Caleb Bond: Adelaide City Council is in trouble if it doesn’t expand

Adelaide City Council is in financial trouble. Amalgamating metro councils into one group would save a lot of money, writes Caleb Bond.

Adelaide Town Hall. Picture: Tom Huntley

Adelaide City Council is having a fire sale of its assets because it’s in a spot of financial bother.

By a spot, I mean $100m worth of losses. It’s no great surprise, really. The council has been spending money like a drunken sailor in recent years on upgrades of Rundle Mall, Topham Mall, Gawler Place and other locations.

The Rundle Mall redo five years ago cost $30m, with all the trees being ripped out. Then the council pulled up brand new pavers to lay down electrical cabling for some LED lights.

Sounds like a council project if ever I heard one. But it gets better.

Keep in mind that Rundle Mall is 530m long. Gawler Place is less than half that length – yet it cost the ACC more than $17m to upgrade. That was after a $10m blowout for some stormwater pipes.

I didn’t think there was anything particularly wrong with Gawler Place before. But it’s only the council’s money, so who cares?

At least, that’s what they’d call it.

Of course, it’s not theirs. It’s ratepayers’ money. Our money.

The Gawler Place upgrade.

And despite all this spending, they don’t seem to have allocated any of their budget to make King William Street look like a half-decent place, as I noted on this page last week.

I understand that we want to have a beautiful city, but we must also measure the costs – particularly when they continually blow out.

Why has the council made losses for four years straight? Why is the council, according to its own staff, at risk of becoming “financially unviable”?

The problem that the ACC really faces is that it’s a piddly little council that only looks after a capital city that, for a large part of last year, was abandoned by the people who would otherwise visit it daily.

Many of those people still haven’t returned to the CBD because they – and their employers – have discovered that it is possible to work effectively from home.

If that means businesses can save money by cutting leases in the CBD because they no longer need offices, you can bet they’ll start doing it.

That will ultimately mean reduced occupancy, which will cut the rental value of commercial property – the council’s biggest source of income.

The council levies its rates based on the potential rental value of property. So, if rental values drop, so will rate revenue.

Caleb Bond says one council for metro Adelaide would save ratepayers money. Picture: Bianca De Marchi

At the same time, fewer people will park in council-owned carparks, which means even less revenue.

The council’s losses as a result of coronavirus are estimated at about $20m.

That then means fewer customers for all the lunch joints and various other businesses in the city, so the losses keep rolling on until something gives and businesses close down.

It’s not hard to see where this ends up.

This is a problem that every capital city in the country will face. But it will be particularly difficult for a city such as Adelaide, whose council’s main sources of income are rates and carparks.

We need to seriously consider expanding the ACC to take in metropolitan Adelaide, just like Brisbane’s council, which has a population of 1.25 million.

As a result, Brisbane’s reliance on rates is far less.

It takes about 38 per cent of the revenue from rates – compared to between 70 to 80 per cent, on average, across Adelaide councils.

It means everyone gets equal provision of services – and it gives the council the buying power to make investments and find other sources of income.

Brisbane City Council, for instance, runs the bus network. And it employs fewer executives than Adelaide’s combined councils.

Brisbane councillors are essentially like politicians, working full-time and looking after their constituencies.

Modelling commissioned by the Property Council in 2016 found amalgamating Adelaide’s metro councils into one entity could deliver $500m worth of benefit to ratepayers.

That is more relevant now than ever. And in Adelaide City Council’s case, it might just be the only way to ensure its future viability.