Council surplus for 2021/22 budget

Devonport City Council’s draft 2021/22 Budget shows a solid result with a proposed operating surplus, modest rate increase and a strong capital works program.

Devonport Mayor Annette Rockliff said the local economy remains robust and the current forecast indicates Council’s 20/21 operating result, in an unpredictable COVID-19 environment being far better than the original estimate of a $2.2 million deficit. 

“Council has developed a responsible budget for the next financial year and is pleased to be able to estimate a net operating surplus of $458,814, ensuring long-term financial sustainability, following a year which required radical action due to the pandemic,” Cr Rockliff said.

“With a solid financial base Council can continue to provide all the important services the community expects and values, along with investing in the renewal of existing assets and the creation of new wealth-generating projects for the ongoing prosperity of the City.

“Following a rates freeze in 2020/21 as part of a community COVID-19 response package, this year’s budget is based on a modest 1.5% increase to the general rate for the average residential property, representing 0.75% for each year, well below the CPI index for the same two-year period.

“Undoubtedly, we are starting to see LIVING CITY ^[1] have a positive impact on Council’s financial position. Strong growth in the rate base, business confidence and solid commercial activity all contribute to Council’s healthy long-term financial position.

“Whilst the importance of LIVING CITY is so much more than its impact on Council finances, it should be noted that in the seven years since Council commenced LIVING CITY, Council’s general rate has increased in total by 3.62% in comparison to Hobart CPI over the same period of 11.3%.

“The 2021/22 capital expenditure budget totals over $14 million, with approximately $6 million towards new assets, primarily including the completion of the LIVING CITY Waterfront Park, new pedestrian bridge between Woodrising and Maidstone Park, continuation of the coastal pathway from Don to Leith and the commencement of the East Devonport Gateway beautification project.”

In addition to core service delivery and capital works, Cr Rockliff said Council sets specific goals or actions for each year with some highlights including, a review and update to a number of important community strategies, including the Pedestrian Strategy, Cycling Strategy, Signage Strategy and the Don Reserve Environmental Management Plan.

“A number of actions focus on further developing Council’s role as a leader in digital transformation, with plans to utilise technology to further improve customer experience, drive operational efficiencies and allow the commencement of “Smart City Initiative” pilot projects,” Cr Rockliff said.

“To reflect our growing and changing city, Council will look to develop a new public art strategy and a residential growth strategy to guide and attract future housing growth.”

Council has recently undertaken an Expression of Interest (EOI) process for the development of selected CBD sites and intends to advance suitable submissions to contract execution phase, during 2021/22, allowing site works to commence.

Cr Rockliff said the EOI is a key part of the LIVING CITY Master Plan and is designed to unlock further private investment in the Devonport CBD.

“Potential EOI sale proceeds are surplus to Council’s budget with the EOI being driven to attract appropriate investment for the long-term growth of the City, not for Council’s financial gain. The process will focus on targeted investment that Council will only consider if it adds value to our City’s commercial sector,” Cr Rockliff said.

“Council undertook a similar approach several years ago which resulted in $40 million of private investment in the waterfront hotel, currently under construction and anchoring the City’s economic COVID-19 recovery.”

Council’s General Manager, Matthew Atkins said from an operating perspective fees and charges, commercial property rent and TasWater dividends are expected to return to pre-pandemic levels. Total income is expected to be up 4.55% on the 2020/21 forecast, to $41.7 million.

He said Council expenditure is estimated at $41.2 million, resulting in a forecast net operating result of just under $0.5 million.

“The COVID-19 environment continues to impact the budget with additional cleaning, event management requirements and some venue limitations still in place,” Mr Atkins said.

“These additional costs have been offset with savings in depreciation, interest and general operating expenses.”

“Reference at times is made regarding Council’s use of debt to fund strategic community assets like the paranaple centre and Splash, but the reality is, Council’s
$47 million of debt sits on a balance sheet containing over $620 million in total assets and annual interest costs make up just 2% of Councils total expenditure.”

The 2021/22 budget contains no new borrowings with total debt estimated to reduce from current levels of $47.94 million to $46.86 million by 30 June 2022.

Cr Rockliff said with a priority on “Living Lightly on the Environment” the responsible management of waste continues to be a priority for Council.

“In preparation for some significant waste management changes in coming years, including a Food Organics Garden Organics (FOGO) collection service and the introduction of a State Government waste levy, the waste management charge has been increased by $20 per year (0.38c p/wk) per residential property,” Cr Rockliff said.

“While Council aims to provide sustainable facilities and services for the community, ultimately it is the people that make this city what it is and on behalf of Council we want to say thank you for what you contribute to make Devonport a great place to live, work and invest.”

Council’s 2021-22 Annual Plan and Budget will be presented for adoption at the ordinary Council meeting on Monday, 28 June 2021. The agenda is available via Council’s website at www.council.tas.gov.au