Councils asking for huge rates risers are sitting on million-dollar gold mines

Councils with cash reserves of up to $50m are claiming to be in dire financial straits and slugging ratepayers with huge rates rises.

Sydney councils slugging ratepayers with large rate rises still have tens of millions of dollars in the bank, despite claiming to be in dire financial straits.

The Saturday Telegraph can reveal that in the 2023/24 financial year Northern Beaches Council had more than $49.6m in unrestricted funds sitting in the kitty. Unrestricted funds refers to money available to spend that is not locked up for government grant-funded projects.

The revelation comes weeks after Northern Beaches councillors voted to apply to the Independent Pricing and Regulatory Tribunal (IPART) to raise rates by 39.6 per cent.

The council said a large rate rise was necessary due to inflationary pressures and the escalating costs of maintaining services.

Yet the amount of unrestricted cash available to the council has increased over the past three years, with there being more than $36.4m in the bank in 2021/22 and $38.9m in 2022/23.

Stuart Gold organised a protest outside Northern Beaches Council Chambers against the hefty rates increase. Picture: Supplied

Additionally, Northern Beaches gathered $246.4m in rates income in the last financial year, more than any other council with the exception of Canterbury-Bankstown. This is due to both councils being the largest in Sydney.

A Northern Beaches Council spokesman said using its cash reserves would not meet the shortfall required to secure long-term financial sustainability. The council maintains that only $29m of the $49.6m is not tied up in other projects and that spending its unrestricted reserves would create serious liquidity issues.

Northern Beaches councillor Vincent De Luca, who has opposed the rate rise, said the council’s finances had been in an adequate position until the council re-evaluated its assets last year, with the new report showing the council needed more cash to meet its infrastructure renewals.

“Northern Beaches is well within its means to meet future infrastructure needs,” he said.

“The minister and the Office of Local Government should be intervening, saying ‘we want to test your reports, your re-evaluation and your asset management plan’.”

Local Government Minister Ron Hoenig. Picture: Nikki Short

Meanwhile, North Sydney Council, which on Monday voted to apply for an 87 per cent rate rise, has more than $10.3m of unrestricted funds sitting in its coffers, an increase from around $8.8m in the previous two financial years.

North Sydney councillors have argued the rate rise is necessary to maintain the financial health of the council and implement its $150m suite of projects, including $3.1m for gender neutral facilities at North Sydney Oval.

A North Sydney Council spokesman said the North Sydney Olympic Pool project had “reduced Council’s internal reserves.”

The spokesman said in addition to its unrestricted funds, it did not have enough internally restricted funds to allow for the council to continue operating. Internally restricted funds is cash that is tied up to fund things such as staff leave and superannuation.

Ku-ring-gai Council, which is currently considering increasing rates, has an unrestricted kitty of $5.1m.

In contrast, Inner West Council has vowed not to raise rates beyond IPART’s rate peg of between 3.6 and 5.1 per cent for the next four years, despite having significantly less unrestricted funds — $7.4m — at its disposal.

North Sydney had $51.2 million in internal funds for 2023/24, while Inner West Council had $142.3 million. Northern Beaches had $88.5 million in internal funds.

A spokesman from the Office of Local Government said councils were expected to be “prudent” managers of their finances during a cost-of-living crisis.

“They need to make sure they have enough cash available to meet at least three months of expenditure, while also saving money to renew and maintain the many roads, environmental management controls, sporting fields and community halls in their areas,” the spokesman said.

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Originally published as Councils asking for huge rates risers are sitting on million-dollar gold mines