26 October 2023
By Hannah Wilcox
North Sydney Council’s net operating surplus surged to $24.5 million last financial year, which was $14.5 million more than the $8.0 million surplus forecast in the original budget.
The surplus was fuelled by receipt of income $25.9 million more than forecast in the original budget.
Developer contributions were $13.5 million more than original budget due to increased development and larger projects such as those at 2-4 Blue St and 1-5 William St.
Parking station fees, parking infringement fines and parking meter fees brought in an additional $4.7 million more than originally budgeted.
Council’s explanation for this was ‘increased activity compared to previous years’ due to lockdown and pandemic-related restrictions.
There was also an extra $4.06 million from capital contributions, $2.m in interest and investment revenue and $767,000 from early receipt of monies from the 23/24 Financial Assistance Grant.
Expenses from continuing operations were $9.5 million more than forecast in the original budget.
Depreciation and amortisation was the highest category, varying $3.2 million over budget due to ongoing construction cost inflation, found retaining walls, found fences, and the recognition of community housing assets have all contributed to an increased depreciation expense.
This was followed by revaluation decrement to investment properties costing $2.7 million over budget, contract employment costing $1.4 million over budget and net losses on the disposal of assets costing $706,000 over budget. The net result was a $2.3 million loss.
Legal fees cost Council $2 million over the forecasted budget amount.
‘During the year, however, unexpectedly high expenses were funded by higher-than-expected parking related income and interest income,’ the budget statement read. ‘Council will need to address the increased level of depreciation and risk of higher-than-expected legal fees in its strategic documents.’
Councillors have raised concerns about the legal costs.
“I’m increasingly concerned about this council’s propensity to send things off to the Land and Environment Court,” Councillor Jilly Gibson said at a Monday meeting.
“Our residents certainly do expect us to preserve our history and heritage. And that’s why I support a municipality-wide heritage study so that we stop wasting money in the Land and Environment Court on interim heritage orders.”
There was an additional $1.7 million in payouts for key management personnel over that period, Gibson added. “That’s a lot of money, Councillors.”
“I think some of our residents might think that that money could have been spent better elsewhere.”
Councillor Ian Mutton agreed he was concerned about the ‘quantity” of legal costs’ but argued it was important council could ‘defend its various positions in court’.
“And regrettably, that can’t be done cheaply. If we’re going to take exception to the amount we spend on legal things, the time to do that is during the regular briefing on what we’re spending and on what matters for litigating,” he said.
“What we want our executive to do is implement our decisions, and if that involves spending money on legal fees, so be it.”
The costs were driven by two pieces of major litigation, Mayor Zoe Baker noted.
“The first is the MLC building, which follows decades of council policy around that building and protecting the North Sydney CBD,” the Mayor said.
“And the second, was the cost of the Noakes floating dry dock development appeal, which was a nine-day hearing in the Land and Environment Court in which Council was ultimately successful.”
“Both of those, in my view, are important pieces of public interest litigation. And that is the purpose of our legal budget. That is what our community overwhelmingly demands of us,” she added.
Another prominent discussion topic was the redevelopment of North Sydney Olympic Pool, which was named as a major draw on internal reserves – on top of a $31 million loan that was initially taken out to fund the project.
The loan’s current 4.24 percent interest rate was labelled an ‘incredible result’ by Councillor James Spenceley.
“This has been a really tough, tough year. This council has taken on a huge debt down at the pool, and we are continuing to have to make really difficult decisions about what we deliver for our community at the moment,” Councillor MaryAnn Beregi said.
“We have a big hole that needs filling, and that isn’t going away anytime soon. We are also going to have to really look forward to how the council operates as things tighten again. This council is an incredibly fortunate council. It is in a strong financial position. It has a fantastically asset-rich portfolio, but it is the day-to-day numbers and the day-to-day money that we need to provide the services. So I’d like to congratulate the council staff and the decisions that this council has had to make, which have been really tough decisions.”
“There are things that this council would have loved to have delivered. Having come in on a very short term, I’m sure everyone had their list of things, but we have been hamstrung by a 31 million debt and the continual funding of the North Sydney pool, which this council has taken on board, accepted responsibility for, and is moving forward.”