St Peters Residents Assocation Budget Response 2024-25

The St Peters Residents Association (SPRA) has, in recent years, repeatedly expressed strong concerns at the financial position of the City of Norwood Payneham & St Peters, particularly in relation to decisions made regarding the Payneham Memorial Swimming Centre (PMSC).

We again wish to express our anger at Council’s resulting debt position and the significant impact this is having on ratepayers due to the unacceptable level of rates now required to fund Council borrowings, mostly for the Swimming Centre. We implore residents to provide feedback.

SPRA believes that despite repeated warnings, the Council has fallen into the "Sunk Cost Trap”¹ by proceeding with the pool redevelopment when there was the opportunity to not proceed or to change the project scope. This has led to a sharp rise in debt, with the Net Financial Liabilities Ratio (NFLR) projected to reach 148% in the 2025-26 budget—well above the recently raised 100% upper limit. This level is highly irresponsible to a point where many would regard it as mismanagement, bordering on ineptitude.

The Association is extremely concerned at the consequent rate revenue increase that is now required to meet the borrowing costs on the accumulating debt. The Debt Servicing Ratio [The ability to repay debt obligations (interest and principal) using rate income] in the revised LTFP for 2025-26 is 7.6%, but this rises to 16.4% in 2029-30 and is still at 14.2% in 2034-35². NPSP’s debt is projected to hit $106.6m by 2028/29³, and SPRA is concerned that there will need to be even higher rate increases in future years.

The Association notes that the LTFP was based on a rate revenue increase of 8% for 2025-26, and this was also the basis of the draft budget presented to Council at the meeting of 5th May 2025. SPRA is therefore extremely disappointed that a larger rate revenue increase of 8.5% adopted by the Council is now deemed necessary to meet the long term debts.

SPRA also notes the following item of additional expenditure within the Draft Annual Business Plan & Budget
“$390,000 for the promotion and preopening of the Payneham Memorial Swimming Centre is included in the Draft Budget”

Without knowing the details of what is included in this amount, this sum is regarded as totally unacceptable in the light of the financial pressures facing Council. We fail to understand why these costs were not accounted for in the original budget for the pool, and wonder if this is required to cover an anticipated income shortfall and resulting cost blow out.

While the overall rate revenue increase proposed is 8.5%, this will equate to a substantial 9.49% residential rate increase well over the large 7.44% for the previous year. The Residential Rate increase is over three times the 3.0% CPI used in the LTFP. In many cases the rates will be higher than this due to property re-valuations and other factors and could be as much as the maximum cap of 17.0%. Some residents will face an effective rate rise of 36.89% over two years!

This is a significant and unacceptable difference, particularly when the community is facing a cost of living crisis.

A comparison of the NPSP Residential Rate increase to other metropolitan Adelaide Councils⁴ shows the excessive rates being levied by this Council, clearly illustrating that this Council has failed in its financial diligence and responsibility to ratepayers⁵. According to the LTFP this situation will not change for at least the next ten years.

SPRA also notes that last year the Residential and the Commercial Rate increases were similar. This year the Commercial Rate increase is less than one percent. There does not seem to be any reason for this difference unless the valuations on commercial premises have stalled, but this seems unlikely, particularly on The Parade. Residential ratepayers appear to be subsidising Commercial ratepayers.

The Council must address these issues and not solely rely on ratepayers to continue to be a major source of income.

Options to consider include not proceeding with, or substantially deferring, capital projects including The Parade Masterplan and the Norwood Library redevelopment, abandoning ‘vanity’ projects including the Gather Round and Tour Down Under, and deferring the Quadrennial artwork. Council should also consider selling or improving the return on ‘lazy’ and non-performing assets and look at the expenditures for self-marketing & promotion and events that do not directly benefit the local community.

The City of Norwood Payneham & St Peters must get back to the core functions of Local Government, at least until appropriate actions have been taken to remedy and restore the budget to an acceptable position.

SPRA would like to point out apparent errors and inconsistencies in the draft Annual Business Plan 2025-25.

• Page 10 says that 30.2% of people in the City of Norwood Payneham & St Peters were born overseas, while Page 11 says that 65.5% were born in Australia. Where are the other 4.3% from?
• Page 11 incorrectly says that 43.5% were born in Italy.
  We note the same error was made in 2024-25 and not corrected
• Page 11 says that 4.0% were born in England. Should this not say United Kingdom? The map shading shows the UK, although Northern Ireland should also be shaded.

The St Peters Residents Association hopes that the City of Norwood Payneham & St Peters seriously considers the points made in this submission.

End Notes

1. The Sunk Cost Trap
2. Debt Servicing Ratio LTFP Revision - Council Meeting on 5-May-2025 Agenda
3. NPSP To Hit $106m in Debt, Advertiser, 22 January 2025
4. Comparative Residential Rates - Advertiser’ 19 May 2025
   

   Norwood Payneham St Peters	9.49%
   Burnside	6.95%
   West Torrens	6.84%
   Gawler	6.00%
   Mitcham	5.67%
   Adelaide	5.60%
   Port Adelaide Enfield	5.20%
   Charles Sturt	4.85%
   Marion	4.80%
   Playford	4.54%
   Salisbury	4.20%
   Prospect	3.90%
   Unley	3.50%
   Walkerville	3.20%
   Tea Tree Gully	3.00%
   Campbelltown	2.50%
   Onkaparinga	2.49%

5. Minutes of the Meeting of Council held on 20 January 2025. Page 10. Item 9.1 Response 5.
6. Norwood, Payneham & St Peters Council plans Adelaide’s biggest rates rise, Advertiser, 22 January 2025