A new report from Queensland’s Auditor General has found that the state’s councils are facing heightened financial difficulties as successive State Government policies hit hard.

The report into the accounts of 68 of the state’s councils has found that a series of decisions, including the withdrawel of state government subsidies, had hit council finances and forced an increase in local government borrowing in order to maintain services.

Local Government Association of Queensland chief executive Greg Hallam said the report into the financial statements of councils and their associated entities for 2011-12 backed up the LGAQ’s view that financial sustainability will be a key challenge for its members over the next few years.

“Those decisions have caused councils to lose about $850 million in revenue each year,’’ he said.

“For many councils that has meant a choice between maintaining services and infrastructure through borrowing and increased rates, or cutting back on services.’’

Mr Hallam said many councils were actively involved in trying to operate more efficiently by reducing their labour costs while encouraging economic growth in their regions through programs to fast track building development approvals.

The Auditor-General’s report found that 16 of the 68 councils audited were at higher risk of becoming financially unsustainable, largely because these had recorded operating losses over the last three years.