Debt bomb

By Melissa Meehan
CARDINIA Shire is being crushed under the weight of a $43.4 million debt – the biggest in Victoria.
The massive debt dwarfs neighbouring Yarra Ranges Council’s $2.5 million liability and is streets ahead of their most indebted neighbouring municipality, The City of Greater Dandenong, which owes $25.3 million.
A spokesperson for Local Government Victoria confirmed Cardinia’s forecast debt at 30 June 2009 was the highest in the state.
“It is noted from Cardinia’s 2010-11 budget that they propose new borrowings of $6 million and will repay $4.6 million on existing loans,” she said.
“On this basis, new net borrowings for 2010-11 will be $1.4 million.”
Cardinia CEO Garry McQuillan said the council was under increasing pressure to provide services and facilities to meet the needs of the growing population and the bulk of the debt was money borrowed for infrastructure.
The council expects to reduce the debt to $5 million within 10 years – if there are no new borrowings,
“We have a very large and diverse shire with a huge infrastructure network that needs to be maintained and improved, as well as a need to cater for the five families moving into our growth corridor every day,” Mr McQuillan said.
“Council is ever-mindful of delivering value for money and examines all possible opportunities to trim non-essential costs.”
Mr McQuillan said the bulk of Cardinia’s borrowings had been used to provide infrastructure works across the shire, including the Connecting Cardinia Road project which resulted in the sealing of 50 kilometres of important link roads to improve transport connections.
He said the council was actively attacking its debt by repaying roughly $6 million a year in principle and interest.
Many Victorian councils are debt adverse and view the achievement of a low level of debt or even being debt-free as a primary goal. Others see the use of loan funding as being a critical component of the funding mix to deliver much-needed infrastructure to their communities.
The City of Greater Dandenong has accessed debt funding in the past to complete a range of new major infrastructure projects.
Yarra Ranges spokesman James Martin said the difference between the two municipalities could be related to the difference in population and needs.
“Cardinia would have different priorities than Yarra Ranges does,” Mr Martin said.
“Especially being in the growth corridor.”
The City of Casey did not provide its figures before the Gazette went to print.