Open Letter – Fit for the Future

June 22, 2015

The Council has received a num­ber of questions from a concerned ratepayer requesting that the ques­tions be answered and published for the information of the Gwydir Community.

The questions and the Council’s responses are detailed below:

Background Information
Gwydir Shire Council has re­solved to submit a standalone proposal to the NSW State Gov­ernment. This submission will be lodged prior to June 30, 2015.

The NSW Government has is­sued a series of benchmark tests that each local government author­ity must attempt to meet over the next five (5) year period. These Fit for the Future benchmarks are de­tailed below:

  • 1. Sustainability

1.1 Operating Performance Ra­tio
Net continuing operating result (excluding capital grants and con­tributions)
Total continuing operating rev­enue (excluding capital grants and contributions)
Core measure of financial sus­tainability – indicates council’s ca­pacity to meet ongoing operating expenditure requirements.
Target – Greater or equal to break-even average over three (3) years
Gwydir’s current rating – Not met – average over 3 years -0.320

1.2 Own Source Revenue Ratio
Total continuing operating rev­enue (excluding all grants and con­tributions)
Councils with higher own source revenue have greater ability to control their own operating perfor­mance and financial sustainability.
Target – Greater than 60% aver­age over three (3) years
Gwydir’s current rating – Not met – average over 3 years 59.1%

1.3 Building and Asset Renewal Ratio
Asset renewals (building and in­frastructure)
Depreciation, amortisation and impairment (building and infra­structure)
Measures whether a council’s assets are deteriorating faster than they are being renewed – indicator of whether a council’s infrastruc­ture backlog is likely to increase.
Target – Greater than 100% aver­age over three (3) years
Gwydir’s current rating – Not met – average over 3 years 50.1%

  • 2. Effective infrastructure and service management

2.1 Infrastructure Backlog Ratio
Estimated cost to bring assets to satisfactory condition
Total (Written Down Value – WDV) of infrastructure, buildings, other structures, depreciable land, and improvement assets
Measures how effectively the council is managing its infrastruc­ture. Increasing backlogs may af­fect the council’s ability to provide services and remain sustainable.
Target – Less than 2%
Gwydir’s current rating – Not met 22.41%

2.2 Asset Maintenance Ratio
Actual asset maintenance
Required asset maintenance
Measures whether the council is spending enough on maintaining its assets to avoid increasing its infra­structure backlog.
Target – Greater than 100% aver­age over three (3) years
Gwydir’s current rating – Not met – average over 3 years 85.9%

2.3 Debt Service Ratio
Cost of debt service (interest ex­pense and principal repayments)
Total continuing operating rev­enue (excluding capital grants and contributions)
Indicates whether the council is using debt wisely to share the life­long cost of assets and avoid exces­sive rate increases.
Target – Greater than 0% but less than or equal to 20% average over three (3) years
Gwydir’s current rating – Met – average over 3 years 5.16%

  • 3. Efficiency

3.1 Real Operating Expenditure
Operating expenditure
Population – Indicates how well the council is utilising economies of scale and managing service levels to achieve efficiencies.
Target – A decrease in Real Op­erating Expenditure per capita over time.
Gwydir’s current rating – Met

When the Independent Local Government Review Panel’s report was released the options for Gwydir Shire were to either merge with Mo­ree Plains Shire Council or become a member of the proposed Namoi Councils Joint Organisation (JOC).

Gwydir Shire is currently an active member of the Namoi JOC pilot.

The original proposals also out­lined the option of becoming a Ru­ral Council provided that the coun­cil satisfied a range of criteria:

Gwydir Shire Assessment
Rural Council Characteristic
Gwydir’s position

  • Small and static or declining population spread over a large area – Yes
  • Local economies that are based on agricultural or resource indus­tries – Yes
  • High operating costs associated with a dispersed population and limited opportunities for return on investment – Yes
  • High importance of retaining lo­cal identity, social capital and ser­vice delivery – Yes
  • Low rate base and high grant reli­ance – Yes
  • Difficulty in attracting and re­taining skilled and experience staff – Yes, partially
  • Challenges in financial sustain­ability and provision of adequate services and infrastructure – Yes
  • Long distances to a major (or sub-regional centre) – No
  • Limited options for mergers – No

For Councils to be successful in submitting a standalone option they must also satisfy the Scale and Capacity test outlined in the Inde­pendent Local Government Review Panel’s final report that detailed 10 key elements of strategic capacity:

  • More robust revenue base and in­creased discretionary spending
  • Scope to undertake new functions and major projects
  • Ability to employ wider range of skilled staff
  • Knowledge, creativity and inno­vation
  • Advanced skills in strategic plan­ning and policy development
  • Effective regional collaboration
  • Credibility for more effective ad­vocacy
  • Capable partner for State and Fed­eral agencies
  • Resources to cope with complex and unexpected change
  • High quality political and mana­gerial leadership.

Of course there have been some very serious reservations about this aspect of the review process sim­ply due to the meaning of the term Scale and Capacity. Indeed is it pos­sible to compare Gwydir Shire, for example, to Blacktown City Coun­cil?

The elected Councillors of Gwydir Shire believe that it does meet the Scale and Capacity test.

The benchmark tests listed above have been altered to allow for the targets to be met over a five (5) year period rather than the original three (3) years.

This background information is underpinning the answers detailed below to the specific questions asked.

Specific Questions


What services will be re­tained?
It is the Council’s desire to main­tain all its current services but there will need to be efficiencies devel­oped in the services that the Coun­cil does provide, in addition to the proposed rate increases detailed earlier this year.

