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City council braces for $20m pandemic hit

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Adelaide City Council has estimated it will lose up to $20 million in revenue by the end of this financial year as a result of COVID-19, prompting elected members to ask staff to take pay cuts after voting to trim their own wages.

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Councillors also rejected a call to freeze rates until 2022 due to tough economic conditions, with a decision yet to be made about whether rates will change in the new financial year. 

In a written response provided at last night’s nine-hour council meeting – now held online due to social distancing restrictions – staff described the impacts of the “unforeseen financial situation” as “immediate, significant and anticipated to be long-term”.  

They said that early modelling showed that in the last quarter of this financial year the council would lose between $10 to $20 million in revenue.

“Council is presently experiencing a significant reduction in income from on-street parking and expiations, business operations including UParks, Aquatic Centre, Golf Links, the property portfolio, Town Hall, park lands events, and other fees and charges,” the response said.

“Action is being taken to reduce and defer non-essential expenditure, including operational expenditure, projects and capital works.”

It comes after staff projected in February – before the coronavirus pandemic hit South Australia – that the council would exceed its borrowing limit by the first half of next year.

Councillors last night voted to take a 20 per cent cut to their allowances – currently set at $25,930 per annum – for the next three months.

The allowance cut only applies to councillor base wages – not any additional wages elected members receive to sit on boards, panels or authorities.

Councillors also asked the council’s CEO Mark Goldstone to “consider similar reductions” for his workforce.

Deputy Lord Mayor Alexander Hyde, who led the call, told InDaily this morning that the Adelaide City Council was “significantly exposed to commercial and economic downturns” as 45 per cent of its revenue came from commercial operations, which were impacted by the coronavirus.

He said an “unusually high proportion” of the council’s rates revenue also came from business owners, “who are obviously hurting quite significantly” and who were increasingly seeking rates deferrals.  

“Our hardship policy allows for the deferral of rates on a case-by-case basis, but I have a feeling that many of these deferrals are going to go on for a matter of months, so we’re going to have cash-flow issues,” he said.  

“I think the way that we come out of this situation and still function as a city and still deliver critical services is we need to trim a little bit in many different areas to make sure we’re financially sustainable.

“I thought it would be important for councillors to show leadership on this matter.”

Hyde said the intention of his motion was not to “direct” staff to take pay cuts or scale back their working hours, rather to give them the “voluntary choice” to decide not to work as much.

During the meeting, north ward councillor Phil Martin attempted to amend Hyde’s motion to limit staff pay cuts to the council’s executive and not its entire workforce, but was knocked back.  

Area councillor Anne Moran was also unsuccessful at convincing the majority of elected members to support a rate freeze for the remainder of this council term, which ends in 2022.

She argued doing so would send a “strong” and “popular” message to ratepayers that the council was “compassionate and understanding” during the COVID-19 crisis. 

But north ward councillor Mary Couros said it would be “premature” to commit the council to a rates freeze before it understood the full economic impact of the coronavirus.  

“I think we all want to support the businesses at this time but… it’s not the right time to do this right now,” she said.

 Area councillor Franz Knoll added that the council should consider freezing rates only for those who are facing hardship and “not as a blanket rule”.  

Adelaide City Councillors met virtually for last night’s nine-hour meeting.

Meanwhile, the council is embroiled in stoush at the Employment Tribunal over union claims it unlawfully ordered about 400 staff to take annual leave to cope with the fallout of COVID-19.

CEO Mark Goldstone said last night that he was prevented from discussing the matter publicly as the Employment Tribunal had requested that both the council and the Australian Workers and Services Unions respect confidentiality.

“The confidentiality requirements of the commission is in relation to the hearing and in relation to the matter until a decision has been made,” he said.

But he revealed that the hearing did discuss claims that the unions breached confidentiality by informing the media of the case.  

“I can’t really go into the details of it at this time, but I do intend to as soon as that confidentiality requirement has been lifted,” he said.

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