The report, commissioned by council in June 2023, addresses the aftermath of the “ill-fated 2016 amalgamation with Urana” and outlines a path forward for the community grappling with the consequences.
The report, tabled at the monthly meeting of council in Urana on Tuesday, categorises recommendations into ‘tier 1’, ‘tier 2’, and ‘tier 3’ tasks, and acknowledges the deep-rooted challenges faced by Federation Council, exacerbated by Corowa’s amalgamation with Urana six years ago.
“Many of the problems go back decades but were sadly compounded by events circa 2016,” the report acknowledges citing unachievable savings projections and implausible assumptions.
The consequences, as per the report, are higher taxes and likely lower services, imposing an injustice on the community for the mistakes made in the past.
The council, according to Professor Drew, is too large to operate with an acceptable level of technical efficiency, a conclusion drawn from evidence demonstrating a more than twenty percent increase in operational expenditure post-amalgamation.
“Entire communities have been effectively disenfranchised by the destructive amalgamation,”
The report indicates that financial burden was further compounded by imprudent spending sanctioned by the former state government, with a considerable portion executed by the government-appointed administrator. The severity of the matter, Drew notes, implies a prolonged period of financial hardship and austerity for the community.
Amidst the gloom, Professor Drew commends the dedication and resilience of the Federation Council’s staff which he said was unique among amalgamated councils. Professor Drew attributes this achievement to the General Manager, councillors, and the staff themselves, identifying them as the single most crucial asset for the local government area.
While acknowledging the change in political control of the state parliament since 2016, the report urges the NSW government to play a key role in Federation Council’s recuperation. It expresses hope in the government’s commitment to assisting communities, outlining specific actions that could improve the situation.
“Recuperation of Federation will ultimately require that a substantial permanent special rate variation (SRV) be approved,” Professor Drew asserts the report. This, however, is presented as only one component of the financial sustainability solution. Fees and charges need adjustment, the council’s business structure requires restructuring, and a fairer allocation of roads grants is deemed necessary.
Tier 1 Recommendations Highlights
•Provide better price signals: advocates for a comprehensive evaluation of price signals, targeting full cost recovery.
•Renewed focus on core remit: All services should be classified as either ‘core’ or ‘discretionary,’ with priority given to fulfilling essential ‘needs’ before addressing ‘wants.’
•Strengthen maintenance focus: especially road reseals and clearing of table drains- highlights the need for an accurate assessment of the maintenance backlog. Timely maintenance is identified as integral to regaining financial sustainability, preventing further deterioration, and ensuring the longevity of crucial assets.
•Divestiture and outsourcing considerations: recommendations regarding the potential divestiture of the Ball Park Caravan Park and the contemplation of outsourcing the Corowa Aquatic Centre. These proposals aim to alleviate the burden on staff, refocus on core services, reduce local economic distortion, and better manage risk.
•Budget reconciliation rigor: Addressing financial oversight, the report recommends improving the rigor of monthly budget reconciliation. Deviations from the budget should be explained, and a clear path forward must be established to mitigate overruns. Quarterly Budget Reviews (QBR) also require enhancement, proposing a higher standard than the state government’s reporting threshold. Extended QBR for all four quarters is suggested.
•Community support for expenditure reduction: Survey evidence suggesting strong community support for reductions in tourism expenditures. It encourages the council to align its spending with community sentiments.
•Strategic saleyard business considerations: The report delves into the saleyard business, suggesting options ranging from selling the business outright to long-term outsourcing. The unique characteristics of the saleyard business necessitate careful consideration, taking into account recent grants and other constraints.
•Increase in councillors: proposes an increase in the number of councillors to 12. A larger councillor representation is viewed as a strategic move to distribute responsibilities effectively and enhance governance.
Tier 2 recommendations acknowledge the challenges faced by the leadership group and proposes support and mentorship initiatives.
Other recommendations include the need for clearer communication of priorities, addressing operational efficiency with a thorough review of fleet and plant for potential rationalisation.
Tier 3 recommendations look at building a sustainable future by adopting an ‘every dollar counts’ mantra.
Meanwhile Tier 3 also suggests that councillors and relevant staff should undertake courses on financial sustainability with tertiary providers.
It also highlights the role of the Audit Risk and Improvement Committee (ARIC) calling for an increased focus on financial sustainability challenges and risks. ARIC is directed to more clearly measure and report on these aspects while monitoring the progress towards implementing recommendations from the overall report.
Council ‘welcomes’ report findings
At the November meeting of council in Urana, Councillor Sally Hughes openly welcomed Professor Drew’s report speaking to a number of points.
“One important point was the succession plan for people in senior positions. We are very fortunate to have three senior directors and if we have people in the wings that can be trained for future roles, I think we should nurture this,” she said.
“The report has identified the issues and through the consultation process, the community has become highly engaged, which is very positive.
“I found it interesting that almost 60 per cent of attendees at forums acknowledged the need for a permanent rate variation.
“Professor Drew stated that a priority must be placed on core infrastructure, reflecting what our community has been calling out loud for- action on roads and sewerage and water upgrades.
“The report calls for stronger community engagement, as David Bott (Federation Ratepayers Inc) said ‘genuine engagement’ to build trust in the community and transparent decision making.”
“People are our most important asset and I think its imperative that their wellbeing is our highest priority. As councillors I hope we give the recommendations the due consideration.”
Mayor Bourke described the process as a “massive journey for council and the community”.
“The future won’t be easy, and it will be a real balancing act,” he said.
“It’s a fantastic report and shows we’re fixing the problem against the odds, and how we can go forward together in the future.”
Federation Ratepayers Incorporated also welcomed the release of Professor’s Drew report.
“We look forward to seeing how councillors prioritise and act upon the 77 recommendations,” they said.
“FRI have been calling for this review since July 2022, we are pleased that the Federation Council has conducted the review. We sought to have input into the terms of reference, and although we were denied this, we are encouraged to see that Professor Drew has delved into some key areas outside council’s key focus on amalgamation.
“As an advocacy group, we encourage the community to read and review the report and recommendations. Now is the time for ratepayers across all our communities to be involved in re-prioritising council’s focus on core service delivery to ensure council remains financially viable.”
