The 2012-13 budget was announced on Monday. The Newsport brings you the Mayor Bob Manning's full, unedited budget speech.

It would be preferable to be speaking to a budget being proposed in times of strong economic growth and outlining aggressive revenue and expenditure targets – but this is not the case.

The Cairns Regional Council local government area (together with the greater Tropical North Queensland region) continues to experience trying economic times with a narrowing of our economic base, diminished levels of business activity, high unemployment levels, restrained investment confidence, a high Australian dollar working against Tropical North Queensland as a tourist destination and a two-speed economy which benefits those involved in the minerals boom but in many respects creates problems for those areas located outside the influence of the mining precincts.

That aside, there are reasons to be optimistic about the future. I can’t help but think that the Cairns region/Tropical North Queensland is again about to embark upon a period of growth and excitement.

The announcement last Saturday of the commencement of China Eastern flights between Shanghai and Cairns is the most exciting aviation announcement since the late 1980s/early 1990s, when Cairns was flooded with flights out of Japan, and then out of Korea.

This has far-reaching consequences for the regional economy and it is perhaps the most significant indication that the ‘tide’ has turned and this should provide a very real boost in business and investment confidence.

This is not the only opportunity that we have at our feet at the moment, but I would regard it as the most promising and potentially the greatest. Sometimes opportunities only present themselves once, and then they are gone. So what do we have to do to make sure that we achieve the maximum outcome from this announcement?

The need has never been greater for the Cairns Regional Council and other entities such as Cairns Airport, Ports North, Tourism Tropical North Queensland and Advance Cairns to ‘partner’ and work together to make sure that we achieve the maximum harvest in terms of both the tourism potential arising out of this announcement and the many other economic spin-offs that will result.

Additionally, Council has to work diligently with the above entities to maximise other potential opportunities which have been or are being identified.

The 2012/13 budget is predicated upon three key assumptions:

1. That the region is showing increased signs of business confidence and that there are signs to indicate that an upward economic trend could be emerging,
2. That Council needs to carry some of the weight in terms of households and business and therefore rates have been struck at the minimum possible increase ie. 3.0% plus the estimated impact of the carbon tax of 0.7%.
3. That Councils needs to hold its capital works program at the maximum possible level in order to stimulate local work, but at the same time not overextending itself. In this regard, Council needs to place itself in a position where it can respond, if it has to, in regard to a more pronounced pick-up in economic activity and which might require an increased Council spend.

Prior to the budget formulation, Council again committed itself to another round of ‘Infrastructure Charges incentives’ in an effort to stimulate commercial construction activity.

The 2012-13 budget provides for Total Operating Revenue of $291.73 million and Total Operating Expenses of $298.370 million, with a forecast deficit of $6.639 million. The forward estimates provide for the Council to bring the budget back into balance in the 2013-14 financial year. This will be achieved by both anticipated growth and a rates increase in the order of 4-5%.

In this regard, it is critical that budget blowouts do not occur, as these will simply compound bringing the budget back into balance.

The budget provides for a Capital Works Program totalling $93.75 million. A high level break up of this program provides for the following:-

• Infrastructure Services $36.65m
• Water and Waste $32.7m
• Community, Sport and Cultural Facilities $17.02m
• Corporate Services $6.69m

Council should ensure that an early start is made towards implementing this program of works but it should also satisfy itself beforehand that major expenditure items are justified.

I believe, as is the case in any budget, that there is ‘fat’ in the proposed budget and it is the function of Council and management to ensure that this is culled out and, if necessary, the funds reallocated.

In this regard, the budget provides a plan to go forward, but there is no reason why proposed expenditures/projects should not be tested to ensure their continued appropriateness. This will require Council to become far more conversant with the 2012-13 works program (capex and opex) and this is a matter which needs to be resolved with management.

It is important for Council in the foreseeable future to start to consider a four-year budget strategy in order to build some discipline around where this term of Council is to take us all. The alternative will lead to a less than optimum outcome.

The current budget preparation has been a somewhat disjointed affair, with the Local Government elections being pushed back a month to accommodate the State elections, thereby leaving too short a time for proper consideration, and then this was compounded with an all too busy and extended Board induction process.

Under the circumstances, and taking into account the above comments, I believe the proposed budget is appropriate for Council to consider and adopt, but again I make the point that the adoption of the budget is not an end in itself and a strong discipline will be required to ensure Council implements the program of works contained within the budget, in the most cost-effective manner, and makes necessary adjustments throughout the budget term as changing conditions/priorities might warrant.