Financial warnings sound for six more councils
Six more councils have been deemed currently “potentially unsustainable” in the latest financial advice released by the state’s Essential Services Commission. See how your council measures up.
Alexandrina, Tumby Bay, Renmark Paringa, Flinders Rangers and Wudinna councils have been advised their current financial performance and future projections are potentially unsustainable.
The Adelaide City Council and District Council of Loxton Waikerie were ranked potentially unsustainable in the future.
Gawler council was also flagged as being potentially unsustainable currently, though mostly sustainable in the future.
The findings, released yesterday, is part of a mandatory four-year scheme in which the Essential Services Commission of SA (ESCOSA) give councils financial advice. The scheme was introduced during the Marshall Government’s 2021 local government reforms as a compromise to rate-capping and is rolled out in stages.
Last year’s round, which included Onkaparinga, Whyalla and more, found many have risks to their long-term financial health due to councils often not spending enough on their asset renewals which leads to increased costs for future repair and maintenance.
Underfunded asset renewals are common again in this round, with findings also showing some councils have an over-reliance on increasing rates above the forecasted inflation rate.
ESCOSA found Renmark Paringa Council’s financial future potentially unsustainable “considering the council’s planned average rate increases of 5.3 per cent per annum per property over this period, planned constraint in expense growth with no indication of how that will be achieved, and asset management plans based on inadequate data”.
InDaily asked the Renmark Paringa Council what criteria they use to determine rate increases, whether they’ll reevaluate how they calculate rates because of this report and what other revenue generation sources the council will seek out to minimise reliance on rates.
The council replied in a statement that said “Renmark Paringa Council is utilising the advice provided by ESCOSA as the basis for its annual planning process for 2025-26”.
ESCOSA gave Renmark Paringa Council 13 recommendations, including using a credible independent source for its inflation assumption and to “consider limiting any further average rate increases above inflation, to help reduce any emerging affordability risk in the community”.
Gawler Council is projecting average rates revenue growth of 4.9 per cent annually, which is higher than the projected long-term RBA-based inflation rate of 2.6 per cent.
This will get them back to an operating surplus by the financial year 2026-27, which will progressively increase until 2033-34 but will rely on the higher rates.
ESCOSA found this can create affordability risks for residential ratepayers, especially in an area where the socio-economic ranking for the community is considered below average, indicating limits on what residents can afford.
Gawler Council Mayor Karen Redman told InDaily the council “welcomes recently released ESCOSA financial sustainability advice acknowledging its efforts in addressing financial challenges and setting a course for long-term sustainability”.
“As the implementation of this strategy is still in its early stages, opportunities to showcase achieved efficiencies have yet to arise,” Redman said.
“However, council is committed to keeping the community informed and will use key publications, including the Annual Business Plan and Annual Report, to report on progress, achievements, and performance against its financial strategy.”
LGA South Australia CEO Clinton Jury said local councils “are being asked to do more than ever, despite the challenging economic climate and federal funding being nearly half of what it was 30 years ago”.
“Roles that were traditionally state and federal responsibilities – such as aged care, childcare, environmental health, climate adaptation and housing – are now being picked up by councils because there’s a local need or gap,” Jury said.
“Despite this, past research has shown South Australian councils achieve high levels of efficiency in delivering services for communities.
“Communities often look to their councils for solutions when other levels of government are absent, but taking action comes with cost and places strain on resourcing – councils manage these expectations in line with their budgets and long-term financial plan targets.”
Find your council
District Council of Loxton Waikerie
District Council of Mount Barker
This picture: Alexandrina Council
Alexandrina Council
Current financial status: unsustainable
Forecasted financial status: potentially unsustainable
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Asset value in 2023-24: $695.1 million
Rateable properties in 2022-23: 19,957
Income in 2023-24: $59.7 million
Key challenges:
- $7.1 million deficit in 2023-24 and forecasted deficits for the next four years
- Past and projected high spending on new and upgraded assets, but underspending on asset renewal and replacement
- Increasing affordability risk for ratepayers
- No reported plan for cost savings targets
Alexandrina Council CEO Andrew MacDonald said the council will take on all ESCOSA’s recommendations and has made changes to their long-term financial plan already.
