Draft Annual Business Plan and Budget 2024-25

Draft Document

Budget Considerations

Are you interested in how your rates are used to improve your community? Are you keen to have your say and help shape our city’s future? Then Whyalla City Council wants to hear from you!

Whyalla City Council is seeking your feedback on this year’s draft budget, which focuses on maintaining existing services and assets, while undertaking targeted planning to ensure we are prepared to cater for the major projects planned for Whyalla.

The release of advice by the Essential Services Commission of SA (ESCOSA) has been important in helping inform our decision making for this year’s plan. This advice highlighted that Council was ‘potentially unsustainable’, with the airport identified as the most critical factor. While useful and timely, this advice presented nothing new, as we have been open with the community that we are currently operating in a deficit, as well as highlighting the challenges we face.

This advice also further highlighted the fact Council cannot afford to fund the level of development required for our future growth – or to meet the many needs and expectations of our community – so we will continue to advocate strongly with government and the private sector to help ensure our goals come to fruition while minimising the impact on ratepayers. In particular, we need to attract people to relocate to Whyalla to live and work.

Our ongoing focus on resolving the numerous legacy issues across the city – particularly relating to ageing infrastructure that has been under-invested for some time – was also reinforced by ESCOSA, so this will continue in FY25. This critical work will allow us to shift our focus from the past to the future.

All of these factors mean that Council is proposing a rate increase of $2.00 per week for the average residential property, including the increase in the Waste Service Charge. This is equal to CPI plus 0.8%, for a total of 5.0% for the coming financial year (2024/25), noting that the CPI of 4.2% makes up almost 85% of the increase.

Some of the key projects slated for delivery in FY25 include:

• Foreshore water park and community plaza, incorporating water play; outdoor adventure play (with junior and senior obstacles); wave lawn; scooter track; and shelter and seating. As mentioned earlier, this is heavily reliant on securing government funding
• Recreation Centre efficiency and operating cost improvement, via installation of solar panels and other efficiency improvements, helping reduce its impact on Council’s budget
• Library renewal – primarily focused on new mobile shelving and floor refurbishment – aimed to make the facility more multi-functional and able to cater for more events

As well as looking to the future, Council is also committed to maintaining current service levels, and ensuring that our day-to-day service delivery is of a high standard that meets community expectations. A program of service reviews continues to be undertaken to ensure that programs are delivered in the most efficient and effective manner.

Consultation

All residents are encouraged to have their say on the draft budget to ensure it captures the community’s needs and priorities.

This document is only in draft form, so it’s critical the final version reflects the feedback we receive over the next three weeks before being adopted by council.

There are a host of ways you can contribute, so if you’re passionate about Whyalla, be sure to get involved.

A full copy of the draft Annual Business Plan and Budget is available to view at council offices or by visiting council’s website.

Community consultation is open from Friday 26 April to Monday 20 May. Feedback can be provided by:

• Attending one of the Community Information Sessions at the Civic Building Grundel Street at 6pm on Tuesday 30 April or 6pm on Tuesday 14 May
• Completing a written submission on council’s website
• Emailing council@whyalla.sa.gov.au
• Writing to: PO Box 126 Whyalla SA 5600
• Providing a verbal submission at the May council meeting (from 5.30pm Monday 20 May)

All feedback received will be carefully considered by council prior to the adoption of the Annual Business Plan and Budget in June.

Frequently Asked Questions

Recent reports say that Council is potentially financially unsustainable, what is being done to fix this?

The information included within the ESCOSA report was not new for Council, it reinforced the internal and external conversations that have occurred over the past 12 to 18 months around the unique and challenging position that Whyalla finds itself in. The report supported the advice received from Council’s Audit and Risk Committee, which taken together led Council to make changes to its Strategic Plan and Long Term Financial Plan (LTFP). The main changes were:

• Recognising the “2-speed” environment that Council finds itself in, with a focus over the next 1 to 2 years on improving financial sustainability and improving current service delivery. Once additional revenue comes online, the plans can be reviewed and resources put towards other priorities.
• Reducing investment in New Assets by 50% over the term of the LTFP.
• Reducing employee numbers by 3.5 Full Time Equivalents by 2025/26.
• Reducing projected Rate Increases by 7.3% over the term of the LTFP.

