Financial sustainability challenges

Overview

Council is taking a number of actions to address the significant financial challenges it currently faces.

An independent review of Council’s financial position in 2023 identified that Council needed to increase revenue and decrease costs through a number of measures to be able to sustain and continue its program of works and services needed now and into the future to meet community needs.

In January 2024, Councillors resolved not to proceed with an application to the Independent Pricing and Regulatory Tribunal (IPART) for a proposed Special Rate Variation and to focus on maintaining strict budgeting measures, improving asset management planning practices and increasing revenue through immediate sales of underperforming property and assets (Minutes from 29 January 2024 Ordinary Meeting - CL24.41: Application to Lodge a Special Rate Variation).

These initiatives are being regularly workshopped with Councillors and reported to the Council on a monthly basis for urgent decisions to be made by Council.

Contributing factors

Many factors have contributed to making Council’s financial position unsustainable:

  • the impacts of the COVID pandemic and 13 consecutive natural disasters during the last five years has significantly depleted revenue and increased operational costs. The net cost of the disasters, including subsidies and waivers on fees and charges, reduced the unrestricted cash (cash that is readily available to spend) position by $14.6 million
  • millions of dollars in grant-funded improvements in the wake of fires and floods means we need to put more away each year to save for maintenance and renewal/depreciation costs
  • community expectations are that maintenance and replacement of assets like roads, bridges and community facilities should be improved above current levels, requiring greater investment
  • rising cost of materials, labour and contractors
  • increase in interest expense due to increase in loan borrowings
  • sustained lower-than-average residential and business rates (in comparison to other local government areas)
  • rate pegging – the IPART restricts how much councils can typically increase rates by, and in recent years rate rises haven’t kept up with inflation
  • cost shifting by NSW Government and Australian Government forcing Council to assume responsibility for infrastructure, services and regulatory functions without providing sufficient supporting funding

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