The TCorp report found that, in 2012, over 25% of councils in NSW were in a 'weak' or 'very weak' financial position and, based on councils' own projections, the sector's financial sustainability outlook is set to deteriorate significantly over the coming years.
TCorp identified that a majority of councils are reporting operating deficits, with only 1/3 of councils recording a surplus in 2012. Over the period 2009 to 2012, the cumulative operating deficits for all councils totalled about $1 billion.
Compounding this problem is the fact that most councils are not providing sufficient funds to maintain their assets to a satisfactory standard, which is further adding to the local government infrastructure backlog.
TCorp found that councils' deteriorating financial performance had been occurring for some time and this had led to a gradual weakening of the local government sector. TCorp concluded that these factors, if not corrected, will lead to further deteriorating financial strength and ultimately a lower quality of assets and hence services that can be delivered by the sector.