Council expects some large increases in the rate base over the next few years, as shown by the table below:

There is still more work to be done, especially in seeking to have the Airport operating sustainably. Almost airport costs are fixed, meaning that Council cannot reduce them at times when income drops. Passenger numbers drive the vast majority of airport revenue, and are currently much lower than previously expected, due to Rex’s exist from Whyalla. As Council had to recently pass on the cost of screening costs, any increases in the passenger levy to address the deficit position need to be phased in over time, to lower the impact on costs.

Why don’t you just cut the waste out of your budget and reduce rates?

Council does not have any “waste” in its budget. There is currently no capacity in the budget and in many cases budget pressures mean that additional funding, not less, is likely required to deliver services to expected levels. As the community has previously been sensitive to cuts in services, Council is juggling these budget pressures to ensure that expected levels of service can continue to be delivered. Council is undertaking a series of service reviews, to ensure that services are being delivered in the most efficient and effective manner possible, which should hopefully generate savings over time. If in the short term the community wanted a lower rate increase, or no rate increase at all, then they would need to identify which services they wanted Council to dial back or stop.

Council have predicted CPI to be 4.2%, so why are rates going up by 5.0%?

CPI (a measure of inflation) is a relevant index to compare rate increases to, as a large portion of Council’s cost base is impacted in part by changes in CPI, and it is a reliable measure that is fairly well understood. However, as Council’s costs are also impacted by other factors, the rate increase does not align completely with CPI. These factors include:

• Council experiences costs such as wages and capital expenditure that are not part of the normal household budget, so are not captured in CPI. These costs tend to go up by more than CPI and so put upwards pressure on rate increases. For example, capital costs have gone up by over 40% over the last few years, well above CPI. In addition, Council needs to fund the increases that have been occurring in the superannuation guarantee, which increases total wage costs.
• As outlined in the Annual Business Plan, investment in New Assets has been reduced over the term of the Long Term Financial Plan, to improve Council’s financial position. However, some spend on New Assets is still required, and this needs to be funded by a small additional rate increase.
• Council is currently in a deficit position and a small additional rate increase is required to move to a surplus over the next few years.

These factors mean that an additional 0.8% increase is required above CPI. This percentage (0.8%) is down from a projected increase of 1.6% that Council was planning prior to recent changes made to the Long Term Financial Plan. Further information can be found in the Annual Business Plan document.

The rate revenue increase is 5%, but what about the impacts of the move from Site Value to Capital Value?

Individual ratepayers rates will change in 2024/25 due to two factors:

1. the change from Site Value to Capital Value (this does not result in any increase revenue for council), and
2. the increase in total rate revenue to be collected by council to cover increasing costs (5% increase).

As a result of a), approximately half of all ratepayers will see either a decrease or an increase of between 0% and 6%, while the other half will see an increase between 7% and 23%.

Residential properties will experience on average a 5.8% increase this year, with the extra 0.8% above the average rate increase for all properties to reverse over the next 2 years.

Council has put in place all the measures it can to reduce the impact of the change from Site Value to Capital Value, however acknowledges that the change will have a significant impact on some ratepayers.

I hardly use any Council services, so what do I get for my rates?

Rates are a property based tax, not a fee for service. Rates fund the services required by the community as whole, but the level of rates paid, and services received, will not match at the individual level. Rates are a tax on the value of property owned, which is considered to be a measure of wealth (and therefore capacity to pay).

The rates I will pay are higher than a similar valued property in Adelaide, why is this?

The average value of a property in Whyalla is lower than that in Adelaide, and the difference can be quite considerable depending on which Metropolitan council you are comparing with.

However, Council still needs to provide the same services that a Metropolitan council provides, and in some cases even more. The cost of providing these services is not cheaper in Whyalla just because our property values are lower, in fact it is often more expensive to provide services in regional areas.

