Kiama Council has come out swinging and plans to land a surplus, eradicate structural losses and establish a balanced budget with a cash balance in the black, by 2026-2027.

Its Long-Term Financial Plan (LTFP) wants to eliminate operating deficits, and ensure cost increases in services and borrowings, are financially sound.

The council is working to answer all of the Performance Improvement Orders (PIO), which stated amongst other matters, that there was, “evidence to suggest that Council has failed to meet its legislative responsibilities in relation to its financial management.”

Council has worked hard to clear the nine matters posed by the Minister Wendy Tuckerman in November 2022.

Even so, the Auditor wrote in the 2023-2022 council statements, that there are still doubts the council’s records stated its true financial position.

Council will be able to pay its debts as long as Blue Haven Bonaira is soon sold. To remain fiscally sustainable, it will need to sell Blue Haven Terralong.

Yet before moving to a sale, the council will examine, “options to retain and refurbish Blue Haven Terralong to conform with contemporary independent living units.”

Mayor Neil Reilly and CEO Jane Stroud.

The remaining $15m owed to TCorp is slated for August 2025 but payment depends on the sale of Bonaira.

According to the council’s Draft Delivery Program 2022-2026 and Operational Plan 2023-2024, the sale of these assets and others will improve the council's unrestricted cash balance and its working capital position by $14.7M by the end of June 2024.

There are early plans to consider subdividing Halivah Place as per the original Kiama Development Control Plan 2020.

“The zoning on (this) site allows for residential development and, as part of the preparation of this DCP, an option was created for a mix of apartments and terrace houses,” the Development Control Plan states.

The Local Government Remuneration Tribunal also awarded a 3.75 per cent salary increase to mayors and councillors from 1 July 2024. Each Kiama councillor will be paid $22,540 and the Mayor will receive $49,200 per annum.

Council must also staunch the $4M already spent on legal fees this financial year, up from $1.7M the year before.

Rates - A wicked problem 

Council provided an excellent example of a ‘wicked’ or paradoxical problem in the recent business papers.

Rate rises are not always the solution.

Setting the rates at a specific return every year (rate pegging) protects rate payers but it also restrains the council's ability to provide services.

The Council was told by the NSW Independent Pricing and Regulatory Tribunal the rate peg for 2023/24 was 4.2 per cent or approximately $800K yet CPI rose by 7 per cent.

For the same period, the Local Government (State) Award required a 4.5 per cent wage increase or about $1.6M.

Councils are exposed to many other increases in materials, contracts, insurance, electricity, fuel and other costs, all to be absorbed in the annual budget.

Excessive cuts to infrastructure expenditure creates mounting pressure on the asset renewal and maintenance, and may pass on cost to the next generation.