Organisational sustainability of small councils

Sustainability Australia Victoria

Over the past five years, the reliance of audited councils on government grants has grown substantially. While rates and charges have increased in real terms, this has not been enough to keep pace with councils' increases in costs. Several audited councils are projected to have deteriorating positions against key financial indicators, which places them at a higher risk of short-term and immediate sustainability concerns.

Common sustainability issues and challenges across the audited councils include having effective financial planning and asset management, effectively and efficiently delivering services, recruiting and retaining qualified and skilled staff and dealing with the impact of population change. A range of strategies and actions have been implemented to address these issues and challenges, however, councils generally cannot demonstrate their effectiveness and whether they are having a material impact on improving their sustainability. Further work is required to improve long-term financial planning, asset management and service delivery, and to address specific challenges. 

Local Government Victoria (LGV) provides a range of general guidance and support to councils, and it has implemented actions to assist small councils at high-risk of sustainability issues. However, it could more proactively target small councils with appropriate support and advice before their situation becomes critical. LGV is developing a performance reporting framework to provide a common suite of sustainability indicators for councils. This may provide an opportunity for LGV to more closely monitor councils' sustainability and respond appropriately to support them on a timely basis.

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