The Biggest issue facing Council – and you need to know about it!

By Peter Fairlie-Jones, NRA Committee Member

Most people have little interest in the finances of their local council. Right? That is natural. We elect a group of councillors representing our ward areas and collectively, under the leadership of the Mayor, they oversee and hold to account the Chief Executive and administration. The Council, with advice from the Administration, sets the priorities for managing the city and its services and authorises the budget and rate setting process. People naturally become interested when their rates go up significantly, or they notice service levels deteriorating, or both. Well, this has started to happen at NPSP! The Essential Services Commission of SA (ESCOSA) reviews the financial sustainability of all Councils individually every 4 years. They have just released their advisory report on NPSP Council that concluded that the council is potentially fiscally unsustainable. They highlight the following issues of concern that arise from the Council’s own long term financial plan (10 years):

1. Council is taking on significant debt mainly to fund the Payneham Memorial Swimming Centre which was originally budgeted at $24m but has subsequently blown out to over $60m. As a result, debt is forecast to peak at $106.7m, and the debt ratio will average 145% over the next 10 years (peak166.8%) and far greater than the Local Government Association (LGA) suggested maximum of 100% (NB: No other metro Council exceeds 100% and most are well under)
2. The Payneham Memorial Swimming Centre cost escalation from $24m to over $60m raises concerns about scope and project management, community consultation and financial transparency
3. Forecast rate increases are almost twice the rate of projected CPI over the entire 10-year period (NB: this follows residential rate increases of 8.5% (23/24), 8.5% (24/25) and 9.4% (25/26))
4. Forecast growth in operating expenses is contained at below historical levels, while also servicing increased debt, without explaining how this will be achieved
5. Council risks further cost increases if it has underestimated the $30m cost of the Parade Masterplan, a figure that was estimated in 2020 and has not been updated since.

Further to the rather damning ESCOSA review, it needs to be recognised that during the public consultation for the 2024/25 and 2025/26 budgets in particular, the Norwood Residents Association and St Peter’s Residents Association and various individuals made written submissions and verbal presentations raising concerns regarding Payneham Pool and its impact on rates. However, the concerns were basically ignored.

What is particularly concerning is that, along with the prospect of significantly higher rates throughout the next 10 years, the Council will be in a financial straight jacket that forces it to cut or reduce services, and may be forced to sell assets (Norwood pool, a library perhaps, open space/parkland?) to reduce debt.

The opportunity to improve our city with more open space, provide more tree canopy, improve footpath maintenance, better car parking, traffic management etc will likely suffer.

The Norwood Residents Association would like to see the Council develop a detailed strategy to deal with the debt problem and associated rate increases and, importantly, consult meaningfully with the community on the actions it proposes before decisions are made.