At its meeting last night, Council endorsed a number of recommended actions to secure the financial sustainability of the organisation as outlined in a Draft Resourcing Strategy and Long-Term Financial Plan 2024– 2034.
The recommendations stem from an independent expert review of Council's finances to determine the overall income and expenditure needed to maintain and provide services across the city in the immediate and long term.
Currently, the report estimates that there is a $25 million to $35 million annual shortfall in the budget that needs to be addressed and the impact of inflation will only continue to increase this deficit if it is not corrected. Also, the net cost of a series of natural disasters that have hit the Shoalhaven in recent years, combined with the much-needed financial relief and support provided to the community during and after the COVID Pandemic, has reduced Council's unrestricted or available cash position by $14.6 million. Council's reduced cash position leaves the city vulnerable should the need arise unexpectedly for council to response to another disaster.
The report identified that Council has a lower average rate for residential and business rating categories comparable to neighbouring councils and many other councils in the state.
The findings of the Financial Sustainability Review are that along with strategies such as potential asset sales and the continued identification of efficiency and productivity improvements, Council need to consider making an application to the Independent Pricing and Regulatory Tribunal (IPART) for a Special Rate Variation (SRV) under s508A of the Local Government Act to reinstate its unrestricted cash reserves, fix the structural operating deficit position and to generate sufficient cash from operations to continue to provide the much needed service for a growing city.
The two proposed SRV options for the community to consider are:
- 32% increase in 2024-25 (inclusive of rate peg)
- 18% increase in 2024-25, 13% increase in 2025-26 and 8% increase in 2026-27 (inclusive of rate peg).
The financial impact of these on the average residential rates would be an increase in 2024-25 of $467 for Option 1 and $263 for Option 2.
Under Option 1, the increase in residential rates from 2025-26 would be limited to the IPART approved rate peg while under Option 2, the average residential rate would increase by $224 in 2025-26 and $156 in 2026-27 and return to the approved IPART rate peg from 2027-28.
Council has also committed to reviewing its land and facilities assets for potential sale.
It has identified a target of $3 million in operational efficiency savings to be found over the next four years, along with implementing asset management improvements to reduce costs of maintenance in the long term.
The updated draft Resourcing Strategy 2022-26, including the Long-Term Financial Plan, Workforce Management Planning Strategy, Asset Management Strategy and Information Communication Technology Strategy will be available for review from Thursday 23 November.
The community are invited to complete a survey about these documents and the proposed SRV options before 10 January 2024.
Council will consider the feedback from the consultation and determine whether to proceed with an application to IPART for a SRV at its meeting on 29 January 2024.
Information will be available on the Get Involved website from Thursday 23 November: Get Involved Shoalhaven (nsw.gov.au).
