The Sunshine Coast Council has deferred millions of dollars worth of projects for the second quarter in a row as it tries to rein in costs and avoid a budget blow-out.
About $40 million of capital works projects have been pushed back until later this financial year and next year, and more are likely to be put on the backburner early next year as the council aims for $53 million in deferrals.
The works that have been put back include the Sunshine Coast Stadium expansion, which Mayor Rosanna Natoli was unhappy about being stalled in state government’s 100-day review of 2032 Olympic venues.
The Moffat Beach seawall, the Sippy Downs library, the meeting place that forms stage two of the Mooloolaba foreshore revamp, a Caloundra transport corridor upgrade, the Caloundra Aerodrome masterplan, stormwater work in Oval Avenue and Arthur Street at Caloundra, streetscaping of Maple Street at Maleny, and upgrades of Lakewood Road and Monak Drive at Peregian Beach are among other major projects which have been put back.
The deferral target of $53 million represents almost 19 per cent of the $283 million capital works program in the council’s 2024-25 budget announced in June.
According to an amended budget adopted at last week’s ordinary meeting, the council’s operating result is likely to drop by almost $18 million to $3.8 million, well short of the optimum $70 million to $75 million it needs to cover debts and capital expenditure.
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Chief financial officer Michael Costello told the meeting a drop in developer contributions from $33.6 million to $25 million had reduced the council’s cash and affected the operating result.
“The operating impact to our cash is around $6.8 million, and there’s a minor capital impact as well, but effectively it’s a developer contribution reduction in the operating result which has reduced our cash balance,” Mr Costello said.
On the upside for the council, it is 44 per cent of the way through the capital works program for this financial year, revenue from holiday parks this year is likely to be $418,000 more than expected and the waste levy has put $700,000 into the budget.
However, the Sunshine Coast Stadium upgrade, which has not begun, will unexpectedly cost an extra $366,000 because of the expenses involved in moving tenants and events, and $289,000 needs to be found for the Caloundra library and operational funding.
Borrowing some phrasing from circa 1990 Paul Keating, Councillor Taylor Bunnag described the second budget review of the financial year as “the budget review that we kind of had to have” and had sought advice about whether the council should be “going harder”.
He expected that in the third budget review in February-March, “the decisions we’ll be making at that time will get more difficult and the runway for us to be able to make those decision will be shorter”.
Councillor Joe Natoli said he and Councillor Ted Hungerford had been concerned about the council’s high capital works programs for five years, which did not slow when costs rose.
“Instead of pulling right back, we just kept going with our foot on the accelerator and the capital works programs actually grew to my surprise and now what I’m seeing is our foot is coming off the accelerator putting on brakes,” Cr Natoli said.
“It’s an uncomfortable process that we have to go through to try and make these adjustments.”
Cr Hungerford said the council had to either slow spending or dip into cash to deal with rising costs, otherwise ratepayers would be looking at 5 per cent to 10 per cent rates increases.
“We’ve had three years now of fairly high inflation. I don’t need to explain the effect that’s had on everything through our society – people’s living expenses, day-to-day costs. Local government’s no different,” he said.
“We have services out there and the increased cost is passed on. We have capital works and the increased cost is passed on, and they get greater each year, so what you have in that situation, you either have to have deferred expenditure somewhere else or you go into your savings, like a person with a mortgage.”
Councillor Christian Dickson, whose division includes the proposed Sippy Downs library, accepted the project had to wait but emphasised to the community that it was not cancelled.
He said the council had the land, detailed design had been completed, and the council had some money for it but had missed out on a federal grant earlier this year to get it over the line.
“We’ve got the work – we are shovel ready, we need more funding, from external parties – but we’ve also got a bit of work to do with the community on the engagement,” he said.
“Other than that, I’m accepting of the deferrals, I understand why we need to do it, we can’t just have lazy money sitting around if it’s not being spent on projects. We need to consolidate.”
