Hobart Lord Mayor Anna Reynolds responds to damning review of council’s financial position

Hobart Lord Mayor Anna Reynolds says the council will ensure services “can continue to be delivered” after a review of the organisation’s financial position made some concerning findings.

Anna Reynolds, Lord Mayor of Hobart. Picture: Nikki Davis-Jones

Lord Mayor Anna Reynolds says the Hobart City Council will ensure that services “continue to be delivered” after an independent audit found the organisation was in a precarious financial position.

The audit, produced in April by management consulting firm KPMG, said the council’s financial strategy and governance had “significant gaps” and were “not fit for purpose”.

It said the organisation’s increasing labour costs were creating “significant financial stress” and that if no action was taken, the council’s financial position would “continue to deteriorate”, potentially necessitating service cuts, a reduction in headcount, or significant rate hikes.

Speaking to reporters on Tuesday, Cr Reynolds said all councils across Australia were grappling with financial pressures in the wake of the Covid pandemic.

Anna Reynolds, Hobart Lord Mayor. Picture: Nikki Davis-Jones

“We ultimately need to pick up the pieces for the community and make sure that services can continue to be delivered,” she said.

The Lord Mayor noted that the council’s 2024-25 budget had approved an average rate increase of 5 per cent, which was “very much around the CPI level”.

Council staff are currently negotiating a new enterprise bargaining agreement with management and are set to embark on industrial action after being disappointed by the latest pay offer.

Confederation of Greater Hobart Business chair Edwin Johnstone predicted the “long-suffering” ratepayers and business-owners of the city would have to “bear the brunt of [the council’s] budget crisis through higher rates and service fees”.

Edwin Johnstone, Confederation of Greater Hobart Business chair. Picture: Nikki Davis-Jones

“It may be a cliche but the council needs to focus on its basic core services especially when we have a state government that is more than willing to provide grants to … community organisations,” he said.

Property Council Tasmanian executive director Rebecca Ellston said it was “unfortunate but not surprising” that the council had “failed to rein in its own spending and continue to expect its ratepayers to fund it”.

Property Council of Australia Tasmania executive director Rebecca Ellston.

“The cost structures and expenditures of the [council] are out of control,” she said.

“Proper fiscal management must start immediately otherwise they will drive businesses out of the city, as well as have a dead weight on property values and investment in our capital city.”

Hobart City Council CEO Michael Stretton told the Mercury on Tuesday that the organisation was reviewing its management structure and financial strategy in response to the KPMG report and was “carefully assessing areas where efficiencies can be achieved”.

Originally published as Hobart Lord Mayor Anna Reynolds responds to damning review of council’s financial position