Australia's National Local Government Newspaper Online

VIC's super black hole

A superannuation shortfall of $393 million has led the Victorian Government to announce that it will lift its Local Government rate cap by 3 percent. Previously, Councils were told they could only increase rates by 0.7 percent, one percent less than the consumer price index.

Councils must use this increase exclusively on unfunded superannuation liabilities. However, Councils that have retained proceeds they received from the Government's sale of their Municipal electricity concerns will not be able to increase rates, and only the very worst affected Councils will be able to use the full 3 percent.

The Minister for Planning and Local Government, Rob Maclellan, has admitted the Government currently does not have the power to force Councils to use their proceeds from the power sell off but will legislate if any refuse to do so. The $393 million super black hole became public in March when a leaked Local Authorities Superannuation Board document was tabled in State Parliament.

The Minister has stated that Councils must pay for their own blow out, pointing to a long standing problem which, he said, stood at $410 million in 1989. Both the Municipal Association of Victoria and the Victorian Local Governance Association argue that State Government policies, including the restructure of Councils from 210 to 78 and the introduction of Compulsory Competitive Tendering resulting in many employees being retrenched, are fundamental causes of the shortfall.

They accuse the Government of passing this 'State debt' straight back to Local Government and ratepayers to sort out. They have also called on the State Government to release documents relating to the Local Authorities Superannuation Board which, to date, the Government has refused to do.

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