Posted 14/11/08


Auditor General warns local governments to be cautious about spending


Herald Sun: Wires

November 13, 2008 02:55pm


COUNCIL expenditure grew faster than revenue this year, prompting a warning to local government's to rein in spending.


A report from Auditor-General Des Pearson, tabled in parliament today, details an audit of 79 local government bodies.


Although no council was rated a "high sustainability risk'', council spending was growing faster than revenue, Mr Pearson said.


"I caution councils to monitor their expenditure, given it grew faster than revenue this year.


"If this were to become the 'norm' it would reduce the financial sustainability of councils.''


Mr Pearson said the number of councils deemed a medium financial risk had decreased from 18 to 15 since last year.


The report said many councils needed better policies for credit card usage, maintenance and security of employee files, and the acceptance of gifts.


Mr Pearson said a review of council investments found the local government sector had $1.5 billion in investments, mostly held in low risk funds.


Only 52 per cent of the councils had investment policies, leaving $275 million invested by councils with no policy in place.


Mr Pearson said councils had a tendency to over commit and under deliver capital works projects, with 34 per cent of councils delivering less than 75 per cent of their budget.


He said these projects should be looked at with a more long-term view and "be more realistic about the outcomes that can be achieved in one financial year''.