Council pays the price

Rosemary Sorensen | Bendigo Weekly | 07-Sep-2012

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City  of Greater Bendigo council will pay upfront a $10.3 million superannuation liability, following an impassioned debate this week of what one City of Greater Bendigo councillor called the “most critical issue” confronted in his time.

Cr Bruce Phillips said the requirement on local government to fully fund superannuation schemes has the “propensity to render council unviable”.

He called on federal and state government to intervene to fix a problem which is putting “unnecessary” financial pressure on councils.

“They have created the monster and they have the power to slay it,” Cr Phillips said.

“Council must continue the rage until the federal government fixes the problem.”

Six of the nine councillors voted in favour of accepting a response to the predicament which includes putting on hold or cutting some projects previously signed off in this year’s budget.

Cr Rod Fyffe said the plan to take advantage of a $500,000 reduction made possible by immediate payment of the call on funds is “responsible and prudent”.

Cr Rod Campbell did not support the motion.

He said councils should collectively make a stand on a situation that is unsustainable.

“I don’t think they are taking us seriously,” Cr Campbell said.

The shortfall in Vision Super’s Defined Benefits Superannuation Scheme, for which the council is liable is due on July 1 next year, with a $500,000 reduction for early payment.

Council decided to take advantage of that reduction, with the balance to be made up from savings in operation costs, deferral or reduction of capital works, and funds made available from changes to the long-service leave restricted cash requirement.

Mayor Alex Sandner has been appointed to a task force set up by the Municipal Association of Victoria to lobby government for the superannuation scheme to become state managed, and remove the requirement that it be fully funded.

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