Cr Henry Davis says Adelaide City Council should lift rates by 30 per cent as borrowings grow to $315m in 2032/33

Adelaide City Council will continue to fund commercial events, homelessness and heritage incentives, but one councillor says it needs to ‘rip the band aid off’.

Adelaide City Council has thrown out a proposal to cut funding from homelessness, heritage and events, in a bid for its rates increase to be dropped from 6.9 to 5.9 per cent.

However, councillor Henry Davis is against the rate cut and has instead suggested it be increased by 30 per cent in 2024/25 as the “city is in trouble”.

At Tuesday night’s finance and governance committee meeting, councillors rejected $1.76m in identified savings from its external grant, sponsorship and strategic partnership programs.

Council staff were previously asked by Cr Phil Martin to find potential savings from the program’s $7.6m budget to lower rates, which sparked backlash from the events community.

Adelaide City Council candidate and former Burnside councillor Henry Davis. Picture: Supplied

A council report recommended cuts to 19 programs, including $148,000 from community impact grants, $256,000 from its heritage incentive scheme and $79,000 for the homelessness Adelaide Zero Project.

Acting chief executive Michael Sedgman told the meeting any grants programs that had pre-funding commitments would not be affected.

Staff also recommended the council’s subsidiary, Adelaide Economic Development Agency, have $500,000 removed from its commercial events and sponsorship program.

AEDA chair Nikki Govan told the meeting the board was “incredibly disappointed” at the proposed cuts, which would hinder its ability to drive economic growth in the city.

“We feel that is a direct take from our ability to achieve and deliver on the charter in which we were formed and that is to drive economic growth in this city,” Ms Govan said.

Cr Davis told the meeting the request to find savings from one area of its operations was a “waste of time” and it should have been more broad given “we’re looking at huge debt”.

He referred to the council’s long term financial plan which outlined borrowings were forecast to grow from $53m in 2024/25 to $315m in 2032/33.

“We need to look at a pathway of increasing revenue or cutting expenses to massively reduce that debt,” he said.

He told The Advertiser the council would need to increase rates by 30 per cent in 2024/25 and by CPI thereafter to achieve a neutral position in 2032/33.

“They (the council) can put this off year by year, but at some point there will be a point that they have to pay the piper and we should rip the bandaid off now,” he said.

Chief operating officer Anthony Spartalis said the current LTFP included increased funding required over the next 10 years to deliver asset management plans.

Mr Spartalis said all LTFP assumptions, specially around revenue and capital expenditure, would be part of the discussions for a revised plan in coming months.

“The $315m figure was heavily caveated in the report and highlighted the need for decisions to manage the level of debt over the next 10 years,” he said.

“There are a range of assumptions and decisions required between now and 10 years’ time which could impact debt levels. The current scenario depicted is but one possible outcome of many, subject to assumptions adopted and decisions made. As such, any estimate of rate increases is speculative at best, until the next iteration of the LTFP can be developed.”

Mr Sedgman told the meeting a “significantly revised” LTFP would be discussed and adopted later this year.

Councillors voted to retain funding for AEDA, heritage and homelessness and requested administration identify other operational savings to increase rates by 5.9 per cent.

Originally published as Cr Henry Davis says Adelaide City Council should lift rates by 30 per cent as borrowings grow to $315m in 2032/33