Why Council is seeking feedback on the rate rise options

Council's financial journey to this point

Willoughby City Council entered the COVID-19 era in a healthy financial position, recording surpluses totalling $48.3m in the three years to 2018/19.

Since that time, Council has been impacted by a range of external factors, including:

  • $20.6m in COVID-19 pandemic revenue losses
  • Wild weather requiring infrastructure repairs
  • High inflation forcing up costs by 12.1% in the two years to June 2023
  • The NSW Government capping Council’s rate revenue at just a third of these inflation levels and shifting costs onto local government

In addition, Council’s temporary Infrastructure Levy ceased in June 2022. This action resulted in a $2.96 million reduction in rate revenue and a $38 fall in average residential rates in 2022/23.

The cessation of the Infrastructure Levy, and NSW Government rate capping, means that Willoughby ratepayers have seen their average rates fall by 3.2% over the past two years.

Council now has the second lowest average residential rate in Northern Sydney (as shown on the chart below).

The Council sought to manage this deteriorating financial position by finding savings and efficiencies.

However, Council recognised by late 2022 that, despite the work undertaken above, it was likely to record ongoing deficits due to:

  • Ongoing inflation impacts forcing up the costs of materials and services
  • Mandated award wage increases between 3-4.5%
  • Ongoing cost-shifting impacts from the NSW Government
  • Low rates and ongoing NSW Government rate pegging

Revised Long Term Financial Plan

These and other issues have resulted in Council exhibiting and approving a revised Long Term Financial Plan (LTFP) in May-June 2023 showing Council moving from surpluses (in other words profits) to deficits (in other words losses) – a financial situation that is not sustainable. This is illustrated on the chart below:

The LTFP stated that, without substantial change, Council could get into financial difficulty by mid 2025 if it sought to continue to maintain and renew local infrastructure to benchmark levels.

In addition, Council is under more pressure to enhance services, including caring for public areas and delivering new community infrastructure, due to Willoughby’s growing and changing population and increased community expectations.

Council is now seeking community feedback on rate rise options to deal with the above challenges.

The rate rise options

These options are known as:

Council has considered alternatives to these rate rises, including raising debt, selling assets or relying on government grants, but does not consider these to be feasible or timely.

Council's financial journey to this point

Willoughby City Council entered the COVID-19 era in a healthy financial position, recording surpluses totalling $48.3m in the three years to 2018/19.

Since that time, Council has been impacted by a range of external factors, including:

  • $20.6m in COVID-19 pandemic revenue losses
  • Wild weather requiring infrastructure repairs
  • High inflation forcing up costs by 12.1% in the two years to June 2023
  • The NSW Government capping Council’s rate revenue at just a third of these inflation levels and shifting costs onto local government

In addition, Council’s temporary Infrastructure Levy ceased in June 2022. This action resulted in a $2.96 million reduction in rate revenue and a $38 fall in average residential rates in 2022/23.

The cessation of the Infrastructure Levy, and NSW Government rate capping, means that Willoughby ratepayers have seen their average rates fall by 3.2% over the past two years.

Council now has the second lowest average residential rate in Northern Sydney (as shown on the chart below).

The Council sought to manage this deteriorating financial position by finding savings and efficiencies.

However, Council recognised by late 2022 that, despite the work undertaken above, it was likely to record ongoing deficits due to:

  • Ongoing inflation impacts forcing up the costs of materials and services
  • Mandated award wage increases between 3-4.5%
  • Ongoing cost-shifting impacts from the NSW Government
  • Low rates and ongoing NSW Government rate pegging

Revised Long Term Financial Plan

These and other issues have resulted in Council exhibiting and approving a revised Long Term Financial Plan (LTFP) in May-June 2023 showing Council moving from surpluses (in other words profits) to deficits (in other words losses) – a financial situation that is not sustainable. This is illustrated on the chart below:

The LTFP stated that, without substantial change, Council could get into financial difficulty by mid 2025 if it sought to continue to maintain and renew local infrastructure to benchmark levels.

In addition, Council is under more pressure to enhance services, including caring for public areas and delivering new community infrastructure, due to Willoughby’s growing and changing population and increased community expectations.

Council is now seeking community feedback on rate rise options to deal with the above challenges.

The rate rise options

These options are known as:

Council has considered alternatives to these rate rises, including raising debt, selling assets or relying on government grants, but does not consider these to be feasible or timely.

Page last updated: 22 Sep 2023, 06:09 PM