WA council figures collated for critique
The Western Australian government says it will soon put council financial information online, so that ratepayers can see how their council stacks up.
The Department of Local Government is setting up a new area on its website that will compare financial benchmarks between councils, so that they can be compared on their ability to repay debts, fund capital works and replace assets.
The site will eventually include financial sustainability scores, details of funds held in reserves and total rates revenue for each council.
While all WA councils are required to publish the information in their annual reports already, the information has never been published in one place.
Under the existing system, councils publish their own information according to a series of key ratios.
The seven ratios show a local government’s liquidity (current ratio), its ability to repay debt (debt service cover ratio), cover costs through revenue (own source revenue coverage ratio) while covering operational costs and keeping revenue for spending (operating surplus ratio).
In regard to assets, ratios measure the rate of consumption of depreciable assets (asset consumption ratio), whether assets are replaced (asset sustainability ratio) and the ability to fund asset renewal (asset renewal funding ratio).
It is the latest step in an ongoing State Government push for transparency in local government.
It comes just weeks after WA Cabinet signed-off on amendments to the Local Government Act that expand the Office of the Auditor General’s role to cover financial and performance audits of councils.
Local Government Minister Tony Simpson says there were some concerning figures in local government financial reporting in 2012-13 and 2013-14.
For example, in 2013-14, a mere 28 per cent of councils met or exceeded the benchmark for the ratio measuring their ability to cover operating costs while maintaining revenue for capital funding.
“My department uses the information collected to identify significant risks and to assist local governments to take appropriate corrective action,” Mr Simpson said.
“While clearly, local governments in Western Australia continue to confront serious challenges in terms of financial sustainability, the mandated improvements to local government planning and reporting that are now in place provide a vastly enhanced level of accountability.
“Providing transparency is a key component of maintaining that accountability and my department will be making information about the financial position of each local government publicly available, so ratepayers can benchmark the performance of their council against other comparable councils.”
WA Local Government Association president Lynne Craigie said the lobby backed the plans to publish comparative data “as a means of both promoting public awareness of relative performance and encouraging local governments to aspire to better outcomes.”
But she warned that any comparative system needed to include details beyond the control of councils, like increased government charges or grant funding cuts.
“A good framework is currently in place in New Zealand and provides a platform for local governments to demonstrate their performance goals and outcomes and how they compare to other local governments,” she said.
“We would expect equal transparency to be provided on the impact to these metrics of decisions beyond local governments’ control such as increased government charges or cuts to grant funding.”