City books healthy, says chief

City of Busselton chief executive Mike Archer has rushed to defend the City’s financial position, suggesting it was one of the most financially healthy local governments in WA.

Mr Archer labelled the State Government’s MyCouncil website financial analytics “overly simplistic” and said the City had adopted a “break-even budget” to ensure revenue was spent on services to the community.

He said the 3.95 per cent rate increase last year was not related to the City’s financial health despite confirming its current debt ratio was low.

“The City’s Debt Service Coverage Ratio is more than two times better than the accepted ratio set by the Department of Local Government,” he said.

Because of an increase in rates over several years, the City has operated at a surplus earning $410,941 last financial year, $653,105 in 2017-18 and $538,171 in 2016-17, which it has transferred into cash reserves.

“What the MyCouncil website fails to recognise is the increase in income from rates our City receives because of the high level of growth and new developments that occur within the City of Busselton on an annual basis,” Mr Archer said.

The WA Local Government Association is investigating the way MyCouncil ratios are calculated to provide more accuracy and advocating for changes to the calculations.

However, an analysis of the City’s debt per capita compared to the City of Bunbury and the Shire of Augusta Margaret River confirmed the Times report last week that the City of Busselton had transferred an exorbitant amount of debt to its ratepayers.

With a population of 38,926 people and debt of $34million the average ratepayer owed the City of Busselton $897 whereas Shire of Augusta Margaret River residents owed $610 and City of Bunbury residents would pay back $391.

Approximately $27million of the City’s borrowing are for terms beyond 2027 resulting in long term debt burdening future generations.

Mr Archer said the City had made a commitment to not increase rates in the 2020-2021 financial year because of the COVID-19 recession but stopped short of confirming this continuing in the long-term financial plan.

Vasse MLA Libby Mettam said Mr Archer’s argument was flawed, suggesting the City’s debt was for works that had already been completed and did not contribute to local economic activity.

“It is like arguing that the money you borrowed to build your home five years ago that you are still repaying is helping keep local tradies in jobs today, which is total rubbish,” she said.

Former mayor Ian Stubbs said the BEACH development was a “dumb decision” and the City should shelve the project until after the current recession.

“Most of my concerns relate to the silly decision to ask for the State Government to repurpose the terminal funding to the BEACH project,” he said.

“I think it was a dumb decision whether they get it or not and quite honestly raising large loans in this economy is dumb.”

The City of Busselton’s 2020/21 budget is due in three weeks.