Our work to cut costs and find revenue and efficiencies to reduce ratepayer impacts

Work in recent years

In recent years, Council has been working hard to cut costs and find new revenue sources to offset its deteriorating financial position.

In June 2015, Council approved an organisational review, which led to a reduction in the number of Directors and Managers. This review resulted in ongoing savings of $2m per annum without a change in service standards.

During each year of the COVID-19 pandemic, Council found savings to offset revenue losses and balance the budget.

In May 2022, Council made a series of difficult budget repair decisions to close or outsource a range of loss-making, under-utilised or non-core services, including the Loop Bus service, Bales Park Out of School Hours Care and Devonshire Street child care centre.

Council took further budget repair measures in the 2023/24 budget, namely by increasing user pays fees and charges by 7% (in line with inflation).

In addition, for the 2023/24 budget, Council moved to a zero-based budgeting approach, where managers were required to outline and justify any proposed operational expenditure, as distinct to assuming that the previous year’s operational expenditure would be available. This is expected to put onward downward pressure on unnecessary expenditure.

Council has also been successful in winning government grants to help deliver projects, including the Willoughby Leisure Centre upgrade and Artarmon and Naremburn streetscape projects. These grants, and others, reduced the burden on ratepayers and totalled more than $16m in 2022/23.

However, Council recognised by late 2022 that, despite the work undertaken above, it was likely to record ongoing deficits due to its weakened post-COVID-19 financial position, its low rate base and ongoing cost impacts including inflation and wage increases and NSW Government cost-shifting.

Council prepared and exhibited a revised Long Term Financial Plan in May-June 2023, which flagged the need for Council to consider a special rate rise, to avoid Council experiencing financial difficulties by 2025.

Since that time, staff and Councillors have worked to identify four rate rise options to take to the community.

Work as part of rate rise options

Each option requires Council to be efficient, find extra revenue and cut costs.

Under the Reduce Services option, rates would increase by the minimum level (the NSW Government rate peg) and Council would achieve a fragile and minimal level of financial security through service and expenditure cuts.

To meet this financial state, Council would need to find $2.8m in expenditure cuts and $500,000 in increased non-rate revenue. If Council wanted a more secure financial state, the cuts and revenue would need to be higher.

To meet the expenditure reduction target, Council will need to examine significant cuts to services to ensure the annual budget is balanced.

The other three options – Maintain Services, Increase Services and Increase Services and Infrastructure - also involve cost cutting and revenue targets, to reduce the impacts of the rate rise.

These options would travel with a $2m target ($1m in cost cutting and $1m in new revenue), which would be achieved in 2024/25.

Also included in all four options is an underlying assumption that Council will target a 7% efficiency dividend for all staff costs.

This is a demonstration to the community that Council is tightly managing one of its most significant costs.

Work in recent years

In recent years, Council has been working hard to cut costs and find new revenue sources to offset its deteriorating financial position.

In June 2015, Council approved an organisational review, which led to a reduction in the number of Directors and Managers. This review resulted in ongoing savings of $2m per annum without a change in service standards.

During each year of the COVID-19 pandemic, Council found savings to offset revenue losses and balance the budget.

In May 2022, Council made a series of difficult budget repair decisions to close or outsource a range of loss-making, under-utilised or non-core services, including the Loop Bus service, Bales Park Out of School Hours Care and Devonshire Street child care centre.

Council took further budget repair measures in the 2023/24 budget, namely by increasing user pays fees and charges by 7% (in line with inflation).

In addition, for the 2023/24 budget, Council moved to a zero-based budgeting approach, where managers were required to outline and justify any proposed operational expenditure, as distinct to assuming that the previous year’s operational expenditure would be available. This is expected to put onward downward pressure on unnecessary expenditure.

Council has also been successful in winning government grants to help deliver projects, including the Willoughby Leisure Centre upgrade and Artarmon and Naremburn streetscape projects. These grants, and others, reduced the burden on ratepayers and totalled more than $16m in 2022/23.

However, Council recognised by late 2022 that, despite the work undertaken above, it was likely to record ongoing deficits due to its weakened post-COVID-19 financial position, its low rate base and ongoing cost impacts including inflation and wage increases and NSW Government cost-shifting.

Council prepared and exhibited a revised Long Term Financial Plan in May-June 2023, which flagged the need for Council to consider a special rate rise, to avoid Council experiencing financial difficulties by 2025.

Since that time, staff and Councillors have worked to identify four rate rise options to take to the community.

Work as part of rate rise options

Each option requires Council to be efficient, find extra revenue and cut costs.

Under the Reduce Services option, rates would increase by the minimum level (the NSW Government rate peg) and Council would achieve a fragile and minimal level of financial security through service and expenditure cuts.

To meet this financial state, Council would need to find $2.8m in expenditure cuts and $500,000 in increased non-rate revenue. If Council wanted a more secure financial state, the cuts and revenue would need to be higher.

To meet the expenditure reduction target, Council will need to examine significant cuts to services to ensure the annual budget is balanced.

The other three options – Maintain Services, Increase Services and Increase Services and Infrastructure - also involve cost cutting and revenue targets, to reduce the impacts of the rate rise.

These options would travel with a $2m target ($1m in cost cutting and $1m in new revenue), which would be achieved in 2024/25.

Also included in all four options is an underlying assumption that Council will target a 7% efficiency dividend for all staff costs.

This is a demonstration to the community that Council is tightly managing one of its most significant costs.

Page last updated: 22 Sep 2023, 06:10 PM