25 May, 2022
Mayor flags cuts to services amid soaring costs
SOARING costs of materials and labour and the effects it will have on the capacity of Mareeba Shire Council have been laid bare, with Mayor Angela Toppin flagging the need to scale back on services and projects in the coming year.
The council is also staring down the barrel of a 20 per cent cut to its Federal grants which fund its day-to-day operations. Mayor Toppin said despite the rises in costs for council, they remained committed to a 2.5 per cent rise for the upcoming 2022-23 Budget.
“We are committed to a 2.5 per cent rate increase because ratepayers cannot afford a higher rate rise and we will have to scale back on services and projects,” she told the meeting last week.
A report to council revealed that the cost of some materials such as steel are expected to continue to rise in the coming months by as much as 58 per cent.
“Given the recent increase in fuel prices, trade and material supply delays and cost increases, and furthermore significant escalation to water and wastewater components, council is anticipating challenges to delivery timeframes and scope capacity for existing capital projects, operations and maintenance,” the report stated. “A number of council supplies such as precast concrete drainage components and water and sewerage pipe materials have been significantly increasing.”
Typical increases council is expecting to see in the coming months include a 24 per cent rise in the cost of reinforced concrete pipes and culverts; 25 per cent for PVC poly water and sewerage main pipes; 50-58 per cent for steel, 30 per cent for timber, 13-40 per cent for roofing products, 20 per cent for electrical components, 10 per cent for park furniture and seven per cent for concrete. The price increases and effect on council’s future service delivery have not yet been measured for materials such as bitumen products and fuel.
The report also flagged “challenges” in delivering capital works and maintenance projects. “Planning and forecasting are more pivotal now than ever before as we experience record increases in the cost of materials and services, reduced availability (supply) of goods and services, staff resourcing shortages and uncertainty around interest rates and inflation,” the report stated. “These challenges undoubtedly impact Asset Management Planning of council’s infrastructure and assets and the associated Long Term Financial Plan and sustainability.”
Council’s long-term Financial Plan is based on inflation rates for both revenue and expenditure at 2.5 per cent for the current year and future nine years. The Council Cost Index for 2021 was 2.74 per cent and while the index for 2022 has not yet been released, it is likely to be higher, creating budgetary concerns for the organisation. “While the Council Cost index of 2.74 per cent is only slightly ahead of the 2.5 per cent projection in the Long-Term Financial Plan, when coupled with significantly higher increases reported in recent times and a reduction in the Financial Assistance Grant, it is more important than ever for diligence and clarity around deliverables and cost saving opportunities,” the report stated.
Officers also gave a commitment to come up with initiatives to minimise the impacts.