Advice key to city’s success
Key points:
- Whyalla City Council was one of five councils listed as ‘potentially unsustainable’ as part of a review by the Essential Services Commission of SA (ESCOSA)
- This advice should be no surprise to ratepayers, as we have been open that we are currently operating in a deficit, as well as highlighting the challenges we face with our airport; existing asset base; and need to develop while being reliant on external funding
- Whyalla currently finds itself in a ‘two-speed’ outlook – the need to grow and develop to cater for what’s ahead, while needing to reduce debt – that complicates decision-making and future planning
- This advice is assisting us to work in conjunction with our Audit and Risk Committee to identify opportunities for savings to reduce the deficit
- Council agrees with ESCOSA in highlighting the airport as the most critical factor in its advice, with the Federal Government removing security screening funding increasing airport operating costs by $1 million per year
Whyalla City Council was recently part of a four-yearly review by the Essential Services Commission of SA (ESCOSA), aimed at providing councils with risk-based advice to assist in making long-term financial and investment decisions for the benefit of ratepayers.
City of Whyalla was one of five out of the 17 councils under review that was listed as ‘potentially unsustainable’. This comes after six of 15 councils were listed as ‘potentially unsustainable’ last year.
Council CEO Justin Commons thanked ESCOSA for the advice, which he believes will prove extremely useful in future planning processes.
“This advice should not be a surprise to our ratepayers, as we have been open with the community that we are currently operating in a deficit, as well as highlighting the challenges we face with our airport; existing asset base; and need to develop while being reliant on external funding. Most importantly, we have been listed as ‘potentially unsustainable’, meaning we are still in a position to solidify a financially sustainable budget within the next few years,” Mr Commons said.
“Whyalla currently finds itself in unique circumstances – with pressures unlikely being experienced by any other local government area in South Australia – due to the major government and industrial projects soon to begin construction. This has resulted in a ‘two-speed’ outlook – the need to grow and develop to cater for what’s ahead, while needing to reduce debt and address operating deficits – that complicates decision-making and future planning.
“This advice is assisting us to work in conjunction with our Audit and Risk Committee to identify both revenue opportunities, as well as potential savings to reduce the deficit, including looking at if and when major projects such as the Foreshore Master Plan are delivered – including factoring in ongoing costs – and how external funding can minimise ratepayer contribution.”
“The ESCOSA report will help inform Council’s decision-making for next year’s Annual Business Plan and Budget process. We therefore strongly encourage residents to actively participate in the workshops and consultation to ensure their feedback can inform the final plan. If the community is passionate about Whyalla’s future, then it is critical they contribute to this process.”
Airport
Mr Commons agreed with ESCOSA in highlighting the airport as the most critical factor in its advice.
“Recent decisions made by the Federal Government – enforcing security screening and then removing the funding to cover these costs, increasing airport operating costs by $1 million per year – have put pressure on the sustainability of the airport, which has been regularly outlined by Council since the funding ceased,” he said.
“Reduced passenger numbers have also played a role, with less flights available since Rex ceased operating out of Whyalla and less passengers using the facility, meaning less revenue from the passenger levy.
“The majority of airport costs are fixed, meaning the only ways to improve the financial position are to increase commercial revenue opportunities, seeking external assistance, or from increasing the passenger levy.
“Increasing the levy will put pressure on already-high pricing and possibly further reduce passenger numbers and therefore overall revenue. We continue to actively lobby the Federal and State governments to financially support these operations, which are ultimately to the benefit of their major industrial projects.”
Asset stock / general costs
In terms of other assets, Mr Commons said most of Council’s building stock is reaching end of life around the same time, with many buildings having low utilisation and/or outdated lease arrangements, putting pressure on Council’s budget.
“A process to review and rationalise the building stock has commenced, with the ESCOSA review further highlighting the criticality of this work,” Mr Commons said.
“We said as recently as last year that Council does not have the financial capacity to maintain and upgrade all of its existing buildings, therefore needing to consolidate some assets to focus on shared, multi-user facilities, while positioning key sites to be ready for future development that will benefit the entire community. Residents need to be prepared that this could result in significant change for some of our community groups, but it is critical to our entire city’s success.
“It’s important to realise our existing roads, community buildings etc were established for a population of 33,000, but are now being maintained by a population of 21,000, which is not financially sustainable.
“We are also already undertaking a Service Review program, which will assist with future decisions about general service levels and related expenditure.”
New infrastructure
“Regarding major projects, some residents have rightly questioned the practicality of something like the Foreshore Master Plan in our cost-restrained position. However, it is critically important to the much-needed growth and development of our city.
“Whyalla is the third largest regional city in the state, but has no modern and contemporary public realm play spaces. These are key to attracting the new residents / families needed to service the massive growth in renewable industries in the coming years.
“Population growth is also critical to keeping rates down while enabling new facilities to be built and existing ones renewed. This benefits existing residents while helping attract even more, like we saw so prolifically in the sixties and seventies, with so many migrants still calling Whyalla home.
“Most importantly, the staged implementation of the Foreshore Master Plan will only proceed with the securing of external funding partners, while its ongoing costs are also considered to be within Council’s financial means, thanks to anticipated growth from the State Prosperity Projects.”
Council will continue to keep the community updated on its progress in solidifying a financially sustainable position, ensuring Whyalla capitalises on the major growth on its horizon.