“The draft LTFP consulted on late last year and reviewed by ESCOSA had projected rate rises of CPI plus 3 per cent for three successive years and then a 2 per cent sustainability rate plus CPI,” MacDonald said.
“We’ve cut that in half. In 2025/26 we are proposing CPI plus a sustainability rate rise of 1.75%, reducing to 0.75 per cent in 2026/27 and then 0.5 per cent in subsequent years.
“That has taken Alexandrina’s projected rate increases from 11% over four years to 3.75 per cent over four years.
“Collectively, Council needs to hold its breath and demonstrate restraint when it comes to expenditure, but I believe we are on the right track to becoming an economically sustainable organisation, provided expenditure continues to be managed responsibly.”
Campbelltown City Council
Current financial status: sustainable
Forecasted financial status: sustainable
Asset value in 2023-24: $988.6 million
Rateable properties in 2023-24: 25,329
Rate income in 2023-24: $47.9 million
According to the report, Campbelltown Council’s projected rate increase of 3.7 per cent is based on the annual average inflation forecast plus growth in the number of rateable properties. ESCOSA found this is broadly in line with inflation expectations and the ratepayers’ average level of income in this area suggests they can afford it.
Key challenges:
- If the forecasted growth in properties is lower than anticipated
- If expenses increase at or above forecasted inflation rates
The city of Adelaide. Photo: Tony Lewis/InDaily
City of Adelaide
Current financial status: mostly sustainable
Forecasted financial status: potentially unsustainable
Asset value in 2022-23: $1.9 billion
Rateable properties as of June 2023: 26,725
Key challenges:
- Has three significant asset renewal projects (the Adelaide Bridge, Torrens Weir and Rundle Street UPark) in a time when construction costs have escalated
- The council wants to spend more on capital than it has in the past
- Is forecast to hit its prudential borrowing limits
The Adelaide City Council’s work on its Long Term Financial Plan is ongoing and the next finance committee meeting, which will consider the ESCOSA advice, is set for next week.
City of Charles Sturt
Current financial status: sustainable
Forecasted financial status: mostly sustainable
Value of assets held in 2022-23: $1.628 billion
Rateable properties in 2022-23: 61,545
Rate income in 2022-23: $119.3 million
Key challenges:
- Lack of reporting on cost savings target outcomes
- Not updating asset valuations and depreciation projections in their long-term financial plan
Council rates in Charles Sturt are based on inflation plus additional rates the council set to incorporate funding for specific projects, such as their tree canopy targets or rising technology and infrastructure costs.
The council has projected average rate increases for its existing ratepayers of about 2.6 per cent per annum from 2024-25 to 2033-34, in line with CPI.
This picture: City of Mount Gambier
City of Mount Gambier
Current financial status: mostly sustainable
Forecasted financial status: mostly sustainable
Value of assets held in 2022-23: $399.8 million
Rateable properties in 2022-23: 14,534
Rate income in 2022-23: $24.9 million
Key challenges:
- Financial sustainability is dependent on rate growth above CPI
- Need to show constraint in its operating expenses
- Not prioritising asset renewal
- Proposing investment in new and upgraded assets will increase ongoing costs
It’s projected the average rate revenue per property will increase by 4.8 per cent per annum, almost double the RBA’s forecast of 2.6 per cent.
Unley Town Hall. This picture: Stephanie Richards/InDaily
City of Unley
Current financial status: sustainable
Forecasted financial status: sustainable
Value of infrastructure assets held in 2023-24: $782 million
Rateable properties in 2023-24: 19,399
Rate income in 2023-24: $48.9 million
Key challenges:
- If operating costs aren’t contained, they may not achieve their projected surplus
ESCOSA recommended that Unley Council publish a comprehensive version of their Long Term Financial Plan annually to improve transparency, but most of their recommendations were to continue their current strategy.
