11 March 2025
By Grahame Lynch
Trust in government is built on transparency, accountability, and responsiveness to the community. North Sydney Council’s proposed Special Rate Variation (SRV) raises fundamental questions about whether the council has demonstrated the fiscal responsibility and integrity required to justify such a significant increase. The council’s financial decisions, lack of transparency, and dismissive approach to community concerns suggest that trust in its governance is not well placed.
The proposed 87% increase is the largest ever considered by the NSW Independent Pricing and Regulatory Tribunal. It comes from a council that has attracted national attention not for its successes but for its mismanagement of the Olympic Pool remediation and a botched parking meter rollout.
Excess Revenue Collection
If approved, North Sydney Council’s SRV would generate an extra $550 million over ten years, bringing the total ratepayer contribution to $1.3 billion over the same period. The council has not justified why this increase is necessary, especially given it would result in revenues way in excess of comparable LGAs.
The common perception, fuelled by council commentary, is that the increase is needed to cover cost overruns on the Olympic Pool project. However, those overruns total around $55 million—just 10% of the additional revenue the council seeks.
The council’s claim of a $146 million infrastructure backlog has also been called into question by an independent financial reviewer, who found that $100 million of this figure resulted from an undisclosed change in asset renewal methodology. The previous method included only Category 5 assets in poor condition, while the revised approach added Category 4 assets that remain functional but are nearing renewal, regardless of any assessment of their actual condition. This adjustment inflated the backlog without explanation to ratepayers or councillors.
Surplus Contradictions
One of the biggest contradictions in North Sydney Council’s rate rise justification is its own financial reporting. The council claims it is in an unsustainable financial position, yet its December 2024 Quarterly Budget Review reported a $13.1 million operating surplus—significantly higher than the budgeted $1.6 million surplus.
The report also showed that the council’s cash and investment holdings stood at $141 million, just $3 million lower than the previous year, despite the cost overrun on the Olympic Pool redevelopment. Additionally, the council expects annual surpluses of $6.5 million to $8.5 million over the next decade, which would accumulate an additional $67 million in reserves without an SRV.
If the Council proceeds with the 87% rate increase, the primary outcome appears to be a substantial rise in its cash reserves, reaching nearly $290 million over the next decade, including investments. The Council has not justified why it needs to hold $4,000 in cash and investments per resident of the 72,000-strong LGA as a matter of urgency—particularly when many of those residents may prefer to retain that money themselves amid challenging global economic conditions and rising living costs.
Concealment of Financial Distress and Appointment of Morrison Low
One of the most serious concerns surrounding the council’s SRV application is the apparent concealment of financial distress before the September 2024 local government election. Despite later claims that the council was in an unsustainable financial position, neither councillors nor the electorate were informed of this view before the election.
A letter sent this week to the Minister for Local Government from former councillor Ian Mutton raises concerns about this lack of transparency. According to Mutton, it was only weeks after the election—in October 2024—that councillors were presented with a financial report declaring financial difficulties. He questions why this was not disclosed before the election, as voters may have made different choices at the ballot box had they been aware.
At the same time, the executive engaged consultancy Morrison Low to develop the SRV plan—while still in a caretaker period. Under standard governance principles, councils in caretaker mode are expected to avoid major financial or policy actions. Nonetheless, North Sydney Council proceeded with hiring Morrison Low just five days after the election as votes were still being counted, suggesting the decision had been made beforehand without councillor knowledge.
In the November 2024 Annual Report, the mayor claimed that cost overruns on the North Sydney Olympic Pool redevelopment had significantly affected the council’s financial position. The CEO went further, declaring that financial pressures had placed the council in “an unsustainable position.” But nothing much had changed in terms of what council staff were telling councillors in their regular reports on the pool development. In June, the actual contract cost was placed at $87.52 million, and by late October, $91.47m. Yet the financial position of the Council had apparently deteriorated markedly over the same period.
Selective and Misleading Consultation Practices
North Sydney Council’s consultation process on the SRV was widely criticised as performative rather than substantive. The engagement period ran from 29 November 2024 to 10 January 2025, spanning the Christmas–New Year holiday period when many residents were away or distracted, limiting meaningful feedback.
The council’s public survey was structured to prevent outright rejection of the rate increase. Respondents had to choose between four rate increase options, starting at 65%, without the ability to reject the increase or propose alternative financial strategies. A separate process of written comments elicited a more revealing finding: barely 1% of nearly 900 comments agreed with the proposed rate rises.
