A STATEWIDE test of council finances has put Cardinia on the bottom rung.

The Pakenham-based council was among five Victorian municipalities to receive a one-star rating in the first Access Economics-Fiscal Star financial sustainability league table.

The rating was given because the policies evident in council’s latest audited financial statements were said to be not sustainable.

But chief executive officer Garry McQuillan slammed the finding as a “misrepresentation” and baseless.

Mr McQuillan took the unusual step last week of publicly reassuring ratepayers that council’s financial position was very strong.

“For someone to come to this conclusion is very mischevious,” Mr McQuillan said.

Released last month, the FiscalStar ratings were said to be an independent assessment of a council’s overall finances.

The rating — said to have taken the ratepayer perspective and not a credit rating — was based primarily on information that is on the public record.

Cardinia was rated alongside Hepburn, Moorabool, Moreland and Swan Hill with “disruptive increases in rates and charges and/or cutbacks in services likely going forward as the council tackles its financial imbalances”.

The rating raised concerns about what FiscalStar said was an unsustainable operating deficit, significant debt burden, above-average underlying expenses growth under existing policies and substantial recent increases in rates and charges.

Ratepayers questioned shire officials on the issue during question time at last week’s meeting.

Pakenham woman Diane Henderson was concerned that other councils in growth areas, such as Casey and Baw Baw which both received three stars, were given higher ratings.

Mr McQuillan said the ratings were based only on an interpretation of council’s 2005-06 financial reports, conducted with no consultation either with Cardinia financial planning staff and other shire officials or the Municipal Association of Victoria.

Mr McQuillan was critical of the manner in which the testing was conducted and did not believe the results were valid.

“Fundamental assumptions are made which are flawed,” he said.

“This assessment has not taken into account council’s long-term financial plan or future revenue streams such as joint developments like the South East Business Park.

“I can reassure the public that council’s financial position is very strong and (has been) grossly misrepresented.”

FiscalStar said the ratings were a summary, based on information on the public record, and did not purport to be comprehensive.

FiscalStar said the ratings were ‘interim’, and yet to reflect information that may be a key to assessing a council’s financial sustainability but which was not published by the council.

Cardinia recently released its 2007-08 draft budget which proposes to raise rates by an average seven per cent across the shire.

Two councils — Melbourne and Maribyrnong — were given five-star ratings with the majority of councils receiving three stars.

No councils received no stars.