FAQs - Long-Term Financial Plan
Provide a transparent account of our financial position and forecasts to the community
Identify the financial risks and opportunities arising in the short, medium and long term
Measure the financial impacts of change through sensitivity testing of key assumptions
Model the financial effects of our other strategic plans and initiatives including other resourcing strategies (asset management and workforce management)
Provide early warning of potential risks to our financial sustainability and provide a framework for decision making and corrective action
Provide a basis to make sound strategic decisions to best meet community expectations and aspirations.
Across 2021/22 and 2022/23, inflation has increased by 13.1%, compared to an overall rates revenue increase of just 4.1% set by the NSW Government during the same period.
User fees and charges remain some $3 million per annum below pre-COVID levels, mainly due to reduced car parking demand.
It is becoming far more expensive to renew and repair Council’s assets, with this cost rising from $12.8m in 2017/18 to $20.9m in 2022/23, in part because of the significant cost increases in material and labour.
The Council was required to absorb $20.6m in lost revenue due to the COVID-19 pandemic. COVID-19 losses came about from Council providing rent relief, supporting community and sporting groups and businesses, closing facilities, waiving fees and from changes in consumer behaviour.
Delivering, since 2018/19, annual average savings of $591,000 in consultancy costs and $963,000 in other miscellaneous expenses.
Winning significant grants from other levels of government totalling $21.2m across the 18 months to December 2022, including a $5m NSW Government grant to upgrade the Willoughby Leisure Centre.
Deciding to outsource or close some under-utilised, loss-making or non-core community services, including Loop Bus services (closed), Bales Park Out of School Hours centre (closed) and the Devonshire Street child care centre, and food services (proposed to be outsourced). The closure of the Loop Bus in itself generated $340,000 in savings.
Rolling out the replacement of nearly 1,800 street lights with more cost efficient and environmentally friendly lights, which will save ratepayers $1m over 5 years.
Ceasing the Council’s Infrastructure Levy at the end of 2021/22, generating an overall fall in rates revenue of 5.2% and cutting average residential rates by $38 in 2022/23.
Containing employee cost increases to just 1.4% in the four years to 2021/22.
Allowing the Council to meet the NSW Government benchmark for asset renewals.
Continued delivery of major projects and asset management initiatives funded by existing internal and external reserves.
Operating surpluses from 2024/25 to 2032/33.
$1 million of extra open space maintenance funding per year after 2024/25.
Placing the Council in a position to both maintain existing service levels and consider service level improvements.
Council resolves to intend to apply to the Independent Pricing and Regulatory Tribunal (IPART) for a SRV
Council notifies IPART of its intention to apply for a SRV
Council engages with the community in discussion about the proposed SRV
Council considers if it proceeds with application to IPART for a SRV
If Council proceeds with an application, IPART will review the application
IPART will undertake a public exhibition process
IPART will then determine Council’s application for a SRV.
What is a Long Term Financial Plan?
A Long Term Financial Plan (LTFP) analyses the Council’s forward financial capacity to deliver the strategies, initiatives and works identified in the Community Strategic Plan (known as Our Future Willoughby).
The objectives of the LTFP are to:
What are the cost increase and financial challenges which are impacting the Council as it heads into 2023/24?
The Council finds itself entering 2023/24 with significant financial sustainability headwinds, primarily due to cost increases outpacing income, namely:
How has the Council been managing these financial challenges in recent times?
Council has consistently delivered operating surpluses while delivering services and new projects, along with maintaining assets. We’ve been making difficult but necessary decisions to reduce costs, and have successfully sought external grants and funds to supplement our revenue.
Council has acted with care and diligence in our financial management and forecasting. We have used, and continually monitored, the best available data to ensure we understand our financial position, now and into the future.
Our work, to meet the above outcomes, has included:
In recent years, overall community satisfaction with Willoughby City Council has remained high, indicating the Council’s ongoing commitment to high-quality service delivery.
The 2022 Community Perception Survey, prepared by independent researchers Micromex, found that overall satisfaction with council stood at 95 per cent in 2022. This satisfaction level is well above the 89 per cent overall satisfaction level recorded by Micromex for 11 comparable metropolitan LGAs.
How does the Council intend to manage financial issues in coming years?
The draft Long Term Financial Plan proposes a range of measures to build on the Council’s work in recent years, and to ensure Council can continue to deliver high-quality services, maintain our assets and parks and deliver significant new community projects over the next decade.
Firstly, as has been the case in recent years, Council will continue to examine ways to increase efficiencies and reduce costs. We are currently developing a new service review framework and program to guide this work.
