Coronavirus: which NSW councils are in deficit as hundreds of millions in lost income revealed
Councils across NSW are facing economic disaster in the wake of the COVID-19 financial crisis, as local government areas report hundreds of millions in lost revenue. SEE HOW YOUR COUNCIL IS IMPACTED.
Blacktown
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- Central Coast Council’s huge property portfolio revealed
- 18,000 jobs on the chopping block in Sydney’s west
Councils across NSW are haemorrhaging hundreds of millions of dollars in lost cash in the wake of the COVID-19 financial crisis, with local government budgets forecasting more than $143.3 million in deficits.
The pandemic has resulted in large budget blowouts for major councils across NSW — with Central Coast, Parramatta, Northern Beaches and North Sydney topping the list of budgets diving into the red.
Strong financial management from most councils across the state — through the sale of assets and reduction of infrastructure spending — has resulted in “conservative figures” on local government deficits reaching $143 million by the end of the next financial year.
However, concerns have been raised about the “extreme loss of income” sending once viable councils to the brink.
NewsLocal understands the City of Sydney Council was one of the hardest hit by the economic crisis, with a projected loss of income reaching $75 million in the six months from March this year.
Despite the major loss of income — and lifeline funding injected into small business within the CBD — City of Sydney recorded a $105.7 million surplus through the projected sale of space above heritage properties like the Queen Victoria Building, which bolstered the council’s bottom line.
Central Coast Council, currently in administration over “devastating financial mismanagement”, revealed the total loss of income in response to COVID-19 has been $50 million, forecasting a massive $89 million deficit in the council’s budget.
However, the financial stability of council was also previously rocked by forced amalgamations between Wyong and Gosford councils — resulting in a total loss income exceeding $150 million.
“The impacts of COVID-19 is one of the items council is investigating in relation to our financial situation,” a spokeswoman said. “Both the timing of rate collections and the impact of reduced income has had a material impact on working capital in the order of $50 million.”
Parramatta Mayor Bob Dwyer revealed the council was budgeting for a $13.3 million deficit in the wake of the coronavirus, attributing the dive to major loss of revenue.
“While City of Parramatta Council has taken a significant financial hit during COVID-19, we remain committed to helping our great City emerge from this pandemic stronger and more resilient than ever,” Cr Dwyer said.
“We have worked hard to support our residents, local businesses and the arts sector, including through our $3 million COVID-19 Community Resilience and Economic Relief Package, funding grants, online educational and cultural programming, and by fast-tracking shovel-ready projects to stimulate the local economy.”
On the Northern Beaches, chief executive Ray Brownlee told NewsLocal the financial impact of COVID-19 is “anticipated to be $12.6 million in 2020/21”.
A total of $6.9 million worth of support packages were issued to local businesses and rate relief, while a further $5.7 million was lost in the closure of services.
“The overall expected result is an operating deficit of $7 million before capital grants and contributions,” Mr Brownlee said. “Council has adjusted its expenditure program to respond to the COVID-19 crisis but retains a strong and sustainable long-term position.”
While North Sydney Council revealed it took a $12.8 million dive in revenue, resulting in a $5.1 million deficit for the next financial year.
A council spokeswoman told NewsLocal the deficit was the result of a “number of factors”.
“COVID-19 was a significant contributor with general revenue from council facilities and rental income down $4M and additional costs incurred in regulatory services and facility management associated with COVID-19,” she said.
Western Sydney councils including Blacktown, Parramatta, The Hills and Cumberland — collectively witnessing a massive $42 million in lost revenue — will be the subject of a new COVID-19 response research study by Western Sydney University,
The study will work to identify the future impacts of the pandemic on council’s bottom line, while examine eight socio-economic influencers of the Central City district’s economy over the next decade in an effort to develop to framework for future policy and regulation.
Local Government NSW president, Linda Scott, said she hoped to see council rescue packages as part of next month’s state budget in an effort to prevent further budget nosedives.
“NSW has led the nation in managing the economic and social impacts of consequential crises – drought, bushfires, floods, and the COVID-9 pandemic — and the 2020-21 State Budget is a prime opportunity to further cement this leadership,” Ms Scott told NewsLocal.
