Presented by Robert Clark MP		www.robertclark.net

Whitehorse Council's $5 million budget deficit needs greater disclosure

News Release - 20 September 2006

The Member for Box Hill, Robert Clark, has called in State Parliament for better disclosure of Whitehorse Council's financial position.

He has pointed out that, using the standard form of financial statements required by the Local Government Act, Whitehorse Council is budgeting for a $5.6 million budget deficit in 2006-07.

Mr Clark has called on the Minister for Local Government to urge Whitehorse councillors to recognise and be accountable to ratepayers and residents for the deficit they are running.

Mr Clark, who is also the State's Shadow Treasurer, said that councillors need to make greater use of financial statements that show the council's finances in the standard form and thus disclose the council's deficit.

Mr Clark says that at present councillors are relying on a form of budget presentation that uses loan receipts, asset sale proceeds and transfers from reserves and the accumulated surplus to make it look as though there is no deficit.

"I was most disturbed when some weeks ago I was at a presentation given on Whitehorse Council's finances and a finance officer from the Council put up on the screen the Council's budgeted income statement in the standard form required by the legislation," Mr Clark told Parliament.

"This statement showed that in 2006-07, Whitehorse Council is budgeting for a deficit of $5.6 million and that the projected deficits for the following three years are $6.6 million, $5.9 million and $4.9 million.

"The 2006-07 deficit represents almost 5 per cent of the council's total budget expenses. It is the equivalent of a state government running an annual deficit of over $1.5 billion. If that happened at a state level it would be rightly regarded as taking the state back to the disastrous days of the Cain-Kirner era.

"This huge deficit comes despite the fact that Whitehorse council rates increased by 11.5 per cent this year and despite the fact that the council is budgeting to raise rate revenue by a further 20 per cent over the next three years, bringing in an additional $11.3 million a year by 2009-10.

"Clearly deficits of $5 million a year or more mean that the council is living off its assets or increasing its liabilities, or both, and this is what is happening.

"The future wellbeing of residents and ratepayers requires that the true financial situation of Whitehorse council, including its chronic and ongoing deficit, be exposed and acted on."

Speaking outside Parliament, Mr Clark said that Whitehorse's deficit problem was the worst of any nearby Council.

"Knox, Manningham and Boroondara Councils are all budgeting for substantial surpluses. Maroondah is also budgeting for a surplus in 2006-07, and Monash's budgeted deficit is less than half that of Whitehorse."

Mr Clark also said that Whitehorse Council's deficit had nothing to do with capital works. "Standard income statements calculate the deficit just counting revenue revenues and operating expenses. This deficit means that council is spending $5.6 million more on wages, salaries, depreciation and other operating expenses than it is receiving in revenue."

The State Parliament legislated in 2003 to require council budget documents to include financial statements in a standard form, which is similar to the main statements used in State budgets and financial reports. When the Minister for Local Government, Candy Broad, introduced the legislation, she said:

Budget documents are to be substantially upgraded to include standard financial statements on an accrual basis to support financial viability but also to include a description of the activities that are being funded in the budget. This will significantly improve the transparency of councils' budget funding.