06/06/2026
The NRA recently made the following submission to council on their budget for the following year and long term financial plan.
Consultation Submission - NPSP Budget 2026-27 and LTFP 2026/27-2035/36
Introduction
The NRA, along with some other resident groups and individuals, have expressed deep
concerns about the financial direction of our Council for the past 2-3 years. We feel these
concerns have not been taken seriously until the Essential Services Commission undertook
their work and issued their report reaching similar conclusions.
That said, we note Council has undertaken a number of reviews to address the ESCOSA
report including the Rating Strategy Review, consideration of an added gym facility into the
Payneham pool complex and associated prudential review, revising the LTFP and
adjusting/reducing the capital works program etc. We commend the Council for taking
these actions as part of its strategy to improve the financial position over the next 10 years
and making them publicly available for community consultation.
However, it must be said the forecasts in the LTFP look good on paper, but rely on the
heroic assumption that there will be little to no new capital expenditure over the next 10
years. It is not realistic!
In considering the current Budget and LTFP we submit the following:
Budget 2026/27
Expenditure has increased by 10%, while income has increased by 6%. This imbalance is
unacceptable.
The Employee Expense category shows the highest cost increase (average of 10.5% per
annum since2022-23). Materials and Contracts also continue to rise about $1M per annum.
The result is an Operating Deficit of $2.12m which is too high and should be reduced
significantly prior to setting rates for 2026/27. Deficits of this order and a further $1.0m in
2027/28 weigh considerably on future budgets and ratepayers. Relying on the positive
forecasts in the outer years of the LTFP is notoriously unreliable.
Some suggestions include:
Recurrent Budget Expenses Cost Cutting
Review Employee Expenses and Materials and Contracts line items to deliver significant
savings of at least 1%, or some $450,000.
In private enterprise, contracts are frequently renegotiated, so council need to do similar.
“No” is not an acceptable response from the CEO & Administration.
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A further review of all operating budgets should be undertaken to find further savings.
Operating Projects Cost Cutting
Consider the real benefits to the City’s broad ratepayer base of holding the:
o Tour Down Under - $60,000 (other Councils have questioned the value)
o Gather Round - $100,000 (it is unclear whether this is football related
activities or the Food and W**e Festival or both?)
It could be argued these activities have short term benefits lasting days as opposed to
investing in expanding tree canopy, improving/expanding open space or beautifying the
Parade that have benefits lasting decades for the community.
Rates
We generally support the proposals contained in the Rating Strategy Review, however we
have some comments/suggestions on the rating proposals for 2026/27.
Average Residential Rate Increase – Tale of Two Cities
Total Residential rate revenue is budgeted to increase by 7%.
However, we are told (ABP p23) the average residential increase is only 5.45%. The reason
for this lower figure is because the calculation includes the 27% of minimum properties that
subject to no increase in their rates. Consequently, the average rate increase for the other
73% will be significantly higher than 5.45%, it must be over 7%+.
The suggestion that the average rate increase is 5.45% maybe technically correct but is
misleading to 73% of residential ratepayers. We believe this distinction should be made
transparent to ratepayers in its publicity, unless Council endorses in some form our
proposal (below) to phase-in the reduction in the proportion of minimum rated
properties.
Minimum Rate
One of the key changes proposed is to reduce the percentage of ratepayers on the
minimum rate to 25%. Legislation requires the number of properties minimum rated to no
more than 35% - NPSP is around 32%.
We recommend a more phased approach while the Council is facing large deficits over the
next 2 years. If the minimum rate was increased by 3% or $42(lower than the average
increase for the bulk of ratepayers and less than current CPI) it would generate
approximately $214,000 more rate revenue to contribute to a reduction of the deficit and
would still lower the number of ratepayers on the minimum.
This mirrors the phase in approach to the changes in the differential rates for commercial
and other non-residential ratepayers.
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General Rates
No one wants to increase rates but the consequences of suggesting the deficit will fix itself
sometime in the future is not desirable with ongoing higher debt servicing costs.
We therefore propose that all rate categories have an additional 0.5% added to the current
proposed rates in the Annual Plan. It is estimated an additional $360,000 rate revenue
would result.
Borrowing Levels
We note the very high borrowing levels at $86.3m in 2026/27 and with the Net Financial
Liability level at 153.5% which is well beyond the LGA’s maximum guidance level of 100%,
noting that all metropolitan Councils are below, and most well below, 100%.
This constrains council from being able to respond to important needs in the community
and will cause further disappointment for ratepayers.
The Long Term Financial Plan has pushed out improvement plans for almost 10 years, which
is clearly unrealistic and undesirable. not a desired outcome. It should include
improvements to valued community assets such as the Norwood Pool and Library.
Gymnasium addition to Payneham Memorial Swimming Centre
Council has proposed to add a gymnasium facility to the Payneham Pool (including
expanded car park provision) at a capital cost of $5.9m based on concept plans. The aim is
to generate operating surpluses from the gym that will partially offset the operating deficits
from the swimming facility.
We are very concerned about the financial risks associated with this project for the
following reasons:
• It is 100% funded by significant additional borrowings;
• Cost estimates are based on concept designs, not detailed design estimates risking
cost escalation;
• On current estimates the capital investment will have a payback period of 11 years,
excluding finance costs and depreciation – these costs need to be factored into the
LTFP and their inclusion further illustrates the questionable viability of this project.
• The prudential report on the project was very cautionary and highlighted many risks,
for example:
o Potential insolvency of the PMSC operator;
o High potential for capital cost blow-outs, noting recent inflation due to Iran
war;
o Insolvency of the builder or key contractors;
o Potential operating losses greater than projected due to escalating costs such
as staffing, energy, utilities etc;
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o Increased borrowing costs due to higher interest rates;
o Membership demand and revenue may be lower than projected;
o potential limited ability to increase gym fees due to user affordability or
market competition;
o competition from other private gyms, existing or new, or changing fitness
trends may impact patronage.
We advocate further public consultation (pause point) (also recommended by ESCOSA)
once detailed design costs and borrowing impacts are known so the community can be
assured the project won’t replicate the history of the Swim Centre Development.
Finally, thank you for the opportunity to put our views and hope there will be opportunities
to improve Council’s financial position in the future to provide for the betterment of the
City.
Presented by the Norwood Residents Association
