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LAST week, the City of Greater Bendigo was advised that Victorian councils would be forced to find $400 million to cover the cost of a shortfall arising from a superannuation scheme closed to new members in 1994.

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Scheme trustee Vision Super will formally advise us and others of the exact figures later this month.

This impost weakens local government’s capacity to fund future works and services.

So why has this happened?

The Local Authorities defined benefits scheme – which included a pension for life for most members – has been closed to new members since 1 January, 1994.

At that time, the state government passed legislation requiring the scheme to be fully-funded until the last member or their spouse no longer draws on it.

With the youngest active member aged just 36, councils could be required to top up any shortfalls for a long time to come.

The shortfall has arisen because there are no new members contributing to the scheme.

This combined with more members retiring means there is not enough money in the fund to guarantee the scheme is fully-funded.

It is important to note that the scheme was compulsory for all councils when it was started in 1982, so everyone who worked for local government had no choice but to be a member.

We, as Greater Bendigo councillors, have an immediate issue to deal with and our council officers have been asked to provide options on how best to fund our share of the $400 million shortfall.

There can be no escaping that this will place a huge burden on ratepayers in our community.

This is not the first time our ratepayers have been asked to fund such a shortfall.

The City of Greater Bendigo has already paid in excess of $14 million, including interest, since 1996.

The big question is: Can this happen again? Will our ratepayers, many of whom have lost on their superannuation due to the global financial crisis, be forced to top up this scheme every time there’s a shortfall?

Unfortunately, under current legislation, the answer is yes.

This is a major issue for councils across Victoria and it is time for state and federal governments to seriously consider the impost it places on local government, which has only limited funding sources.

Our council has written to the Prime Minister and Premier to seek their assistance in this matter.

We are seeking urgent meetings with the Federal Minister for Finance Penny Wong and the State Minister for Local Government Jeanette Powell.

Local government is already the victim of significant cost shifting by both state and federal governments.

They cannot expect ratepayers to increasingly foot the bill for programs that have traditionally been theirs to fund.

It’s not sustainable nor is it fair.

Our council is also conscious of the hardship that this unfunded superannuation liability will put on our smaller neighbouring councils that have even less capacity to cover these costs.

State and federal governments can no longer take a head in the sand approach to this issue, which is placing a huge burden on ratepayers across our community and beyond.

We encourage them to join us and other councils in finding a solution.