Secondly, the Council will continue to advocate against decisions by other levels of government which cause an unreasonable cost burden for the Council and Willoughby community. This includes a $100,000 increase to run the September 2024 election, an unexpected $487,000 increase in the NSW Government’s Emergency Services Levy in 2023/24, and the ongoing capping of statutory fees well below the actual cost of delivering the service.
Finally, this draft Plan outlines two potential future rating scenarios – one scenario maintains rates based on the expected NSW Government overall rate revenue cap, with the second scenario modelled on a rate variation between 15 to 20% (above this cap) from 2024/25.
What would be the likely outcome if the Council chose not to pursue a Special Rate Variation in 2024/25?
This scenario would result in a severe deterioration in Council’s financial position in the near to medium term, with cumulative losses over 10 years of $38.3 million.
If Council attempted to deliver asset renewals to meet NSW Government benchmarks, the Council’s working capital would be progressively exhausted and Council would be insolvent by 2025/26.
Alternatively, Council would have to limit asset renewal spending to an extent that it would not be able to meet NSW Government benchmarks and asset conditions would deteriorate and may become unsafe.
What would be the likely outcome if the Council elected to apply for, and received approval for, a Special Rate Variation?
The Long Term Financial Plan recommends that the Council apply for a one off rate variation, between 15% and 20%, above the expected rate revenue cap commencing in 2024/25 and remaining in place on an ongoing basis.
Such an increase would set the Council on a path for a secure and sustainable financial future, including:
This proposed 15-20% variation also seeks to recoup the cumulative past impacts of a rate revenue cap that is below inflation, and to manage forecast future financial requirements. This will ensure the current level of services experienced by residents can be maintained.
What is a Special Rate Variation?
Special variations are an important means of providing additional funding to councils to allow them to deliver services and infrastructure that the community has requested, and the council is unable to fund within its existing revenue.
A council may need a Special Rate Variation (SRV) to either maintain current service levels or to increase service levels. A SRV requires an application to the Independent Pricing and Regulatory Tribunal (IPART).
What would be the impact of the Special Rate Variation on residential rates?
A 15% variation would result in Council’s minimum residential rate (paid by the majority of ratepayers) increasing by $132 a year in 2024/25, above the expected increase allowable under the NSW Government’s rate revenue cap. A 20% variation would result in a $176 increase.
For other residential ratepayers, a 15% variation would result in an average $202 increase above the rate revenue cap, while a 20% variation would result in a $270 increase.
How will Willoughby’s residential rates compare to other nearby Councils, after the Special Rate Variation?
The Council currently has a comparatively low residential rates cost, with our average residential rate (in 2020/21) being the second lowest among all councils who are part of the Northern Sydney Regional Organisation of Councils (NSROC).
This means that, even with a Special Rate Variation, the Council’s average residential rate is likely to remain close to the average rating cost among all NSROC councils.
How does Willoughby’s Special Rate Variation compare to rate increases being sought by, or obtained, by other Sydney councils?
The proposed 15-20% variation is modest compared to rate increases either proposed by, or approved for, a number of other Sydney councils – indicating that the financial issues facing Willoughby are common to many other councils.
For instance, for 2023/24, Strathfield is proposing a 93% increase over four years, Canada Bay is proposing a 32.52% increase over four years and Hornsby is proposing a 28% increase over four years.
Meanwhile, in recent years, councils to receive Special Rate Variation approvals include Canterbury Bankstown (36.34% increase), Georges River (32.6% increase) and Hunters Hill (26% increase).
Given existing cost of living issues, why are you considering increasing our rates?
Unfortunately, the Council – just like community members – is being significantly impacted by inflation and cost increase issues.
The Council will continue to examine ways to increase efficiencies and reduce costs, along with generate additional non-rate revenue sources and advocate against unreasonable cost burdens imposed by other levels of government.
However, the Long Term Financial Plan finds that – alongside these actions - a Special Rate Variation needs to be examined to allow the Council to have a sustainable financial future and be able to deliver high-quality services and renew community assets to benchmark levels.
If the Council decided to progress the Special Rate Variation proposal, what would be the next steps, including further community engagement?
Under NSW Government guidelines, Councils which are contemplating applying for a Special Rate Variation (SRV) must first canvass this scenario in its Integrated Planning and Reporting Framework documentation. This inclusion of a SRV scenario in the Long Term Financial Plan currently on exhibition means the Council is complying with this guideline.
However, there are number of very significant steps which would need to be followed before this increase became a reality.
Following this, if Council was to resolve to pursue a SRV, the next steps would include:
The above steps would occur later this year to early 2024.