Unley Council forecast rates increasing on average by $83 per year per ratepayer until 2033-34, which is consistent with RBA rates plus their projected growth in rateable properties.
Coorong District Council
Current financial status: mostly sustainable
Forecasted financial status: mostly sustainable
Rateable properties in 2023-24: 4,639
Rate income in 2023-24: $17.2 million
Key challenges:
- Planned operating surpluses are reliant on rate rises
- Asset management plans need to be updated to reflect the current valuation, condition and expected life of the asset to improve long-term financial planning
The council project average annual rates revenue growth of 5.3 per cent until 2033-34, higher than the RBA forecast and their long-term financial plan doesn’t specify why the council is deviating from the RBA forecast.
ESCOSA recommends they consider limiting future rate rises to reduce affordability risks within the community.
This picture: Elliston District Council
District Council of Elliston
Current financial status: sustainable
Forecasted financial status: sustainable
Rateable properties in 2022-23: 1,340
Key challenges:
- The council’s strategic documents are not “sufficiently transparent” for the community to assess its financial position
- The council’s long-term financial plan doesn’t include capital spending on new and upgraded assets for the next five years
- Income growth among ratepayers might be constrained due to low agricultural yields from low rainfall in 2024
ESCOSA recommended they increase rates below inflation unless there are funds required to spend on capital and there is a community preference to limit debt.
District Council of Loxton Waikerie
Current financial status: mostly sustainable
Forecasted financial status: potentially unsustainable
Rateable properties in 2023-24: 8167
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Rate income in 2023-24: $15 million
Key challenges:
- The council need to prepare a long-term financial plan annually and undertake rigorous forecasts to manage its financial priorities
- The council needs to update its asset management plans with information about the asset conditions
- Forecast revenue relies on rates increasing above inflation for 10 years, which might not be acceptable to ratepayers
Loxton Waikerie Council projects average rate increases of 3.8 per cent per annum per property, which is above RBA forecasts and may pose an affordability risk for its community.
This picture: Mount Barker Council
District Council of Mount Barker
Current financial status: sustainable
Forecasted financial status: mostly sustainable
Rateable properties in 2022-23: 19,369
Rate income in 2022-23: $50.6 million
Value of assets in 2022-23: $749.6 million
Key challenges:
- Delays or cost increases on infrastructure projects could impact capital expenditure and mean the council doesn’t achieve its efficiency measures
- A potential misalignment between infrastructure spending and the growth of ratepayers in the area to use and fund the infrastructure
- Lack of prioritising renewing and replacing assets.
The planned average rate increases are considered appropriate at 2.5 per cent per annum per property, btu the high projected borrowing levels from the council was a risk outlined by ESCOSA.
Tumby Bay’s Jetty repair costs were a big community issue in 2024, as the jetty was closed to the public in 2022. This picture:: Tumby Bay Council
District Council of Tumby Bay
Current financial status: unsustainable
Forecasted financial status: potentially unsustainable
Rateable properties in 2022-23: 2399
Rate income in 2022-23: $5.9 million
Value of assets in 2022-23: $83.8 million
Key challenges:
- The council is at risk if they don’t constrain their expenses to grow at less than forecasted inflation
- If the community can’t afford the projected rate rises
- If the council funds structural repairs for Tumby Bay and Port Neil Jetties
Tumby Bay Council has formally resolved not to continue leasing the Tumby Bay and Port Neill jetties beyond their current lease and return them to the state government. This means they will remove financial provisions for jetty maintenance and upgrades from their long-term financial plan and asset management plans.
The council intends to increase rates at 3.6 per cent over the next 10 years, according to the report.
The council told InDaily that their projected rate growth exceeds CPI to ensure long-term financial sustainability.
“This approach allows the Council to responsibly manage essential services, maintain infrastructure, and plan for future community needs while reducing financial risk,” Council CEO Rebecca Hayes said.
“Council actively pursues available grant funding to reduce reliance on rate revenue.
“However, as a small regional council, opportunities for alternative income streams are limited, and rates remain the primary and most reliable funding source for delivering essential community services.”
