Independent audit sounds note of alarm about Shire’s inability to balance its budget

An independent auditor has sounded a note of concern about the Shire’s finances. The mandatory independent review found the ongoing failure to produce a balanced budget without rolling over unspent money was a risk to the local government’s ability to cover its operating costs. Successive Times reports in recent years has noted the Shire of Augusta-Margaret River’s net budget position relied heavily on delayed capital works projects and external grant funding balances. The auditor has told councillors the budget position for the past three years has failed to meet the Department of Local Government, Sport and Cultural Industries’ recommended metric. “The Operating Surplus Ratio measures the ability of a local government to cover its operational costs,” a Shire report said. “The same adverse finding was reported for all annual financial reports since 2014-15.” In August, the Times reported the Shire used a surplus of almost $3.5m plus significant carry-overs from last year’s capital works program to balance its budget this year, with overall staff costs rising by about $1m. “Increases to employee costs and external costs including utilities, insurances, materials and contract services have placed pressure upon formulating a balanced budget and some significant amendments were required to prioritise, stage and defer projects,” now-retired Shire finance manager Andrew Ross said at the time. The auditor’s warning represented “a significant adverse trend in the financial position of the Shire,” the report said. However, new Shire manager of corporate performance Melanie Aylett noted it was “not uncommon” for local governments to produce a similar result. The onus on local governments to account for depreciation of assets was pinned as the biggest factor in the poor result. In June, the Times also reported the Shire’s Long-Term Financial Plan acknowledged it was still yet to deliver a balanced budget, could exceed four key benchmarks, and was delivered despite key documents, such as the Shire’s Workforce Plan, being produced. That plan was still yet to be considered by councillors and costly risk-reduction measures at the Margaret River Heart, considered at the last council meeting of the year, were also not included in the LTFP.