DACCI supports shire's budget caution (#815)

Many people find numbers a bit boring and sometimes a bit scary.  Yet we can’t build bridges without them.  If you just want to cross the river, simply trust the engineers and stop reading here.  But if you are part of the decision making process and want to be informed, read on.

DACCI unreservedly supports the Shire President’s insistence on budget rigour (Bulletin #814).  This has been a prime concern of Council’s Project Team since it began work late in 2009.  So in the spirit of budget rigour, let’s get the numbers clear.

The Coffey Commercial Advisory estimate of capital cost was $8.173M.  In January this year the Shire gave a revised figure of $9.338M with annual running costs of $1.201M.  The latter included $461k to pay the mortgage and $308k put aside each year for a replacement pool 30 years hence.  Thus $769k would be needed each year to pay for a pool without staff, water or customers!

In response, DACCI developed several alternative models and used the same methodology to estimate capital and running costs for one of these - concept Plan A.  We found it should cost $4.828M to build and $297k each year to run including an annual mortgage of $83K.

 

These dramatic gains were achieved without changing the water configuration by halving the building’s footprint, delaying the pool replacement fund until the 25-year mortgage was paid off, a forward savings plan and opening up the funding possibilities to include sources other than the State government’s Community Sporting and Recreation Facilites Fund [CSRFF].

These funding assumptions, based on the Pinjarra experience (40% from State and 17% Federal sources) and a new Pool Reserve Fund (explained in earlier articles), allowed the required loan to be reduced six-fold.  The Reserve needs to be underwritten by the community’s readiness to pay whatever the eventual operating subsidy may be throughout the two and a half year planning and construction stage – i.e. $1.50 per week or $78 per year for the average ratepayer.  This amount happened to be 7% of last year’s average rate, but it is 6.5% of this year’s average.

The Department of Sport and Recreation’s advice that Council should plan for a maximum grant of 33% from the CSRFF rather than 40% (Pinjarra) implies a $335k gap in the Plan A capital works budget … but it’s hardly a Canberra black hole.  Other possibilities exist.  Neither the Shire’s nor DACCI’s capital funding estimates include a Royalties for Regions contribution.  Perhaps this self-imposed discipline needs to be revisited in the light of this year’s capital works budget includes RfR projects worth $2.876M for a range of other community projects.

Finally, while concept Plan A does involve moving the gym from one side of the basketball courts it’s not leaving the Rec Centre.  And with 50 new parking bays included in Plan A (35 already funded) you will be able to park when you have a swim. 

Cyril Edwards, DACCI, denmarkpool@gmail.com and http://www.denmarkpool.blogspot.com.