In discussions with councils, the burning bridge is the challenge of ongoing organisational sustainability in terms of adequate funding to deliver services, assets, management systems and governance requirements.
A confluence of issues has come together that has further exposed the resource capacity of councils. These include natural disasters, COVID-19, mergers, cost shifting, increasing community demands, technology, social media, services levels, asset standards and governance requirements.
In reviewing a number of metropolitan, regional and rural councils, all appear to be facing financial challenges given the general fund operating results for 2019/20. Metropolitan and large regional councils seem to be facing the greatest challenges, with general fund deficits ranging from $30 million to a small surplus of $180,000. The majority have operating deficits greater than $5 million. It is more variable in smaller regional and rural councils, with deficits from $3.2 million to surpluses of $1 million.
It is important to take a holistic approach to organisational sustainability, as purely achieving financial sustainability does not necessarily ensure organisational sustainability. This is just one element and if not supported by all the foundational planks of a sustainable organisation, any sustainability will be short lived. Councils need to have a sustainable organisational strategy for their services, assets, capability, capacity and resources which must integrate to provide the solution and best value to its customer.
Any organisational sustainability solution or strategy should have key themes, using information from the council’s Community Strategic Plan, Delivery Plan and Operational Plan, with regard to IPART’s Special Rates Variation criteria.
What has become evident is that service planning is a key plank in driving sustainability, with service specifications and management of assets, people and financial resources all considered important factors impacting future sustainability. Organisational sustainability means having sustainable strategies, policies, culture and practices, that provide the right services and service levels over the longer term. To achieve this, the long-term financial position of the council must be sustainable and the community’s assets, both existing and new, must be able to be maintained.
We only have to look back to see the impact of poor planning on the careers of general managers and councillors. Greater expectations from the community and government on council performance means it is more important than ever that councils have a long-term holistic plan. Councils need to harness their resources, governance, management and operational processes to become a sustainable organisation that delivers the right services in the right way at the right levels. With the pending local government elections and the next Integrated Planning and Reporting round, now is the perfect time to formulate yours.