Council Balances Ambitious Projects With Long-Term Financial Sustainability

Signature projects and cautious financial considerations took centre stage at the Mackay Regional Council's 2023-2024 budget meeting. While exciting initiatives, including the Seaforth Esplanade redevelopment and Pioneer Valley Mountain Bike Trails, generated anticipation, some councillors raised concerns about the potential burden of debt and its impact on future rate rises.

Mayor Greg Williamson expressed enthusiasm for the transformative projects, highlighting their potential to boost tourism and improve the region's quality of life for residents and local businesses. However, the cautious voices emphasised the importance of comprehensive financial planning and cost analysis for sustainable decision-making.

Mayor Greg Williamson said he was thrilled to see so many exciting projects being delivered.

“Our region has so much potential, and these projects will create new tourism opportunities while also improving liveability and livelihood for residents and local businesses,” Mayor Williamson said.

Cr Marty Bella voiced his concern over project spending, saying it’s the ‘proverbial honey trap’.

“For the chance to cut a ribbon or a photo opportunity, we’re saddled with continually increasing maintenance and depreciation debt, which we have seen increase rapidly in the past 12 months,” he said.

“Unless the whole life costs of capital projects are provided, the decisions we make are based on less-than-optimum knowledge.”

Council’s Long-Term Financial Forecast (LTFF) provides a 10-year view that demonstrates council’s ability to manage the wide range of services and infrastructure it provides to the community over the long term. It’s based on current and known activity at the time of writing and is a living plan which is continuously reviewed and updated to reflect prevailing economic conditions, updated asset management plans and community requirements.

Presented during the budget meeting, council’s LTFF showed a forecast debt balance from around $50M rising to around $220M by 2033. Cr Laurence Bonaventura questioned why this forecast had changed dramatically from the $120M anticipated last year for the same time period and why it wasn’t anticipated 12 months ago.

The Director clarified that this budget assumes more growth in the capital expenditure program over that 10-year period as well as more indexation with higher inflation and higher costs factored into the forecast that the cash reserves are anticipated to be insufficient to cover that long-term plan.

Cr Bonaventura called the rapid rise in debt “sobering” and “cause for concern”.

“It should not only be of concern to us as councillors, but to all ratepayers who will be responsible for paying back that debt over the next 20 years,” he said.

Cr Alison Jones said that council simply cannot keep undertaking new projects because of the historical projects which keep incurring maintenance costs.

“We must look after what we already have on our books,” Cr Jones said.

“Just remember what happens with continuous project escalations, overspends now and into the future.”

Cr Bella added, “While we look at our own financial position as a council, it has impacts on the financial position of the people within our region.

“While we are considering our debt and what we are building, we need to consider the financial situation of our mum and dad ratepayers and their kids, and whether the increased burden we place upon them becomes onerous, such that, it comes to a point of this place being great for liveability and livelihood is no longer, not because of a lack of facilities but because of an inability to pay dues.”

Cr Justin Englert said that this budget focuses on growth.

“Without growth there’s no investment in the region. Without investment in the region the region stagnates. A stagnated region doesn’t grow its rate base and when you don’t grow your rate base you pay more rates,” he said.

“We’ve just delivered a budget under CPI, we could have delivered a budget over CPI and the people of today can pay above CPI, or we can take out some debt and pay it off over a period of time so people of today and their kids can pay under CPI,” he added.

“Council has paid back $130M of debt over the past 8 years and now council is looking at taking on more over the next 10 years, it’s called spreading the load over multiple generations and it has allowed this council to keep rate rises under CPI for at least the last 8 years straight.”

Deputy Mayor Cr Karen May agreed with Cr Englert and said the budget focuses on the whole of council operations and spreading the load over a number of years.

“There wouldn’t be a person that sits around this table that doesn’t want to leave the assets in a better place than what they are today when we depart,” she said.

“We’re delivering and planning for the future.

“If we do not have growth in this region, we will become obsolete.

“The plan is a strong one for this region and for the ratepayers now and in the future. The door is open, we’re planning for you to come.”

Mayor Williamson wrapped up the budget by saying that the LTFF needed to be sustainable, with reasonable rate increases that the community can live with.

“It’s up to the councils of the future to deliver on. This is a forecast and the best forecast position we need to be in if we want to achieve the growth and sustainability we want to achieve as a council, this is where we need to be.”

The 2023-2024 total expenditure budget is $420 million, of which $128 million will be spent on capital projects.

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$8.1 million has been allocated to the continuation of the Mackay Waterfront redevelopment in the 2023-2024 budget

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