The dangers of local government debt

Letters to the editor

We should all be concerned that Central Coast Council ran a $5M deficit in 2018/2019 and a $40M deficit in 2109-20 and is now projecting a $13M deficit in the coming year (“COVID-19, amalgamation drive Council deeper into deficit”, CCN 253).

Admittedly, borrowed money is cheap this year, but that is only significant if you are expending the borrowed money in ways that will make a return greater than the interest rate you are paying: the Federal Government can easily justify that, but a local council has few such options.

There is no indication that any of Central Coast’s program is oriented in this way.

CEO Murphy’s assurance that ratepayers are protected because “the Council is audited yearly by the NSW Audit Office” is of little moment, since auditing is largely just a matter of adding up the numbers to see that the arithmetic is correct: we didn’t get much protection from the Audit Office at the time of the GFC.

A local council is not analogous to the Federal Government.

The national government can run up all the deficits it likes (look at the US government), because a national government can always just print money to cover what it needs, or it can indulge in financial sleight of hand, such as buying its own bonds (as we are doing now), which amounts to the same thing.

A local council has only the income it derives from rates and other charges, and it has to balance its books eventually, just as does any household, or go bankrupt.

It would be interesting to see an exact account of how COVID-19 and amalgamation have brought about the present situation, because, on the face of it, it sounds more like an [deleted] excuse than a genuine explanation.

It would also be enlightening to see a precise explanation of how the budget will miraculously return to surplus in 2021-2022, unless the Council is contemplating massive increases in rates and service charges.

The point that population is increasing more quickly than revenues is well taken.

Since new residents will almost certainly demand higher-level services than the long-suffering, established residents who have accustomed themselves to minimum standards, we can expect that calls for expenditures will rise even more quickly than population.

How will this be reconciled with financial constraints?

A streamlined administration in an amalgamated city should be costing us less than the two councils paid previously, so why, four years after amalgamation, are costs not under control (leaving aside the councillors’ largesse to themselves from our money).

Why is the administration still split between Gosford and Wyong: this is not a multinational company that needs branch offices, particularly in the era of the worldwide web.

There has been some talk that the Minister should dismiss the Council and appoint an Administrator.

We have had experience of an Administrator and I think enough has been said about that.

I should, however, like to know why the election has to be postponed by a year: we managed a by-election recently, so the problems are clearly not overwhelming.

We made a hash of the original city election, but we deserve another chance.

Email, Aug 1
Bruce Hyland, Woy Woy

Share this story