Port Pirie Regional Council
Current financial status: mostly sustainable
Forecasted financial status: mostly sustainable
Value of assets held in 2023-24: $284.2 million
Rateable properties in 2023-24: 10,424
Rate income in 2023-24: $21.5 million
Key challenges:
- There’s a risk the council may not understand the value and condition of its assets
- Rates are forecast to rise higher than CPI, which could impact residents’ affordability
- Council is forecasting lower than historical rates of growing costs without showing how that will be achieved
The Council’s 2024-25 long-term financial plan projects a cumulative increase of $684 per existing ratepayer by 2033-34, which is above the RBA-based inflation forecast of an average of 2.6 per cent per annum.
ESCOSA recommends they try to minimise rate rises and continue their good practice consultation with the community on rate rises, publishing the result of their consultation.
Renmark Paringa Council
Current financial status: unsustainable
Forecasted financial status: potentially unsustainable
Value of assets held in 2022-23: $138.1 million
Rateable properties in 2022-23: 5,658
Income in 2022-23: $23.3 million
Key challenges:
- ESCOSA found the council has undeveloped financial forecasting
- Reliance on average rate rises of 5.3 per cent per annum per property
- Asset management plans don’t include data on their asset conditions
Tatiara District Council
Current financial status: sustainable
Forecasted financial status: sustainable
Value of assets held in 2022-23: $208.7 million
Rateable properties in 2022-23: 4727
Rate income in 2022-23: $11.0 million
Key challenges:
- Not updating asset management plans to include information about valuation, condition or renewal requirements
- Conservative operating performance targets leave room for the risk that small surpluses become deficits
ESCOSA found that Tatiara Council has a high cash balance of $22.8 million as of June 2024 and plans to raise rates by 2 per cent per annum per property in the next 10 years. The report recommends they review their cash reserves to prevent an intergenerational equity risk.
This picture: Flinders Ranges Council
The Flinders Ranges Council
Current financial status: unsustainable
Forecasted financial status: unsustainable
Value of assets held in 2022-23: $61.1 million
Rateable properties in 2022-23: 1696
Income in 2022-23: $6.6 million
Key challenges:
- If the council has underestimated costs, its deficits could be greater
- There is a risk the council doesn’t understand the value and condition of its assets
Over the 2024-25 to 2033-34 period the council is forecasting a rate rise of 2.7 percent, slightly above the projected long-term inflation rate.
Town of Gawler
Current financial status: potentially unsustainable
Forecasted financial status: mostly sustainable
Value of assets held in 2022-23: $393.4 million
Rateable properties in 2022-23: 12,321
Rates income in 2022-23: $27.2 million
Key challenges:
- Not disclosing or achieving plans to deliver cost savings and productivity improvements
- The pace of developing new infrastructure puts pressure on the council’s borrowing capacity and rates revenue
- Lack of prioritising asset renewal
Gawler Mayor Karen Redman told InDaily the 2025-2026 Annual Business Plan and Budget will “mark the first year of Council’s financial strategy aimed at strengthening its financial position”.
“As part of this commitment, Council has doubled asset renewal expenditure to approximately $7 million, ensuring that funds are directed towards addressing the renewal backlog based on asset condition. In addition, an ongoing program of cost and efficiency reviews will further support financial sustainability,” she said.
Wudinna District Council
Current financial status: marginally unsustainable
Forecasted financial status: potentially unsustainable
Value of assets held in 2022-23: $70.8 million
Rateable properties in 2022-23: 1069
Rate income in 2022-23: $2.44 million
Key challenges:
- Managing the community’s demand for core and non-core services.
- The remaining lifespan of assets and depreciation expenses aren’t incorporated in long-term plans
Wudinna Council currently operates in a deficit and forecasts average rate increases of 4 per cent per property per annum, above inflation rates.
ESCOSA has made eight recommendations, including ensuring long-term financial plans are updated regularly, setting savings targets for major expenditures and continuing to align rate rises with inflation while maintaining service delivery levels.
Wudinna council did not respond to InDaily’s request for comment.