During the 10 February 2025 council meeting which approved the SRV application, 44 registered speakers sought to address the rate rise, but only two directly supported the proposal, while 25 spoke against it. Others were turned away due to limited space, and some of those who did attend said they felt dismissed by the mayor and councillors.
One resident, in a letter addressed to the mayor and sent to all ten councillors and seen by the Sun, wrote: “The many people who attended were treated very poorly. We queued to attend a meeting that we did not realise was impossible for us to get into because the room you chose to hold it in was so small. At no point was this explained to us as we patiently waited outside trying to get in. But we were shouted at by security guards.”
“When I eventually managed to squeeze into the room I was shocked by your combative, aggressive stance. I was expecting an apology for having to squeeze in and stand up, but no, I felt I was being severely reprimanded by you. This shocked me. … You must have expected a large number of people to come to such an important meeting, not to have done so again frames you as totally out of touch with your constituents.”
“This appalling process gives you no mandate at all. You were totally disinterested in anything your constituents had to say on the night of Monday 10th Feb. You should have delayed the vote and conducted a professional strategic and consultation process.”
On the night, the mayor expressed a sentiment that the opposition to the rate rise had been whipped up by the Liberal party. “The presence of the Liberal candidate for Warringah tonight reinforces that party politics is here, seeking to start community division and hijack reasonable debate on complex facts,” Mayor Baker said. However this assertion seemed at odds with the reality that some of the most passionate opposition to the proposal just moments before had come from a prominent local Labor party member as well as a woman who served on Zoe Baker’s own electoral ticket in a recent election. Many of the critical public speakers were residents, often with professional qualifications in accounting, business or governance, who did not have political affiliations. One of the most active opponents of the SRV on local social media is a self-declared Zali Steggall supporter.
Poor Project Management and Financial Accountability
One of the biggest reasons Council is facing such pushback on its proposed 87% rate rise is its mediocre track record on bringing projects to completion on time and budget. It also has a disappointing record on achieving optimal productivity from its existing assets.
- North Sydney Olympic Pool: The redevelopment costs have ballooned from $63.9 million to $92 million, and now over $122 million, with no clear explanation for the additional $30 million in costs. Although the current mayor commissioned PricewaterhouseCoopers to examine the project and make recommendations – which were largely followed – as far back as 2022, the cost and completion date have continued to blow out. The project has suffered from multiple revisions and variations, yet the council has failed to provide a transparent account of how the latest cost increases occurred.
- Ward Street Car Park: This valuable property above the Victoria Cross Metro station was estimated at over $80 million in 2016 in development value. However, it has remained in strategic limbo since 2020, as the council has failed to outline a clear plan for the site. Instead, it has been tied up in a vague “master plan” for a pedestrian plaza—an initiative that is not even included in the council’s long-term 10-year plan. Despite the site’s prime location in a mixed-use zone and its alignment with state planning priorities for urban development, the council has failed to capitalise on its economic potential.
- Parking Meter System: North Sydney Council introduced a new app-based parking system in mid-2024, replacing traditional meters. However, many users found the app difficult to navigate, leading to reduced utility. They have also been stunned by hidden fees payable to the system app operator. However, the app also allows users to state the end duration of their stay, aligning paid time with actual time used, serving to suppress actual revenues to council. Council is claiming that it believes parking revenues will decline, but this appears to be a feature of its own system design. Nevertheless, Council does have one distinction when it comes to parking: statistics last year showed it issued a fine every ten minutes!
- Unrealised Advertising Revenue: In 2022, North Sydney Council awarded a contract to JCDecaux for digital advertising panels throughout the area. However, according to a company exec, due to Council’s delays in approvals, only six of the 54 planned installations have been deployed. This lack of execution could cost the council an estimated $20 million in lost revenue over six years, a significant shortfall in potential earnings that could make a big impression in pool costs.
North Sydney Council is asking ratepayers to trust it with an unprecedented rate increase, but its track record suggests that such trust may not be warranted.
Many residents believe IPART should carefully scrutinise the council’s rate rise application. Submissions from ratepayers, still open until 24 March, are likely to make for bruising reading for council executives and the seven councillors from the Real Independents, Greens, and Labor who support the rate rise.