“Now more than ever we need to pull together to properly fund the local delivery of infrastructure and services, to protect and create jobs and keep money moving, preventing the pandemic from wreaking further economic havoc on NSW.”
Ms Scott said investment in water infrastructure, affordable housing, waste and recycling management were “innovative ways to generate jobs, support businesses and simultaneously deliver public good”.
“There is no doubt that there are tough days ahead, but by working together across all levels of government we can help drive a locally-led recovery and build a better, stronger NSW,” she said.
SEE HOW YOUR COUNCIL HAS WEATHERED THE COVID-19 FINANCIAL STORM HERE.
MOSMAN
A Mosman Council spokeswoman said council recorded an operating deficit of $169,000, “reflecting careful management of council’s finances”.
CUMBERLAND
Cumberland Council saw a $3.3 million nosedive in revenue since the start of the coronavirus pandemic, resulting in a $400,000 deficits.
“We have been actively managing our expenses and workforce in order to deal with these challenges,” a council spokeswoman said.
“Local government generally has a financial affordability crisis due to rates capping of our income.”
“We are currently experiencing a small deficit … and we forecast a budget surplus of $560,000 in 2020/21.”
CESSNOCK
Cessnock Council is reporting a $203,000 deficit in the last financial year.
A spokesman said council remains in a “sustainable position despite the adverse impacts on revenue and Council’s cash position”.
CANADA BAY
The “strong financial position” of Canada Bay council has been impacted by COVID-19, with a $2.8 million revenue loss since the start of the pandemic.
“An operating deficit result for 2019/20 was necessary to ensure we continued to support our community through the pandemic, to maintain our existing services and to continue our asset maintenance and renewal at current levels,” a council spokesman said.
“Overall, Council remains in a solid financial position as evidenced by our achieving all the Key Performance Indicator benchmarks used by the Office of Local Government to gauge financial sustainability and operational performance.”
Council reported a $1.7 million deficit in the last financial year, with estimates projecting a $1.9m deficit in 2020/21.
HORNSBY
Hornsby Council has weathered the COVID-19 financial crisis well, with a $1.6 million surplus forecast for the next financial year.
“Council remains in a strong and stable financial position despite the COVID-19 pandemic,” a spokeswoman told NewsLocal.
WILLOUGHBY
Willoughby Council is forecasting a “modest surplus”, despite the financial threat of the pandemic.
A spokeswoman said council has been “diligent in the management of its finances in light of the impact of COVID-19”.
“This result has been achieved despite multimillion-dollar revenue losses arising from COVID-19 and providing $2.3 million in fee and rental relief to businesses, community and sporting groups, with another $545,000 earmarked for additional business support,” the representative said.
LIVERPOOL
Liverpool Council representatives said the COVID-19 financial crisis has had an impact on fees and charges revenue streams, “however it has not been significant enough to cause stress on Council’s financial position”.
Council is forecasting a $5.6 million deficit in the next financial year.
THE HILLS
The Hills Shire Council saw a total loss of revenue around $1.4 million since the start of the COVID-19 pandemic, however maintained services “close to normal”.
A council spokeswoman said there was no net impact on the financial position, as it was “able to manage its budget position through co-operation with our staff to take leave with or without pay, redeploy to different roles, a freeze on recruitment and identifying savings through activities such as events that could not proceed during COVID-19”.
SHELLHARBOUR
The coronavirus pandemic didn’t impact the bottom line of Shellharbour, with chief executive Carey McIntyre, forecasting a “very sustainable” council position despite a $1 million drop in revenue.
”(Council’s) long term position is strong despite the impacts of COVID-19 on Council’s budget,” the chief executive said.
“Council’s draft results for the 2019/20 year reflect an operating surplus — the current forecast for the 2020/21 year is also a surplus.
“The impacts of COVID have been considered and estimated, are being monitored and reported quarterly. While they may be significant, sustainable adjustments to the current budget will be made if required.”
SUTHERLAND
A whopping $63,8 million surplus has been recorded at Sutherland Council, despite “considerable economic impact of the COVID-19 pandemic”.
A council spokesman said it maintained financial results “well above local government industry benchmarks throughout the pandemic”.
