By CAMERON LUCADOU-WELLS
GREATER Dandenong Council has ruled out future rate rises to pay for a $10.6 million superannuation blowout to be paid by July 1 next year.
The council’s corporate services director Mick Jaensch last week confirmed the liability amount, which had been reported by the Weekly last month.
Mr Jaensch said the council was “considering its options” to pay the liability – which will be a sizeable slab of the council’s $148million operating revenue budgeted for 2012-13.
The alternatives to increasing rates were likely to be a mix of using the council’s reserve funds and capital program funds, and taking out short-term loans, he said.
The exact mix will not be determined until late this year.
“[The] council is committed to the viewpoint that council rates should not increase above its long-term projections in order to fund this liability,” Mr Jaensch said.
The liability is Greater Dandenong’s share of a $396.9 million shortfall in the defunct Local Authorities Superannuation Fund.
The LCAF was a defined benefit scheme that covers past and present council employees in Victoria who began work prior to December 1993.
Under the scheme, which closed in 1993, these employees are given a guaranteed amount when they retire. It means councils have to make up any shortfalls when investments sour during ‘global economic crises’ such as 2003, 2010 and this year.
The council has fewer than 100 employees within the defined benefit scheme but it was required to pay present and past staff.
Mr Jaensch said the council would press for the state government to assist paying for the shortfall and to make changes to the LCAF to “prevent future liabilities”.
The Municipal Association of Victoria argues the LCAF should become an exempt public-sector fund, as for state and federal public servants. That would allow the councils’ liabilities to be spread out over time, rather than as top-up payments every three years.
Local Government Minister Jeanette Powell last week said the scheme was set up under federal legislation and any legislative changes had to be made by Federal Parliament.
“The Victorian government will continue to provide advice on how municipal councils can meet their obligations under the defined benefits scheme.”
