City of Busselton's financial health in spotlight

The City of Busselton chief executive officer has disputed the MyCouncil website which shows the city's financial health is below standards.

The state government announced an update to the website on July 1 to show financial information on all WA local governments for 2018/19.

A feature of the website is the Financial Health Indicator which provides a brief overview of the local government's financial health.

It is calculated from the seven financial ratios that local governments are required to calculate annually.

An indicator result of 70 and above indicates sound financial health and the maximum result achievable is 100.

The City of Busselton scored well below that amount at 40. It is also below the state average score of 60.

The financial health indicator showed the city performed below standard in asset renewal, asset sustainability and operating surplus.

City of Busselton chief executive Mike Archer said the financial indicators were 'overly simplistic'.

"The City of Busselton's financial position is solid and we have no concerns at all," he said.

"It is important to note that the indicators on My Council do not take into consideration cash reserves.

"The city's auditor has stated over consecutive years, that while the City of Busselton's current ratio is low, it's significant cash reserves show that it is in a strong financial position.

"The indicators do not take into account the relative "youth" of the city's considerable asset base.

"The city has been through a significant capital construction program over the past decade. As these assets are new, less renewal costs are being spent on the existing assets.

"The city's Debt Service Coverage Ratio is more than two times better than the accepted ratio set by the Department."

Mr Archer said the WA Local Government Association has recognised this shortfall and was advocating for changes to how the financial indicators were calculated to properly reflect the city's financial health.

Another ratio that the health indicator showed the city was below standard was operating surplus.

But Mr Archer said the city has had a surplus over the past few years.

"The City utilises any surplus from its end of year position and places this money into a specific cash reserve to assist in project and development expenditure in the future," Mr Archer said.

"These funds are not included in the My Council Financial Health Indicator calculations, as it treats these funds as 'restricted funds.'"

The website allows people to compare their council with another in a bid to engage with their local governments and keep them accountable.

The Mail compared the City of Busselton with the Shire of Augusta Margaret River who received an indicator score of 71.

Busselton MLA Libby Mettam said rates had grown by an average of 7.4 per cent per annum which was two to three times the rate of inflation.

"It is even more important that local government are prudent with planning and budgeting for the 2020-2021 financial year at a time when many residents are feeling the effect of the COVID-19 pandemic."

However Mr Archer said the city increased its rate in 2018/19 by 3.95 per cent.

"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," he said.

"Because this increases the city's rate income, this has the effect of looking like rates have increased by 8 per cent when in fact they have not."

MyCouncil also includes information on what local governments raise in rates and how much they spend, details of councillor remuneration and gender diversity, and waste and recycling.