Over the past 10 years, Council has maintained a strong and stable financial position achieving an annual budget surplus of 1%. This has allowed Council to deliver a broad range of services, invest in local infrastructure, grow our economy and make Port Stephens a great place to live, work and visit.
Council’s Long Term Financial Plan (LTFP) is the tool used to effectively plan for and deliver long term sustainability. For some time, the LTFP has identified this year and next as being tough with operational costs associated with insurance, workers compensation and legislated changes in superannuation negatively impacting the budget.
Like many other businesses around the world, the last two years have also impacted Council’s budget. Income from our holiday parks, childcare centres and Newcastle Airport have been reduced while at the same time costs associated with construction and transport have significantly increased. Major storm events have increased our maintenance costs, insurance prices and diverted funds away from planned projects.
Last year, Council predicted an underlying deficit of $4.4 million however, with careful planning and a commitment to further reducing expenditure, we saw a surplus of $583,000. To achieve this, we’ve focused on improving our productivity, streamlining services, containing our costs and increasing revenue.
Despite these efforts, our financial forecast has shown that if we keep going this way, we’ll spend more on our services than we can afford unless we make real change.
We know COVID-19 isn’t over and other economic factors such as inflation continue to have flow-on effects, so it’s important we take steps now to ensure Council is financially sustainable in the long term.
This may include reducing service delivery, increasing fees and charges, a rate increase or investigating new revenue streams – it’s all on the table.
Port Stephens has one of the lowest rate bases in the region. A special rate variation is an option but if our community wants to keep rates low, we need to understand what services you’re prepared to see reduced into the future.
With a new Council in place, it’s time to look at how we do business – where can we increase our income, find savings and strike a balance between the needs of our community and Council’s funded future.
What is Council doing?
At its meeting on 26 October 2021, Council acknowledged the ongoing impacts of financial sustainability and our previous reliance on non-rate tourist income such as the Newcastle airport and holiday parks to keep rates low. They endorsed a number of key directions to improve our financial position over time, including creating a strong cash reserve to help Council avoid shocks from natural disasters or economic downturns, creating the Port Stephens Resilience Fund to future proof investment in important infrastructure, seeking grant funding and reducing operational costs.
To support this, we appointed independent experts to analyse our overall long term financial position. Independent experts Professor Dollery and Professor Drew presented a number of reports and recommendations to Councillors in March 2022.
Since then, a number of measures have been implemented or investigated including:
- We have saved $1 million by cutting back and tightening our budgets
- A one-off 10% increase to fees and charges
- Agreement to a further roll-out of paid parking
- Potential land assets for sale have been identified
- Locking in Council loans at record low-interest rates
- Identifying increase income from developer contributions
- Deferring non mandatory projects and not taking on any additional debt
Get involved in the conversation by completing the online survey or attending one of the community information sessions.