Wyndham council’s draft budget has been dealt a major blow, with the council set to lose about $10 million in federal funding over the next three years.
Last Tuesday’s federal budget revealed plans to freeze increases to assistance grants given to councils to fund vital services. Among the results will be reductions to kindergarten funding.
The cuts came one day after the council unveiled a $108 million capital works program for next financial year and announced plans to increase borrowings to $55 million to fund projects.
Mayor Bob Fairclough said the council stood to miss out on $2.7 million next financial year and about $10 million over the next three years. He said the cuts would force the council to review its spending.
“In 2014-15, we could be facing a reduction [in assistance grants] in the order of $961,000, which is a major blow to our proposed budget,” Cr Fairclough said.
While the council will need to wait for the federal budget to pass through Parliament to understand its full impact on Wyndham, it could be forced to reduce capital works spending.
“Wyndham council staff are currently seeking more detail around the proposed federal budget, and while Senate approval is still required, early indications are incredibly concerning,” Cr Fairclough said.
“The proposed federal budget will result in pressure on both state and local governments to make up for shortfalls in funding where vital services are required.
“Our residents pay taxes and should not be short-changed in terms of what they get back in their local community.’’
Municipal Association of Victoria president Cr Bill McArthur described the funding cuts as “catastrophic” and said they would hurt every ratepayer.
“Commonwealth financial assistance grants are a core revenue stream for local government,’’ he said.
‘‘Councils have only one form of own-source revenue: rates. Such a significant cut in federal funding leaves councils with two choices: cut services or increase rates.”
Cr McArthur said funding cuts had massive cumulative impacts with ratepayers left to foot the bill for the growing gap between costs and rates revenue.
The council also stands to lose $1.7 million if the government proceeds with cuts to a national partnership that provides children with 15 hours of kindergarten a week in the year before they start school.
Cr Fairclough said the council had already planned and resourced for 15 hours of kindergarten for the municipality’s four-year-olds next financial year. He said the loss of funding was “an unreasonable cost shift” for the council to absorb.
