One-third of QLD councils on financial brink
A significant one-third of Queensland councils are at "high risk" of not being financially sustainable, as they battle low cash flows and extra costs amid the COVID-19 crisis.
The worrying finding has been made in a new report by Auditor-General Brendan Worrall, who has revealed that 70 per cent of the state's local governments spent more than they earned in 2020.
Mr Worrall said the deteriorating condition of the councils' finances was "not unexpected", pointing to the measures they took to support their communities during the pandemic as well as the impact travel restrictions and lockdowns had on revenues.
And they took on more expenses, by bringing forward capital projects, maintaining border controls and being lumped with increased cleaning costs for council and public facilities.
Mr Worrall said as of June 30 last year, there were 25 councils at "high risk of not being financially sustainable" - up four more councils from the year before and making up about a third of the sector.
"The financial sustainability of most councils deteriorated this year, with the sector's expenses and liabilities increasing faster than its revenues and assets," Mr Worrall wrote in his report.
"The financial sustainability risk rating for 12 councils has increased to either moderate or high.
"The sustainability ratios for another 64 councils also deteriorated but did not result in a change in their financial sustainability risk rating."
Mr Worrall recommended that councils improve their procurement and contract management practices to ensure they are getting value for money.
He also recommended the state's Local Government Department review its funding model to find opportunities to provide "funding certainty" to councils beyond one financial year.
"A three to five year funding model would assist councils, especially those heavily reliant on grants, to develop and implement more sustainable medium to long term plans," Mr Worrall wrote.
"We recommend that the department provides periodic training to councillors and the senior leadership team for councils that are highly reliant on grants."
The state government has already extended each Works for Queensland funding round to three years.
Local Government Association of Queensland head of advocacy Alison Smith said: "We welcome the Auditor-General's recommendation for more long-term programs to be provided to help local governments plan for the future."
Originally published as One-third of QLD councils on financial brink