By CAMERON LUCADOU-WELLS
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GREATER Dandenong Council could be scrambling to protect ratepayers from a superannuation blow-out of about $10 million.
Greater Dandenong corporate services director Mick Jaensch said the council may be forced to use its reserves and short-term borrowings to pay off the Local Authorities Superannuation Fund (LCAF) shortfall.
The council will also review its capital and operational works funding. Mr Jaensch declined to quarantine the $62million municipal building-library-civic square project from cuts.
It shaped as “a major challenge not just for the City of Greater Dandenong but for all local governments in Victoria”, he said.
“Every effort will be made to address the funding required without raising council rates. Once we have a known figure, the council will revise its long-term financial strategy and endeavour to come up with a range of strategies in terms of how to repay the liability.”
Last month, the council had budgeted for a $3million liability as its share of the LCAF blow-out.
Chief executive John Bennie said last week that the shortfall would be “significantly in excess” of $3 million after the fund – now known as Vision Super – announced the bill would be $400 million across all Victorian councils. “I should stress this amount is beyond the council’s control,” Mr Bennie said.
In 2010, the council was required to pay $2.1 million out of a $62.1 million shortfall across the state’s councils. By that ratio, the council could face a bill of close to $13 million payable by July 1 next year.
The LCAF is a defined benefit scheme that covers past and present council employees who began work prior to December 1993.
Mr Jaensch said there were fewer than 100 Greater Dandenong employees within the defined benefit scheme but it was required to pay present and past staff.
Vision Super chairman Rob Spence, also chief executive of the Municipal Association of Victoria, said the state government should legislate to make the LCAF an exempt public-sector fund.
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