2021/22 Draft Annual Business Plan and Budget

2021/22 Draft Annual Business Plan and Budget
and Draft Long Term Financial Plan 2021/22 - 2030/31

**UPDATE**

The proposed 2021/22 Draft Annual Business Plan and Budget was endorsed by Council on 22 June 2021.

Click here to view the 2021/22 Annual Business Plan and Budget.

Thank you for having your say.

BACKGROUND:

We weren't able to meet in person to talk about the draft budget due to COVID restrictions, so we've put together this presentation to share more about what is proposed for 2021/22. Watch the online presentation then ask us questions using the 'Ask Us A Question' tab at the bottom of the page.

Each year Council must adopt an Annual Business Plan and Budget that will communicate:

• the services provided by the City of Burnside.

• any proposed new initiatives and projects.

• any proposed rate increases.

Before the plan is adopted, Council is seeking the community's feedback on a Draft Annual Business Plan and Budget and a Draft Long Term Financial Plan.

Burnside Council rates freeze for a second consecutive year

The past year has seen great challenges for our community and the economy is still recovering from the effects of COVID-19.

All levels of Government have a role to play in the recovery of the economy and in the past year, Council undertook a number of initiatives to alleviate the pressure on ratepayers such as hardship relief and a freeze on staff salaries and wages.

Every year Council estimates the increase in the ‘cost of business’ (COB) to deliver services to the community in the coming year (ie construction and maintenance of roads, footpaths, drains, parks, facilities and environmental projects, staff salaries and contractor costs such as waste management and recycling). Other pressures such as cost increases above general inflation (such as waste collection costs) are also considered.

The Local Government Price Index is an historical index whereas a rates increase is for the year ahead. In the LGPI ‘basket’ are wages, heavy equipment, diesel, bitumen, and much greater proportions of power and water than the average household. While the LGPI was 0 per cent for the year to December 2020, the COB has been estimated at 2.4 per cent for the 2021/22 financial year.

Even though the cost of business has been estimated at 2.4 per cent, Council is proposing to freeze its rates which will be made possible through targeted efficiency and cost savings of $1.14m.

The highlights of the 2021/22 budget include:

• Maintaining all 118 services.
• $124k in additional projects and services*.
• An Operating Surplus of $1.0m (including the operating results of our subsidiaries), or $192k (ie a balanced budget excluding subsidiaries).
• $30.8m in new and renewed capital projects for the community based on the receipt of grant funding for projects such as the Kensington Gardens Reserve Project and the Magill Village Project*.

*Find out more detail on these projects in the DABPB document found in the Document Library above.

The Long Term Financial Plan

As part of our financial planning process and the development of the DABPB, we review and update our Long Term Financial Plan. This review helps provide a high level of certainty in our ability to meet the ongoing costs of services and capital works while ensuring our financial sustainability is maintained over a 10 year planning horizon.

This review also considers our funding approaches for asset renewals, new assets and significant upgrades including our approach to borrowings.

This Long Term Financial Plan is based on, and achieves, the following outcomes:

• Rates freeze for 2021/22 (excluding growth on subdivisions) and despite a 1.0 per cent CPI (as at December 2020) and a 2.4 per cent Cost of Business.
• An Operating Surplus of $1.0m in 2021/22 and surpluses for all remaining years.
• A budgeted cost reduction of $750k in 2021/22 and the inclusion of a further stretch savings target of $387k in materials and contracts costs.
• Total borrowings as at 30 June 2022 forecast at $21.6m (Current Forecast position for 2020/21 is $15.8m) and at the end of the 10-year period at $30.3m (based on the set level of Capital spend assumed in the Plan).
• Majority of the financial indicators within acceptable target levels throughout the 10-year period. The Asset Renewal Funding Ratio in 2021/22 is currently 199 per cent due to the Magill Road project. It is expected that as the project progresses and the split between new and renewal is firmed up, this percentage will reduce.
• Renewal and Replacement of existing assets equalling $21.3m in 2021/22 and totaling $114.4m across the 10-year period.
• New and Upgraded assets equalling $9.5m in 2021/22 and totalling $41.6m across the 10-year period.
• Capital contribution of $5.6m towards the Brownhill Keswick Creek Project across the 10-year period.