2024/25 Draft Annual Business Plan and Budget

Media statement - City of Burnside announces 2024/25 rate rise on 25 June 2024

The City of Burnside has announced the 2024/25 rate rise following the decision of Council at their 24 June 2024 Special Council meeting last night.

Following an intensive community consultation process the Council has adopted a 9.8 per cent rate rise as part of a three-year recovery model, with a number of operating and capital projects removed. This rate would then be followed by rate rises of between 4-7 per cent for the following two financial years, achieving a breakeven position within three years.  

Mayor Anne Monceaux said that this budget results from listening to the wishes of our community and making compromises.

“It was a very difficult but important decision to make in setting the next financial year’s rates rise, taking into account the valued and varied feedback from our community,” Mayor Monceaux said. “The Council listened and compromises were made by all Members for the benefit of the whole community,” Mayor Monceaux said.

CEO Chris Cowley said that the Council adopted a 9.8 per cent rate increase following a comprehensive community consultation process and that Council has listened to the feedback.

“I thank our ratepayers who took the time to be involved in the community consultation to understand the position that Council is in and the hard decisions that need to be made,” Mr Cowley said. 

“Two thirds of the residents that responded to the community consultation were comfortable with at least a 9.8 per cent rate rise however they also asked us to review our service levels and asset renewal intervention levels to investigate savings opportunities,” Mr Cowley said.

Mr Cowley said that Council’s decision will ensure that the many services that are valued by the community will still be delivered, while dealing with the inflationary pressures impacting on the costs of providing those services.

“In the coming year Council will focus on finding savings and reviewing our existing services and service levels,” Mr Cowley said.

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The Public Meeting was held on Wednesday 22 May 2024.

Watch the video of the presentation and follow along with the presentation slides. Both can be found to the right of this screen in the 'Public Meeting Presentation' and the 'Videos' sections.

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Over the past four years, during times of great change and uncertainty in our community, the budgets Council proposed were based on zero, 3.5 or 6.0 per cent rates rises that were consistently lower than the cost of living:

• 2020/21 zero per cent rate rise;
• 2021/22 zero per cent rate rise;
• 2022/23 3.5 per cent rate rise; and,
• 2023/24 5.8 per cent rate rise.

Council delivered our 118+ (now 122) services, and maintained community assets and infrastructure, to the standard that the residents of Burnside expect. During these years borrowings were used to fund the replacement and renewal of existing assets; not just for funding new capital assets which is generally what Council uses debt for.

Rate increases reflect the increasing costs to deliver services (for example the increasing cost of electricity, asphalt and diesel). The zero or too-low rate increases of past years resulted in Council delivering services to the community with a shortfall in funding in those years. The consequence of the past low rate rises is that Council is now in a deficit financial position.

Council can no longer sustain the use of borrowings to fund the replacement and renewal of existing assets. To be financially sustainable, Council must seek to operate on a break-even basis, otherwise services must be cut.

To return to a break-even position this year, Council is proposing a rate rise of 14 per cent in 2024/25 with between 3-4 per cent rate increases the following financial year. This path will also save $250k in interest repayments.

The alternative is a a three-year recovery model with a 9.8 per cent rate rise for the 2024/25 financial year. This rate would then be followed by rate rises of between 4-7 per cent for the following two financial years, achieving a breakeven position within three years. This path will cost $250k in interest repayments.

The cost of business

Every year Council estimates the increase in the ‘cost of business’ to deliver services to the community (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 fuel costs) are also considered.

For 2024/25, Council expects a 13.4 per cent increase in costs to maintain and deliver the existing services that Burnside residents enjoy.

Rates

Council will always need to find the balance between what residents expect Council to deliver and what is appropriate and affordable for Council to provide with the revenue available.

In setting rates each year, Council balances the increasing costs that Council must pay to deliver services and maintain infrastructure for the community; and other factors such as the current economic climate, Council’s debt profile, changes in legislation, increased utility and contract costs, and the need to manage, maintain and improve the community’s physical infrastructure assets for current and future generations.

The rating history for the City of Burnside over the past 10 years is shown below with average rate increases consistently below the LGPI for the past three financial years and for the 2024/25 year.

Average per cent increases compared to the preceding Local Government Price Index*

* the Local Government Price (LGPI) Index is a 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.

The Long Term Financial Plan 2024/25 – 2033/34

As part of our financial planning process and developing the Draft Annual Business Plan and Budget, Council reviews and updates the 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, maintained over a 10-year planning horizon.

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

This draft Long Term Financial Plan achieves a number of outcomes for the community:

• On average, a rates increase of 14 per cent for 2024/25 (excluding Vacant Land and growth on subdivisions) which is higher than the December 2023 Local Government Price Index (LGPI) of 4.8 per cent, due to Council shortfall from four years of setting rate increases below LGPI.
• An operating surplus position of $405k (excluding Subsidiaries) in 2024/25; an operating surplus of $1.2m (excluding Subsidiaries) in 2025/26 and surpluses for all remaining years.