DEEP PROBLEMS IN TOWN HALLS ALL OVER TASMANIA

COMMENT

It is patently clear that the local government model in Tasmania has passed its use-by-date by a long shot. 

Jeff Kennett estimated some time ago that something in the order of $2Billion was being spent on local governance. The evidence now seems to be that most of it is not being well spent.

It way past time for a reality check!

By Lucy MacDonald 

When coronavirus hit Tasmania's communities, councils across the state rushed to help by freezing rates and cutting fees but, with coffers bare and staff stood down, it is becoming clear many councils will be the ones in need of aid.

Key points:

• Tasmania's councils have frozen rates and created hardship packages, but it's meant a huge hit to their bottom line
• Many councils are worried about how they'll pay staff and fund services
• The financial situation has renewed calls for the State Government to reconsider its position on council amalgamations

Their financial stress has seen renewed calls for the State Government to ditch its policy of voluntary amalgamations and finally force some councils to merge.

It was mid-April when Premier Peter Gutwein and Local Government Minister Mark Shelton wrote to councils urging them "to do more".

"We strongly encourage all councils to consider their individual packages and provide support to their community as a matter of urgency," they wrote.

"It is vital that all councils agree to measures including rate increase freezes and generous hardship policies."

The state's councils agreed to implement hardship packages — including delaying rates collections and waiving or deferring fees — and freeze rates for the 20/21 financial year.

But not all councils could afford this or agreed with the rates freeze, with some mayors saying they felt forced into doing so.

For Flinders Island Council, the rates freeze is putting some serious pressure on its finances.

"To all councils [the freeze] is probably a big issue, a big burden. To us, it's just off the planet," Mayor Annie Revie said.

The council has been in "a high-risk category financially" since 2018 and entered into the crisis with about $2 million in debt.

The extra hit means the council may be forced to sacrifice some services.

"It's something we're going to have to look at. We're going to have to involve our community in what sort of services can we afford," she said.

This will be a question many councils across the state will now face and, depending on the council, the loss of services could range from a pause on council-supported events and grants to delays on infrastructure upgrades and slower reparation of things like roads and street lamps.

On paper, councils are asset-rich — they own parks, roads and buildings — but few of them can be sold or, as Derwent Valley Mayor Ben Shaw put it, "you can't sell a footpath".

Derwent Valley Council has about $800,000 in outstanding rates for this financial year and as part of the agreed-upon hardship package, they won't be chasing them.

Cr Shaw said with the council's cash flow in "disarray" he was worried about paying staff leave entitlements.

"We're around about the $1 million mark [in leave entitlements] on our books, which is a real concern. We need to have that cash available plus we need to have operation cash as well," he said.

He does not know how they will keep the hardship package and implement a freeze on rates.

"If it all comes in and all our rates come in, we'll be fine," he said.

"It's the fact that there's no incentive for anybody for this next 12 months to pay their rates because we won't be chasing them and there's no interest accrual on them.

"If everybody decides not to pay their rates, we will run out of cash."