Adelaide City Council’s finances deemed ‘potentially unsustainable’ by Essential Services Commission of SA

Two integral pieces of city infrastructure need to be replaced for a combined cost of $100m, but the quotes were derived prior to Covid and could cost ratepayers more.

A combined cost of $100m for Adelaide City Council to replace the Adelaide Bridge and Torrens Weir may be significantly higher, raising the alarm of the Essential Services Commission of SA.

An ESCOSA report has detailed the quote of $60m to replace the bridge and $40m for the weir were derived prior to Covid and could be understated as a result of market, price and supply changes.

While the quotes had been escalated to reflect the 2024-25 dollar, the council advised it had ‘low to medium’ confidence in the estimates.

The Torrens Weir needs $40m of renewal works. Picture: Tom Huntley

The commission questioned the council’s ability to deliver the projects as part of its $150m asset management plan, given its high reliance on unsecured grants for the upgrades, adding there was a risk of higher borrowings and rates.

The council was one of 17 to have its finances analysed in 2024-25 by ESCOSA, which provides independent risk-based advice on investment decisions and long-term financial plans.

The Adelaide Bridge needs $60m of upgrades to preserve its future. Picture: RoyVphotography

It found the council had operated unsustainably for the past 10 years having frozen rates, which limited its capacity to raise money and led to the deferral of asset renewal and replacement.

The council’s future financial performance was deemed potentially unsustainable, but the Commission recognised it had started to improve its practices and had achieved a $8.5m operating surplus in 2023-24.

ESCOSA recommended the council identify opportunities for cost savings, including the disposal of assets to reduce debt and exposure to future liability streams.

The council was assessing the feasibility of the Rundle UPark, which has $15m allocated to it in the long-term plan to extend its useful life.

Lord Mayor Jane Lomax-Smith welcomed the report, saying it confirmed the path the council had taken this term was “the right one to secure our long-term financial sustainability”.

Lord Mayor Jane Lomax-Smith. Picture: Morgan Sette

“It reinforces the context we inherited and endorses the measures we have taken to achieve budget repair,” Dr Lomax-Smith said.

“Importantly, while it confirms that we are on the right path, the finances are still fragile and require budgetary discipline to avoid future risk.”

ESCOSA is midway through a four-year cycle of the state’s 68 councils, which also determined Alexandrina, Loxton Waikerie, Tumby Bay, Renmark Paringa and Wudinna were projected to be potentially unsustainable.

The finances of Flinders Ranges Council were currently unsustainable and projected to remain unsustainable, as it forecast nine operating deficits over the next 10 years.

The ESCOSA report found the council remained highly dependent on grants to support its services and grants were predicted to decline by quarter.

The Commission said there was merit in asking the community what they were willing to pay for services and what services the council might no longer provide, if the community does not cover the gap.

Originally published as Adelaide City Council’s finances deemed ‘potentially unsustainable’ by Essential Services Commission of SA