Rural and Remote Queensland Councils - Financial Vulnerability Final Report
Rural and remote Councils in North West, Central West and South West Queensland are financially vulnerable to external shocks and generally have a very heavy reliance on external funding to finance their operations.
The following key issues exist that potentially threaten the ongoing financial sustainability of North West, Central West and South West Queensland Councils:
- Limited own source revenue and a rate base spread across large geographic areas.
- Substantial declines in their populations over the past five years, meaning less residents now exist to share the rate and cost burden.
- Considerably higher capital and operating costs given distances to markets for labour, goods and services.
- Very high level of capital investment required per head of population that must be financed, renewed and maintained.
- Ageing infrastructure requiring large renewal investments in the short to medium term.
- Volatility of operating grants and some historic grant funding decisions (e.g. freeze in Financial Assistance Grants) that significantly impacted the ability to provide infrastructure and services to local communities. The limited rate base of most Councils means that own source revenue cannot replace any loss in external funding and such funding is therefore essential.
- Adverse weather conditions, with the majority of North West, Central West and South West Councils having been drought-declared since mid to late 2013 (with some exceptions in the North West).
As a consequence of these challenges, rural and remote Queensland Councils in the North West, Central West and South West generally struggle to consistently balance their operating position. Of the 21 North West, Central West and South West Councils, 17 were in deficit in 2015-16 and 13 were in deficit in 2016-17. For some Councils, a 10% to 30% increase in total operating revenue – including rates and charges, operating grants and other revenue – is required to overcome sustained operating deficits.
In addition to growth in external funding support, greater certainty and predictability in the sources and levels of this funding are required to support Queensland Councils in the North West, Central West and South West. Strategic infrastructure investment and service provision can only be achieved if there is certainty in long-term funding levels essential to financial sustainability and community development.