This means that Council needs to raise the same value of rates that a comparable Metropolitan council would, but because our property values are lower, the Rate in the Dollar required to achieve this is higher, resulting in higher rates for similar valued properties.

A better measure is the average rates paid by each property, which for Whyalla is slightly below the state average.

Your wages are too high, is that the reason rates are going up?

Some people like to compare Council wages to the South Australian Municipal Salaried Officers Award, the Local Government Employees Award and/or other businesses/industries.

Councils have been required to undertake Enterprise Bargaining for many years, so this comparison to the South Australian Municipal Salaried Officers Award and Local Government Employees Award is no longer relevant with all councils and many businesses/industries having higher wages than the Award, which sets the legislative minimum.

The responsibilities and expectations of councils have changed massively over time, and the skill sets now needed in councils are often in direct competition with the private sector. Councils operate in a highly regulated environment and unlike many other businesses, we provide in excess of 35 services across many disciplines.

Whyalla City Council benchmarks itself against other ‘like councils’ and our wages sit in roughly the middle of this group, which is considered the perfect place to be.  Whyalla City Council’s organisational structure is very similar to other Councils of similar size and complexity.

Whyalla City Council’s wage increases over the last few years have been below CPI, unlike many councils who had their EBs linked to CPI movements. The increase in the superannuation increase has also put upward pressure on wage costs.

Council has committed to cutting the number of employees it has, so aren’t you just admitting that you have too many?

Over the last few years, a large number of long term ongoing issues have been dealt with, that have set Council up to be better prepared for the future. Based on the community’s vision for the city that has been articulated through the recently developed Community Plan, Council really needs additional resources to deliver on its obligations. However, Council has recognised that some staff reduction is required at the current time to assist with improving financial sustainability, and that this can be revisited as the city begins to see growth (with improved revenue streams) over the next few years.

Council needs to do more to ensure the city looks presentable.

Council is aware that service levels in the city need to meet community expectations, particularly in regard to city presentation. Areas of particular focus include the management of trees, weeds and illegal littering. Some additional budget has been allocated to this; however novel approaches will be required to make significant improvements in these areas while operating within current budget constraints.

Why did Council let Rex leave – isn’t this the reason the Airport is running at a loss?

Regional Express (Rex) made a commercial decision to cease operations to Whyalla Airport and they would be welcome to resume the route again in the future. Due to changes in legislation made by the Federal Government a number of years ago, Council was required to begin screening outgoing passengers from the Whyalla terminal. Grant funding covering the cost of this service ran out in November 2023 (originally expected to run out at the end of June 2023), meaning that Council needed to commence passing on the annual cost of approximately $1.1 million per year to the airlines servicing Whyalla.

The decision was made to pass on screening costs to all airlines equally, based on passenger numbers, despite Rex not being required by legislation to be screened. This was considered to be the fairest and most responsible decision, based on all the information available to Council at the time.

Rex leaving has impacted on overall capacity, meaning that passenger numbers have reduced since the same time last year. This does negatively impact on the financial result of the airport. However, based on issues that other airports have recently experienced with Rex, it is not guaranteed that they would have continued to service Whyalla, even if a different decision had been made.

Council has decided to cut back on New Asset investment, so why is the Foreshore Plaza still included in the plan?

Extensive community consultation was undertaken on the Foreshore Masterplan, and planning for delivery of the first stage in the form of the Foreshore Plaza is well advanced. The community was highly engaged in the recent development of the Community Plan and during this process made it clear that this project is a high priority.

The project will only proceed with external funding, with Council currently waiting on the outcome of an application under the Growing Regions Grant stream.

Council considered a number of prudential reports in late 2023 that outlined the risks and financial implications of proceeding with the project in two different forms. Council approved the grant application to proceed, and resolved that the ongoing operating costs of the new assets will be funded from interest savings from land sales to the State Government for strategic projects. This ensures that this one off opportunity results in ongoing positive benefits for all Whyalla residents.