Adelaide City Council told it must increase rates and fees, cut services, freeze spending to avoid $215m debt

Adelaide City Council could fall into at least $215m debt if it doesn’t hike rates and fees, and cut costs – as it grapples with finding money for $175m in urgent upgrades.

Adelaide City Council’s bleak financial position has been laid bare, with ratepayers facing cuts to services, higher rates, no new capital works projects and having to borrow to fix major assets.

Elected members have been told that government funding or loans will be needed for essential work required on the Torrens Weir, King William Rd bridge and bus routes along Currie and Grenfell streets over the next decade.

The council is facing a $39.2m operating deficit this year, with its poor financial position before the COVID-19 pandemic further weakened by the subsequent loss of revenue during the four-month lockdown of the Adelaide CBD.

Councillors have been warned the council’s total debt will exceed $215m within 10 years if action is not taken to increase rates, cut services, freeze capital works projects and reduce costs such as salaries and wages.

They also have been asked to consider the introduction of separate levies on residential and commercial ratepayers to fund projects such as a new Adelaide Aquatic Centre.

Work already is well advanced on an organisational restructure that will result in the loss of 400 full-time, casual and temporary positions to deliver $20m in operational savings demanded this financial year by the dominant Team Adelaide faction.

Despite the cuts, four new positions were advertised this week as part of an overhaul of the council’s senior management team, which has seen the number of senior executives reduced to six.

An Adelaide City Council meeting at the Adelaide Town Hall. Picture: Colin James

The Torrens Weir needs to be replaced, costing about $25m. Picture: Colin James

Spending on infrastructure also is under review, with a staff report presented to a recent workshop saying the council’s existing long-term financial plan “requires borrowings to fund major renewals by the end of the decade”.

The report said the council owned $2b worth of assets “that must be managed, maintained and monitored for their useful life”.

“The Torrens Lake and Weir are part of this asset category and the weir is approaching end of life and will likely need replacement,” it said.

“Adelaide Bridge (King William Rd) is approaching end of life and will likely require renewal or replacement within the next five to 10 years.

“The Currie-Grenfell road corridor is approaching end of life and will be requiring significant renewal investment in the next five years.”

The report estimated the cost of replacing the Torrens Weir at $35m while $60m needed to be spent on the King William Rd bridge and another $80m on Currie and Grenfell streets.

Other infrastructure projects requiring funding included ageing underground assets such as street lighting cables, stormwater drains and traffic signal wiring.

Finance associate director Sonjoy Ghosh told the workshop external funding such as government grants or borrowings would be needed for major projects.

Mr Ghosh said the council would be able to return to operating surpluses if it generated more revenue from rates, fees, charges and restricted infrastructure spending to maintaining existing assets.

“We are looking at holding our spending on infrastructure at $20m,” he said.

“We are working on the assumption that there will be no new or significant upgrades happening apart from the Central Market Arcade upgrade.

“Council will have to borrow to fund any (asset) renewals and we have taken into account things like the bridge and the weir.”

Lord Mayor Sandy Verschoor said she was “looking forward” to discussions with the State Government about the future of the Currie-Grenfell corridor, Adelaide Bridge and Torrens Weir.

The bus route down Grenfell and Currie streets in the CBD has a high level of public transport. Picture: Colin James

“As the City of Adelaide looks to recover from the pandemic our focus can sometimes be on the short-term,” she said.

“As a capital city council it is vital that we take a long-term view on the strategic financial provisions for the renewal and replacement of critical infrastructure for the city.”

Ms Verschoor said the council had endorsed a new treasury policy to ensure its borrowings remained within prudential limits.

“We have developed a budget that balances reduced revenue with providing targeted assistance and ongoing services to our community,” she said.

Ms Verschoor said she acknowledged expert advice received by the council about its future financial direction “and that we need to show strong financial discipline as we chart our recovery from COVID-19”.

“It is not going to be an easy road ahead but I firmly believe council will make the right decisions to benefit everyone who visits, works and plays in the city now and in the future,” he said.

Elected members will continue discussing the long-term financial plan with staff over the next few months.

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