Council in $7.7m black hole
THE FRASER Coast Council is facing a financial disaster as it wrestles with a looming multi-million dollar black hole in its infrastructure budget.
The budget shortfall could well mean hundreds of essential projects across the region involving parks, pedestrian and cycle paths and roads may have to be put on hold.
This year the council budgeted for an unprecedented $7.7 million in its infrastructure haul from developers.
But the Chronicle has learned that as of early December last year the council had only managed to rake in just over $300,000.
That means it now has just five more months to bring in more than $7 million.
Local developers say that the shortfall can be traced back to the council’s poor decision back in June last year to blow out the cost of infrastructure charges.
The developers say the only thing the increased charges did was to send potential projects to the scrap heap.
They say many developers have given up and left town, while others have called a halt to their projects and failed to register their lot titles – which means the council can’t bill them.
The 2009 June quarter recorded an 88.5 per cent plunge in title registrations compared with the previous year and in the 2009 year overall; the drop from 2008 was 37.1 per cent.
With the new June 2009 infrastructure charges, a 30 residential unit development’s contribution went from $218,280 to $535,820. An industrial complex soared from $166,195 to $354, 075 and a new medical centre shot from $5,963 to $18,081.
Translated into jobs and facilities for the region, the loss of the money paints a bleak future for the Fraser Coast, which in June 2008 was home to 95,980, or 2.2 per cent of the State’s population.
Between 2003 and 2008 our population growth was 3.9 per cent – 1.5 per cent higher than the State average and it’s still growing at an accelerated rate.
“The significant drop in collection of infrastructure charges by the council shows the lack of development activity here and this is reflected in the major downturn in plan registrations,” warns local Urban Development Institute chairman Daniel Poacher.
“This lack of activity will reflect dramatically on unemployment in our region.
“The UDIA pleads with the council to lower these charges before settling on the amended policy that they are reviewing at present.
“Or where will the council find the money to fund services and facilities to match this growing population, if developers stop work and therefore significantly less infrastructure dollars come into the council’s coffers?”
In 2007-2008 government calculations put the Fraser Coast’s development industry as turning over $1.256 billion, $169 million of which were incomes for 5300 people in full or part time work.
“The development industry here is the third largest industry generator of employment after retail and health,” Mr Poacher said.
“It accounts for 10.8 per cent of employment in this region, or let me correct myself, it did. As more and more developers realise they can’t pay these exorbitant council infrastructure charges, they are pulling out of projects or putting them on hold to consider their options.”
The council’s current worrying shortfall is not new. It comes in the wake of a horror infrastructure charges year in 2008-2009.
The council budgeted for just over $2.5 million in contributions from developers but its total collection for the year was only $663,000.
Before amalgamation the Local Government Reform Commission rated the four Fraser Coast councils for “financial sustainability”. Maryborough and Hervey Bay scored “moderate”, third down the list of ratings.
Tiaro scored a “weak” and Woocoo came bottom of the list with “very weak”.
“It wasn’t financially a great launching platform for the new amalgamated council,” mayor Mick Kruger said in an interview with the Chronicle earlier this month when we asked him if the council was currently financially viable.
“We’ve had to battle our way through it because we had to wear amalgamation costs, which were about $6.4 million. The State Government isn’t going to review its grants and subsidies to councils until 2011. We’ve had to review our capital works program and our operations as far as service delivery is concerned. Our management has looked at all our operations to cut costs. We’ve balanced everything and we’re financially viable and we’re moving forward.”
But the Chronicle understands the council is currently facing a total budget shortfall of $10 million.
The council has budgeted for $4.9 million in developer contributions for each of the next four years.
On Tuesday the Chronicle emailed the council’s CEO Andrew Brien asking for detailed information on the council’s infrastructure budgets and charges for this year and last year.
We did not receive a reply and emailed again yesterday morning asking what had the council collected in charges to date and what percentage of infrastructure charges collected does the council use to improve and create projects, maintain parks, foreshore walks and the like?
Mr Brien replied saying his media officer was away until next week and “the majority of information is on our website”.