Australia’s largest city council has slashed nearly half a billion dollars in expenditures to deal with its burgeoning debt, while looking towards cutting rates for local residents.
According to its latest quarterly budget update, the Brisbane City Council (BCC) is expected to deliver a 10 percent operating surplus this year amid rising operating costs.
To achieve this result, the Liberal National Party-dominated council said it had managed to keep spending “under control,” with a reduction of nearly $470 million (US$302 million) in expenditures.
The spending cut was significant, given that the BCC has an annual budget of $4.3 billion, the largest among councils across the nation.
While its net debt stands at $3.68 billion, the council said that would decrease by 7.7 percent in the next three years. The BCC estimates it saved taxpayers $12 million through reducing borrowings and using working capital more effectively in 2022.
Despite the spending cuts, the BCC says it will still invest in key projects like renovations to the Brisbane Metro M2 services, preparatory work for the Brisbane Metro M1, the rollout of Brisbane’s new bus network, and the Stage 1 upgrade of Beams Road.
“Our council is committed to spending within its means, so we don’t add unnecessary costs onto residents now and into the future,” said Brisbane Lord Mayor Adrian Schrinner, in a statement to The Epoch Times.
“We have kept our budget balanced and ensured Brisbane owner-occupiers pay the cheapest residential rates in southeast Queensland.
“Brisbane residents already pay hundreds of dollars per year less in rates than residents in other council areas, and we’re determined to keep it that way.”
The mayor also said the local government authority would be more likely to cut debt sooner than the state or federal government.
Opposition’s Criticism
Meanwhile, Labor’s Opposition Council Leader Jared Cassidy criticised the spending cuts, calling for more services to people.“What we need to be delivering [are] everyday things: the road people drive on, the public transport they access,” he told Nine News.
“When you talk about half a billion dollars worth of cuts in a council the size of Brisbane, those cuts are being made everywhere.”
1 in 4 Local Councils Struggling Financially
Brisbane City Council’s budget update comes as a significant number of local governments in the country struggle financially.Specifically, these councils only met one or none of three sustainability criteria, including an operating surplus ratio of 0-10 percent, a debt service ratio of below 60 percent, and an asset sustainability ratio of over 90 percent.
Councils in Tasmania were the most financially vulnerable, with 66 percent classified as having low sustainability, compared to 43 percent in Queensland and 32 percent in New South Wales (NSW).
At the same time, the report found that a considerable number of councils could not maintain their assets due to a lack of funding.
For example, in NSW, over 50 percent of the councils reported that their spending on asset maintenance was lower than what was required in 2020-21.
Some councils have cut back on services, such as childcare, aged care and health. However, not every council runs these services in the first place.
The poor performance of councils was partly due to stagnant growth in local government revenue, exacerbated by rate pegging and capping in Victoria and NSW.
In addition, many councils were highly dependent on grants from different layers of government.
