Snowy Monaro Regional Council: Fiscal Reckoning and the Need for Accountability
An analysis of the SMRC 2024 May Business Paper in relation to today - by Chris Chan
The Snowy Monaro Regional Council (SMRC) is at a financial and governance crossroads. Years of mismanagement, unchecked spending, and poor strategic decisions have brought the council to the brink of insolvency. The May 2024 Business Paper (Item 6.1.1) lays bare the depth of the challenges: escalating employee costs that exceed rate revenues, chronic deficits, and an over-reliance on grant funding. Coupled with governance failures by the so-called “Gang” of incumbent councillors, SMRC faces a critical need for reform.
If there’s one take away from all this mess, it’s that those who created the problem are incapable of fixing it.
A Structural Crisis: Employee Costs Outstrip Revenue
The council’s financial imbalance is stark: employee salary costs continue to exceed the revenue raised from Ordinary Rates. Ordinary Rates are defined as revenues received from residential, farmland, and business properties. SMRC’s employee costs have risen to $38.4 million annually up from $33.3 million, while Ordinary Rates received contribute only around $20 million*—a $18.4 million shortfall that highlights a fundamentally unsustainable system. (*$39.4million if including all other user fees and other charges - 30/06/2024 Draft GPFS)
Despite reducing full-time equivalent (FTE) staff from 332 to 285, salary expenses increased due to award-mandated pay rises, step progressions, and superannuation contributions.
6.1.1 Insight: "The impact of this is that a large portion of the staff are qualifying to progress through steps in the salary system, increasing the relative cost of wages by 2.5%."
With just 20,000 residents, SMRC’s administrative costs per capita are among the highest in comparable councils, at nearly $2,000 per resident. A council of this size must operate efficiently, but its bloated structure is draining resources from essential services.
Grant Dependency: A Risky Strategy
Grants have become a lifeline for SMRC, constituting over 50% of its revenue, but this reliance poses substantial risks:
Volatility: Grants are inherently unpredictable, subject to shifting government priorities and economic conditions.
Restrictions: Most grants are tied to specific projects and cannot be used to cover operational shortfalls.
The May 2024 Business Paper warns against this reliance:
"Reliance upon grant funding is not a sustainable approach to funding asset renewals… The current strategy has been to defer renewals and not undertake all required maintenance... increasing maintenance activity costs and shortening asset lives."
Grants have masked deeper structural issues, creating a false sense of security while the council’s fiscal foundation crumbles. As grants dwindle, the community faces growing service gaps and mounting debt.
Infrastructure Neglect and Deferred Maintenance
The consequences of SMRC’s financial mismanagement are evident in its crumbling infrastructure:
Roads: Over 80% of sealed pavements have exceeded their 15-year lifespan, with $4.1 million required annually for maintenance but only $2.5 million allocated.
Unsealed Roads: Annual funding shortfalls leave half the network inadequately maintained.
6.1.1 Insight: "Expectations that Council can maintain the entire sealed road network cannot be met with the available funds... This will have to be managed through planned withdrawal of the assets from service."
“…an estimated 30,000 potholes being expected to need addressing.”
The failure to address maintenance needs in a timely manner has exponentially increased long-term costs, while public safety and quality of life have deteriorated.
Why "The Gang’s" Policies Failed
The SMRC’s challenges cannot be understood without examining the role of its councillors, particularly "The Gang"—a majority bloc of councillors who have presided over years of mismanagement. Their approach has consistently prioritized short-term political convenience over long-term sustainability.
Deferring Difficult Decisions
The Gang avoided hard choices, relying on grants and deferring maintenance to create the illusion of fiscal stability. This “kick the can down the road” mentality has left SMRC with a mounting deficit.Overstaffing and Inefficiencies
Rather than addressing administrative bloat, The Gang allowed employee costs to spiral out of control, diverting resources from critical infrastructure.Systemic Failure of Staff Capability
The Polo Flat Road debarcle has demonstrated that there is recurrent systemic failure of relevant council staff to oversee major road maintainance projects.
