Hobart City Council to launch service reviews in effort to identify ‘inefficiencies’

The Hobart City Council will launch a series of sweeping service reviews later this year as it looks to identify “efficiencies” in a bid to lessen the likelihood of rate hikes in the future.

Doone Kennedy Hobart Aquatic Centre will be among the council services set to be reviewed from November this year. Picture: NIKKI DAVIS-JONES

The Hobart City Council will review its services in order to identify “inefficiencies” and alternative sources of revenue as it looks to head off future rate hikes.

In an exclusive interview with the Mercury, the council’s CEO, Michael Stretton, revealed that a series of “service reviews” would be launched in November, examining facilities such as the Doone Kennedy Hobart Aquatic Centre and the Tasmanian Travel and Information Centre.

It comes after an external review of the council’s finances, conducted by consulting firm KPMG, found that the organisation’s financial strategy and governance suffered from “significant gaps” and were not “fit for purpose”.

The Hobart City Council building on Davey Street, Hobart. Picture: MATHEW FARRELL

The report said the council’s projected financial position would “continue to deteriorate” and “may necessitate a reduction of services to the community” unless its headcount was cut or a significant increase in rates was sought.

KPMG also concluded that the council suffered from a lack of revenue “diversification” and relied too heavily on rates, parking, and fines as revenue streams.

Hobart derives 65 per cent of its budgeted revenue from rates alone.

Mr Stretton, who took on the CEO role in February, said the council’s next few years would be about capitalising on the services it delivered and “being more cost-effective”.

“We don’t think that there’s a need to cut services. We think that there’s a need to reduce our reliance on rates. So we’re looking at things like alternative revenue, we’re looking at things like how we can actually deliver services at a reduced cost by just cutting out the inefficiencies,” he said.

“By doing that you’re going to be providing best value to the community.”

The service reviews will begin on November 25, coinciding with the implementation of a new management structure at the council.

Mr Stretton stressed that while the council’s cost of delivering services was “too high”, it was not in serious financial strife and remained a “$200m a year organisation”.

Hobart City Council CEO Michael Stretton. Picture: Nikki Davis-Jones

“We do understand that our rates are quite high and we understand what’s happening in the economy. And certainly we’re working to keep rates as low as we can,” he said.

“And that’s why I think looking at alternative forms of revenue is [important] … because you can’t just keep expecting the ratepayers to have significantly higher rate increases every year.”

The council’s 2024-25 budget imposed a 5 per cent rate hike and forecast an underlying deficit of $1.2m.

The CEO said he was not seeking to outsource “major parts of council”.

“In some ways, it’s better to do it with your own people, if you’re able to. And so that’s more our focus than the opposite would be, where we can actually do things, probably more cost-effectively and efficiently, ourselves,” he said.

The council has an asset portfolio worth $3.2bn and Mr Stretton believes there are opportunities for revenue-raising in leasing properties and selling advertising space on council infrastructure such as bus stops.

“It’s around how we’re actually getting a better return and getting the most out of that $3.2bn worth of assets. I think, at times, we probably haven’t had that commercial edge around those sorts of arrangements,” he said.