06-08-2024
Upper Lachlan Shire Council is currently grappling with an unsustainable financial model, marked by operational deficits and minimal unrestricted cash reserves. Despite a 3.70% rate increase in the 2023/2024 financial year, resulting in an additional $310,000 in revenue, escalating costs have outpaced these gains.
Key cost pressures include:
- Emergency Services Levy: Increased from $445,000 to $749,000, reflecting an annual rise of $348,000.
- Audit Office Fees: A 168% increase, equating to an additional $93,000 annually.
- Insurance Costs: A 10% annual increase over three years, adding $200,000 to current expenses.
- Electricity and Heating: A 40% increase, amounting to an additional $150,000.
- Diesel Costs: A 26% rise, resulting in a $330,000 annual increase.
- Capital Works Materials: A 35% escalation over three years due to external factors such as COVID-19 and natural disasters.
Additionally, a 4.5% in 23/24 financial year and further 3.5% award increase in staff costs this financial year further exacerbates financial strain, surpassing the revenue gains from rate increases.
This is a broader challenge across NSW and Upper Lachlan Shire Council is not alone in facing financial instability.
Many NSW councils are encountering similar challenges, leading to service cuts and organisational reviews.
In a decisive move towards achieving financial sustainability, Upper Lachlan Shire Council is undertaking a comprehensive review of its organisational structure. This strategic action follows recommendations from the AEC Group’s Financial Sustainability Report, released in November 2023, which identified critical efficiencies necessary for the Council’s long-term viability.
The AEC Group’s report underscored the urgent need to increase revenue, reduce operational expenses, and build robust cash reserves to cushion against asset failures or unforeseen events. Council has therefore begun implementing many of AEC Group’s identified operational efficiencies, which include service reviews, sale of assets and modifications to service levels.
The full report is accessible on the Council’s website: [AEC Final Report](https://upperlachlan.nsw.gov.au/wp-content/uploads/2024/01/AEC-Final-Report-Upper-Lachlan-Shire-Council-Financial-Sustainability-Review-2023.pdf).
The proposed structure proposes an 18.7 Full-Time Equivalent (FTE) reduction, affecting 22 positions, including both full-time and part-time roles at various levels, with a focus on vacant positions.
The Council anticipates adjustments in service delivery, with some services being restructured or discontinued. Changes will align with operational realities and financial constraints, ensuring sustainable service levels within the Council’s financial capacity.
Extensive consultation has occurred with executive, managers and staff, whereby all staff have had opportunities to provide feedback on any potential restructure. Key stakeholders, including the USU and the union organiser have been consulted and involved as part of the service review.
Affected staff have also received formal notifications and been provided opportunities for consultation and feedback, in accordance with Section 42 of the Award.
Council has already initiated several efficiency measures, including:
- Sale of surplus assets, including properties and vehicles.
- Surrender of the Taralga Post Office License.
- Streamlining of park and garden maintenance.
- Reduction of casual and contract employment.
- Optimisation of procurement processes.
- Transition to a volunteer model for visitor information services.
Upper Lachlan Shire Council remains committed to achieving financial sustainability through strategic and responsible management.