Council’s Draft Operational Plan for 2021/2 has gone on exhibition, showing an operating loss of $3.5 million and a cash surplus of $4.9m.

These are big improvements on the operational loss of $8 million and cash loss of $9.7 million suffered in 2019/20 when COVID impacts on tourism peaked. In the current year, Council is now forecasting a $6.6 million operational loss and a $13.3 million cash surplus.

While much work has gone into cost efficiencies, the budget for the coming year has had to incorporate extra expenses, such as a $2.3 million increase in depreciation costs (caused by the revaluation of roads and bringing Blue Haven Bonaira onto the books), a $600,000 increase in insurance premiums, additional borrowing costs and $250,000 for the Council election. These have contributed to total expenses increasing 8 per cent to $75.7 million.

Acting General Manager Mike Dowd is satisfied with the progress that has been made already, and says the key message of the plan is its focus on long term sustainability.

“It is not a quick fix. It is about building sustainable finances for council moving forward," he says.

“We aren’t trying to achieve a surplus within twelve months because it wouldn’t be sustainable if we did that.

“We are looking at a range of opportunities to increase our income, improve efficiencies and reduce costs. Not in isolation, but in combination.”

Mr Dowd wants to reassure the community that while Council will continue to experience losses over the next two to three years, its overall financial state is strong, with $39 million in reserves.

“Council is in a strong position to continue to provide all those high quality services and programs to our community that make us proud to live and work here in Kiama; maintenance of our parks, gardens and outdoor play spaces, provision of library, community and cultural services, collection and management of waste and improvements to our road, footpath and bicycle facilities, just to name a few,“ he says.

The budget allows for $16.9 million in capital works (down from $21.5 million this year), $3.6 million of which is for new projects. The largest item on the renewal side of the capital works program is $2 million for a major enterprise software upgrade.

On the income side, total revenue is forecast to be up 7.3 per cent to $76 million, with 35 per cent of that coming from rates and annual charges, 28 per cent from user fees and charges (including Blue Haven and the Holiday Parks) and 29 per cent from grants.

Council’s Holiday Parks at Blowhole Point, Surf Beach, Kendalls and Werri Beach are expected to make a $2.9 million net contribution to this year’s budget; and Blue Haven a net contribution of $1.5 million.

The Business Paper report for the May Council Meeting says the small cash surplus in ‘principally driven by accommodation deposits into the new Blue Haven Bonaira Aged Care Home’.

The coming year will see a number of strategic projects undertaken to enhance on-going sustainability:

• a review of Council’s income generating assets to maximise current opportunities
• a formal review into Council’s fees and charges
• working in partnership with a number of consultants regarding the financial performance of the aged care home (funded by the Department of Health)
• a strategic review into Council’s current use of recreation and open spaces
• a focus on grant opportunities with a more controlled strategic plan around Council’s operational grants to ensure all available opportunities are taken up
• continual review of Council’s depreciation expenditure
• a review of Council’s borrowing costs
• better reporting to Managers, including monthly reporting and the development of dashboards.

“Not all of these are related to trying to achieve savings in the coming year, but we want to take a pause and step back and do the strategic planning for improvements in coming years,” says Mr Dowd.

The Draft Operational Plan and Delivery Program are on exhibition until 16 June.

All documents in the business papers of the May Meeting at www.kiama.nsw.gov.au