Reactive Policies
The Gang’s reactive culture has driven up costs. For example, emergency infrastructure repairs are 6–7 times more expensive than preventative maintenance.Opaque Governance
The incumbent councillors failed to hold the executive accountable, allowing poor financial decisions to persist unchecked and invisible to the residents.
Specific Policies That Caused Failure
Several specific policies reflect the governance failures of The Gang:
Deferred Maintenance
Chronic underfunding of roads and public infrastructure has increased long-term costs and led to widespread deterioration.Expansion of Non-Essential Services
The Gang’s vanity projects (e.g. Sports Centre) in addition to pools, cost millions to maintain each year. Similarly, excess open spaces and underused facilities divert funding from core needs.Grant Mismanagement
Grants were treated as a solution to systemic deficits rather than temporary support, leaving the council vulnerable to funding gaps.Safety Neglect
Chronic underinvestment in safety systems has cost $600,000 annually in preventable incidents, exposing the council to unnecessary risks.
The Path Forward: Accountability and Reform
SMRC must confront its structural and cultural failures to regain public trust and fiscal stability. Reform must focus on:
Streamlining Operations
Reduce non-essential positions and focus resources on core services like roads and public safety.
Align administrative costs with the council’s small population base.
Empowering Reform-Minded Councillors
Independent councillors—Rose, Stewart, Williamson, and Thaler—have shown a commitment to reform. They need community support to promote and implement policies that enhance governance and fiscal discipline.Educating the Community
Residents must understand the detrimental effects of The Gang’s policies. The community has the power to drive change by voting for leaders who prioritize transparency and sustainability.Prioritizing Preventative Maintenance
Redirect resources to planned infrastructure repairs to minimize long-term costs and safety risks.Rebuilding Unrestricted Cash Reserves
Establish a robust reserve fund of $5 million to manage risks and reduce reliance on external funding.
The Path Forward: Enhance Governance
The financial and operational failures of SMRC cannot be fully addressed without acknowledging the role of its councillors. The incumbent councillors, often referred to as "The Gang," have not only presided over this fiscal mess but have also demonstrated an unwillingness or inability to implement meaningful reforms. Their policies and decisions have exacerbated SMRC’s structural deficits, leaving the community to bear the brunt of their mismanagement.
By contrast, the Independents—Rose, Stewart, Williamson, and Thaler— have shown a commitment to greater transparency and accountability. These councillors have pushed for governance reforms and policies aimed at addressing the root causes of SMRC’s financial instability. To succeed, they need the full support of the community to counterbalance the obstructionist tendencies of The Gang.
Key governance reforms must focus on:
Empowering the Independents
Support Independent councillors in their efforts to implement reforms, ensuring transparency and fiscal discipline.
Enable policies that prioritize long-term financial sustainability over political expediency.
Educating the Community
Highlight the detrimental effects of The Gang’s policies, including unchecked spending, lack of oversight, and reliance on unsustainable grant funding.
Demonstrate how The Gang’s decisions have jeopardized infrastructure, increased debt, and stifled community development.
Changing Voting Patterns
Encourage voters to critically assess the track records of all councillors.
Advocate for policies and candidates that prioritize the region’s long-term welfare and future generations.
The community must recognize that its role in this governance crisis extends beyond ratepayer dissatisfaction; it includes the responsibility to vote for leaders who will act in the public's best interest. Only by rejecting complacency and demanding accountability can SMRC hope to secure a better future for the Snowy Monaro region.
Conclusion: A Call to Action
The Snowy Monaro Regional Council’s financial crisis is the result of years of mismanagement and failed policies. The time for excuses has passed. Reform is urgently needed to address administrative inefficiencies, reduce reliance on grants, and prioritize fiscal sustainability.
The community must support reform-minded councillors and demand greater accountability from leadership. Only by rejecting complacency and demanding change can SMRC secure a stable future for the region and its residents.
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