A $5 million overdraft facility taken out by Glen Innes Severn Council has drawn criticism from some councillors, who have raised concerns over transparency and compliance with local government procedures.
At a council meeting on Thursday, 24 April, General Manager Bernard Smith defended the facility, which was extended by the National Australia Bank in 2024. Mr Smith said the overdraft had been established to manage cash flow while the Council awaited reimbursement for already completed and paid-for grant-funded projects.
“Importantly, the facility hasn’t been drawn down,” Mr Smith told councillors during the meeting.
Although Council already had an existing $200,000 overdraft in place, the new $5 million overdraft was established without prior approval from elected representatives. Senior council staff said this was an “oversight” and asked councillors at the April meeting to retrospectively approve the overdraft.
This request prompted strong criticism from Cr Scott.
“It is expected that councillors would have a full understanding of the terms and conditions of borrowing arrangements before entering into any contract,” Cr Scott said.
“This kind of retrospective act is a red flag, it doesn’t allow for transparency and analysis”.
In response, Mr Smith said the funds had not been accessed. He stated the facility existed purely as a precautionary measure.
“The overdraft facility is a line of credit that can be used by Council in the event that its cash reserves are exhausted, and it can be called upon at short notice as and when required,” Mr Smith said.
He also noted that the Office of Local Government and the Audit Office had expressed concerns about Council’s financial position, and that increasing the overdraft limit was a step toward addressing those issues.
Council policy allows the General Manager to authorise use of an overdraft facility for up to $200,000, but any higher amount must be approved by councillors.
Staff stated they believed they had not breached the Local Government Act and noted that the existence of the facility had been disclosed to the Office of Local Government on more than one occasion.
Cr Scott’s motion to refer the matter to Council’s Audit, Risk and Improvement Committee for further advice was ultimately rejected by a majority of councillors.
