Back in December 2021, there were strong doubts by the state government and the community, whether the Kiama Council could keep trading.

The council couldn’t produce 2020-2021 annual financial statements and there were increasing liabilities and trading losses.

There were major losses at Blue Haven (consolidated) and fear that restricted funds had been illegally used.

Council’s initial problems arose from a decision to invest $58 million into a new, large, aged care and retirement village site – Bonaira Residential Aged Care.

The capital costs blew out to $107 million with operating dollars used to fund shortfalls.

There was inadequate public reporting to the community, to the councillors and the state government.

The $60 million TCorp loan to build Blue Haven Bonaira had no proper repayment plan and had to be paid within five years.

To add to the complexity, the council had lost the accounting ‘zero point’ – it did not know where the funds from various sources had come from or gone.

After rolling forensic investigations into the councils accounts, the astounding creation in one year of new accounts for three financial years, and a new stringent Performance Improvement Order, the Kiama Council is still sailing in stormy seas but it has plugged the leaks.

Exhaustive work has been done by CEO Jane Stroud and her administration team under considerable community- and media criticism. This is evidenced by the CEO's report to the council on Thursday.

It has also been performed at a time when the council has provided services and outlays, which were once covered by the state or federal governments.

But the storm still blows. The above chart shows the staggering outlays on materials and services with no growth in user charges and fees or rates and annual charges.

Kiama Council is no orphan as these issues haunt councils across Australia. New sources of revenue must be found.

Note the unfavourable gap between expenses and revenue increased over the years with the operating performance ratio being significantly below the benchmark over the past five years.

The budget for 2024-25 prioritises funding for asset maintenance and ensures a consistent level of service provision to the community.

The Council aims to deliver $16.5 million worth of capital works in the next financial year, primarily funded by grants and reserves. But next year will be a ‘belt-tightening’ time.

Excluding capital grants and contributions and one-off sales, the council will still post a deficit of $5.4 million. But without the intervention of CEO Jane Stroud and her team, the deficit would have been ten times that.

Council’s long-term plan – and one which the new elected councillors will have to follow – is to achieve financial sustainability by the 2026/27 fiscal year.

There will be tough efficiencies over the next few years to:

• Attain a net surplus;
• Eliminate the structural loss;
• Establish a balanced budget and 
• Maintain a positive unrestricted cash balance.

There is more pain to come but nothing like the gyrations council and the community has endured in the last two years.