“Through continued sound financial management Council has successfully achieved a net operating surplus of $63.8m,” he said.
SHOALHAVEN
A massive $8,9 million in rates were lost to Shoalhaven Council by October this year, after more than 8000 property owners defaulted on payments.
A Council representative said it wouldn’t charge interest on overdue rates until January 1,
2021.
FAIRFIELD
A Fairfield Council representative said it has “worked hard to stay financially sustainable and continue to deliver services while maintaining the lowest rates compared to neighbouring councils”.
“COVID has impacted all councils but Fairfield remains in a strong position given we have very little debt,” the spokeswoman said.
“Given our strong position, Fairfield Council amended its rates and charges to reduce financial burden on residents.
“This means 95 per cent of residents will pay less in rates and charges compared to the prior year — Fairfield was one of the only Councils to do this.”
The COVID-19 pandemic will result in a $3 million deficit for council in the next financial year.
CAMPBELLTOWN
Campbelltown Council director Phu Nguyen said council has worked the manage the economic impact of the pandemic.
“While some revenue has been moderately impacted, we are forecasting a balanced overall cash budget for this year and expect to meet our pre-COVID forecast of a small $2.8 million operating deficit,” he said.
CANTERBURY BANKSTOWN
Canterbury Bankstown was hit with a massive $18 million drop in income in response to the COVID-19 pandemic.
“This has been an extraordinary year not only for our Council but for most businesses across the country,” a council spokesman said.
“Our revenues have been affected and the full costs of dealing with the pandemic are still unknown.”
The representative said the loss of income will result in a reduction of capital works and infrastructure cash reserves.
STRATHFIELD
Strathfield Council is expecting a $7.6 million surplus in the next financial year, despite the economic threat of COVID-19.
“Inclusive of grants and contributions, and subject to audit, Strathfield expects to achieve a similar net operating surplus for the 2019/20 Financial Year as in the previous year,” a council spokesman said.
BLACKTOWN
A whopping $24 million has been recorded in lost income for Blacktown City Council in response to the COVID-19 pandemic.
“Council estimates the pandemic is costing Council an estimated $24 million dollars in the 18-months to October next year through loss of revenue, extra maintenance costs and with little or no help from the Federal or State Governments,” a council spokesman said.
DUBBO
Dubbo Regional Council is forecasting a $4.23 million surplus in the next financial year, thanks to a massive $2.5 billion asset management program.
“While we are still finalising our September 2020 quarterly review, Dubbo Regional Council remains in surplus,” Chief executive Michael McMahon told NewsLocal.
NEWCASTLE
Newcastle Council has revealed it lost a whopping $17.8 million by the end of the last financial year.
Community support programs and a major drop in revenue will result in an $8.33 million deficit in last year’s budget.
Newcastle Council chief executive Jeremy Bath said long-term financial sustainability “remained sound”.
“Just like the majority of businesses and organisations in our city and region, our income has been significantly affected by COVID-19,” Mr Bath said.
“However, because of the prudent management of the City’s finances in recent years, we have the ability to get through this economic downturn, all be it with a budget deficit this year.”
LAKE MACQUARIE
Lake Macquarie residents were told this week council could be set to be hit with a $30 million deficit over the next three years, recording a $11.5 million deficit in the last financial year.
HAWKESBURY
Hawkesbury Council is forecasting a $270,000 surplus in the next financial year, with a spokeswoman revealing the council operating result will see a $1.2 million surplus.
WAVERLY
Financial statements for Waverly Council show a net operating result of a $2.32m surplus for the last financial year.
A council spokeswoman said the COVID-19 pandemic had a “material impact on Council’s operations, particularly in terms of reduced revenue”.
“Our financial position is satisfactory and we have a strong balance sheet and cash
reserves to help us weather the pandemic,” the spokeswoman said. “In April 2020, Council endorsed a $1 million per-month small business support package to support the business community during the pandemic.
“Additionally, a number of facilities, services and events weresignificantly affected during the period of pandemic restrictions, and this resulted in reduced revenues of approximately $8.2 million compared to original budget. Around $938k of COVID-19 related expenditure was incurred by Council to protect staff and the community.”