Newcastle council’s budget position improves on back of rate rises

GOOD BOOKS: Lord Mayor Nuatali Nelmes argues the improved budget position comes down to the hard decisions she’s made since taking over the job. RESIDENTIAL rates will again increase by 8 per cent, thanks to the 2015 special rate variation that will see rates rise by about $500 by 2020, the council’s newly released draft budget shows.
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Overall though, thebudget tells the story of acouncil whose bottom line hascontinuedto improve sinceformer general manager Phil Pearce warned in 2013 thatit faced“possible insolvency” by 2017 without a significant overhaul of the city’sfinances.

The council is budgeting for a fifth straight operating surplus of$5.1 million next financial year, witha total works program of $90 million thatincludes$1.4 million on Hunter Street “revitalisation” projectsand $2.4 million on new cycleways.

It will also start work on a five-year,$9 million East End civil works program brought forward for the Supercars race in November.

The infrastructure backlog is down to $99 million from $117 million in 2011, and the council believes it will have it under control by 2020.

But that comes with a cost. Above trend expenditure on infrastructure including asset maintenance coupled with a reduction in asset sales–from $15.1 million in 2014 to $2.5 million this year–means the council is predicting a net funding deficit of $10.9 million next financial year.

“Council’s funding position has been stabilised however a modest reduction in council’s funding position is anticipated whilst the infrastructure backlog is addressed,” the budget papers read.

Lord Mayor Nuatali Nelmes arguesthe improved budget position comes down to the hard decisions she’s made since taking over the job.

In her first meeting as Lord Mayor in 2014,Cr Nelmes supported a move to seeks a special rate variation of46.9 per cent over five years.

That was up from the increase proposed by her predecessor Jeff McCloy of about37.5 per centincreaseover five years.

She said the“proof was in the evidence of what has happened over the last couple of years”.

“The issues were always in therevenue side of budget,everything else was tinkering around the edges,” she said.

“What wason the agendabefore Iwas elected wereservice cuts, privatisation andthe closure of facilities, all coupled with a rate rise.”

But the budget papers say that while the special rate variation was important, the decisionthat has“generated the greatest sustained benefit was the organisational restructure largely completed in 2013”.

“The impacts of the implementation of this initiative were an immediate, significant and sustainable improvement in our operating position”.

That“restructure” includedjob cuts overseen by Mr McCloy and the general manager he installed, Ken Gouldthorp.

Former Lord Mayor Jeff McCloy pointed out that both Labor and the Greens had opposed the smaller rate rise that he put forward while in the job.

“I think it’s obvious what Ken [Gouldthorp] and I did against the votes of the Greens and Labor,” he said.

“The retrenchmentof staff wasn’t easy but putting the whole organisation on balance sheets and changing the senior management was crucial to running a successful operation.

“That was done of course, and the ground work has been set in motion when I left.

“We didn’t target a rate increase as big as what has happened and of courserate increase of that size helps [but]we certainly didn’t think it needed to orshould have gonethat high, there weremore efficiencies that needed to be made to drive the business.”

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