The Council is in the process of undertaking a review of its service standards and any changes will be subject to a consultation process with the community, especially those directly impacted by any change.

What jobs/positions will be lost/have been lost?
The Council has already ration­alised some of its processes and these changes have resulted in the loss of 17 positions since July 2013 through redundancies.

65% of these redundant positions were designated indoor staff (11) and 35% were designated outdoor staff positions (6).

In addition, as employees resign, the positions that were occupied are evaluated and in some cases, sav­ings have been made through job redesign or reallocation of respon­sibilities.

The net effect of these measures is that the Shire’s wages and sala­ries for the coming budget 2015/16 year are less than the Council’s total wages and salaries cost in 2013.

Will core staff numbers be maintained?
Council advised the Minister for Local Government and the relevant Industrial Union during August and September 2014 that it was no longer practicable for Gwydir Shire to be bound by the core number re­quirement gazetted when the amal­gamated Shire was formed in 2004.

The determined core number as at 17th March 2004 was agreed as 148.7 equivalent full time employ­ees (EFT). The number of EFT as at today is 160.01. (it is important to note that the majority of new posi­tions have been due to the expan­sion of Naroo Hostel in Warialda).

What is the current percentage of indoor staff to outdoor staff, and will it stay the same?
Currently Council’s EFT staff number is 160.01. The relative percentages designated Indoor is 29.89% and designated Outdoor staff 70.11%.

There can be no guarantee that this mix or, indeed, EFT staff num­bers will remain unaltered due to the service standard review that is currently being undertaken.

How is Council going to encourage growth in the Community?
This question seems to suggest that the Council is not already ac­tively involved in encouraging growth within the Shire.

Council has an incentive scheme for new businesses to commence operations as well as facilitating ex­isting businesses to expand through assistance in the development ap­proval process.

Council also acts as a guarantor for home buyers within the Shire who do not have the required de­posit.

Council promotes the Shire at various events throughout NSW.

Will Council put a hold on all pay increases/bonuses until it is financially favourable?
The Council does not pay bo­nuses.

The normal Award increases will be paid as this is a legal require­ment.

Regional Development Australia, Northern Inland, recently released an Issues Report No. 9: The Eco­nomic Impacts of Local Govern­ment Amalgamations (Figure 2 may be viewed on Council’s website or Facebook page), that noted that the average wages and salaries paid to Gwydir Shire’s staff were the low­est amongst the 13 local govern­ment areas within the Northern In­land area.

As pointed out in an earlier ques­tion, the Council’s total cost in wag­es and salaries has reduced over the last 2 years.

What guarantees can Council give Ratepayers?
The only guarantee that the Coun­cil can extend to the community and its ratepayers is that the Coun­cil is committed to standing alone because it believes that it is the best outcome for this community.

Gwydir Shire Council provides direct employment for around 10% of the Shire’s eligible workforce and the loss of the Council would, over time, be a significant blow to the Shire’s economy.

What plans does Council have regarding Coal Seam Gas in our Shire?
Council has no decision making powers with regard to the potential exploitation of coal seam gas within the Shire.

However, the elected Council­lors and senior staff have toured the Surat Basin in Queensland to better understand the likely impact upon Gwydir if CSG exploration and ex­ploitation was to occur here.

In discussions with some of the companies involved in the extrac­tion process it is evident that the potential for exploitation of this re­source within the Shire in the short to medium term is highly unlikely.

No change to the current situa­tion is expected for at least 15 to 20 years.

If our rates continue to rise, how will Council encourage new home owners?
The introduction of the Fit for the Future benchmark outcomes will result in an increase in the rates’ burden, irrespective of whether this Council is amalgamated or not. However, Council does believe that the Council’s rates will be rela­tively cheaper than its neighbouring Councils based upon past historical trends.

Council also believes that it is creating an area that new residents will find appealing as it becomes more difficult to acquire a home in the more densely populated urban areas.


What services WILL be lost?
This is a difficult question to answer of course. Any reduced service outcome will largely de­pend upon the attitude of the newly formed elected Council.

However Gwydir Shire does provide some services that are not currently provided by Moree Plains Shire Council. These include ser­vices within the Social Services and Aged Care areas.

What jobs/positions will be lost and in what time frames?
All the existing positions, other than the position of General Man­ager, would be safe for at least the first three (3) years following the merger.

It is almost certain that following this period of grace a rationalisation of services will result in significant reductions in staff numbers. This was certainly the result in some sur­rounding areas such as Ashford and Barraba.

What assets will be lost/sold off?
This would be at the discretion of the ‘new’ Council and impossible to predict or make comment.

What rate increases will we be looking at given our land values?
Once again this would be a deci­sion for any newly formed Council.

However that Council would have to set a rate that accumulates the State Government approved Notional Rates Income for each of the two prior Council areas of Gwydir and Moree Plains Shires.

The most likely scenarios all in­volve substantial increases for the former Gwydir Shire ratepayers due to the need to set a rate in the dollar that collects the allowable Notional Rates Income for the new Shire area.

Has/will Council be meeting with Moree Council to discuss options and getting a clear idea of what would happen so ratepayers can be informed, should amalga­mation go ahead?
Gwydir Shire has held two senior staff meetings with Moree Plains Shire Council’s senior staff and also one joint meeting between the elected members of each Council. Neither Council supports a merger of the two Councils.

The discussions did not progress to the development of a business case either way, due to the fact that both Gwydir and Moree Plains Shire Councils are facing the same difficulties in meeting the bench­marks as defined, and there would be a similar problem in meeting the benchmarks as a combined entity, especially when burdened with a core number requirement for the first three (3) years.

Max Eastcott
Gwydir Shire Council
General Manager