Acknowledgement of Country Bayside Council acknowledges the Bidjigal Clan, the traditional owners of the land on which we meet and work and acknowledges the Gadigal people of the Eora Nation. Bayside Council pays respects to Elders past and present.
Introduction
The Long-Term Financial Plan (LTFP) is an important part of Council’s strategic planning process. This is the point where long-term community aspirations and goals are tested against financial realities
The strategies from the LTFP will guide the delivery of actions by Council to achieve the following outcomes:
Council needs to resolve the ‘Income Gap’ that is reflected in this LTFP. This issue is not unique to Bayside and is the result of the continuous impact of the Rate Peg regime in NSW since 1977.
While Council has been investing significantly in new assets since being formed in September 2016, these have mainly been funded by external sources, including developer contributions and grants and there is no funding source to provide for the increased maintenance, operating and future renewal of these assets.
Bayside Council is forecasted to continue to have a high level of high-density residential housing development over the period of this LTFP and this will increase pressure to upgrade and expand existing infrastructure to provide services for our community.
The former Rockdale City Council had an Infrastructure Levy that provide a funding source for renewal of infrastructure assets, but these funds can only be spent in the area they were levied.
The former City of Botany Bay Council did not have the equivalent funding source that could be used to fund the required asset maintenance and future renewal
About this Plan
The LTFP is a tool to aid decision making, priority setting and problem solving. It is a guide for future action, to be reviewed and updated annually, and addresses the following:
how Council will survive future financial pressures
opportunities for future income and economic growth
whether Council can afford what the community requests
how Council can achieve outcomes agreed with the community.
The LTFP must be for a minimum of 10 years. it is a rolling plan that is reviewed annually
It informs decision-making and demonstrates how the strategies of the Community Strategic Plan, the outcomes of the Delivery Program and the actions from the Operational Plan will be resourced and funded.
The LTFP captures financial implications of asset management and workforce planning. For example, by identifying how additional assets will be funded, or existing assets renewed or upgraded and what provisions are made for changes to service levels.
Projected income and expenditure, balance sheet and cash flow statement must be prepared in accordance with the current Code of Accounting Practice and Financial Reporting
Who we are Bayside Area & People
The Area
Located in the heart of Sydney, Bayside stretches over 29 suburbs including Bexley, Kingsgrove, and Carlton in the west; Banksmeadow, Hillsdale, Pagewood, Daceyville and Rosebery in the east; Wolli Creek and Turrella in the north; plus Rockdale, Mascot, Botany, Sydney Airport and Port Botany down to the coastal communities of Brighton Le Sands, Ramsgate, Dolls Point and Sandringham in the south.
We are very proud of our local area and all that it offers. With our many parks, sporting facilities and picturesque foreshore, as we surround Botany Bay (Kamay) with 8 kilometres of beach and parkland, we believe that Bayside is truly one of the best places to live in Sydney.
Bayside is well served with public transport with two main train lines and several busy bus routes. There are many great schools, boutique businesses, active laneways and precincts and a very vibrant mix of cultures.
Our significant wetlands provide important corridors for native flora and fauna, as well as places for our community to engage with natural surroundings
Central to the area is the logistics core of NSW. Bayside has two major international transport hubs, the Sydney Kingsford Smith Airport in Mascot and Port Botany, the largest container port in NSW. These areas are significant as they enable people and products to travel around the world and to come to Australia. Goods arriving at our ports are transported right around the country and Sydney is the busiest airport in Australia. Our local economy will mature as innovation and growth takes advantage of these opportunities.
Our Community
Almost 183,000 residents live in Bayside and this is expected to increase by 30,000 by 2036. Bayside is home to a diverse community hailing from Australia and all over the world. People of all ages enjoy life in Bayside, many speak a language other than English at home and almost half were born overseas.
First Nations people have lived on the shores of Botany Bay (Kamay) for tens of thousands of years. All of these different cultures enrich our area with their traditions, celebrations and stories. In order to effectively serve our community, we must understand the community we are serving.
Following are some statistics that demonstrate that diversity.
People & Households
Living & Lifestyle
Work & Travel
Source Profile ID, Australian Bureau of Statistics 2021 Census, Household Travel Survey 2019
Bayside Council
The Organisation Values
Values guide us in our interactions and relationships with all our customers. Internally there are also identifying statements and highlighted behaviours that strengthen our understanding of the values and clearly set the organisations expectations.
We go above & beyonddelivering an outstanding customer experience every time.
We are all leaders’ decisive, outward focused & forward thinking, setting the vision for Bayside Council today & into the future
We are courageous & innovative - committed to making a difference in our work.
We support & invest in each other - creating a strong collaborative culture
How we developed this Plan Long-Term Financial Sustainability
How do w e Define Long-Term Financial Sustainability?
A financially sustainable Council is one that can continue to deliver services and replace or renew its assets without relying on too much debt or excessively raising rates for future generations. This idea is broken down into five k ey financial sustainability principles:
Achieving a balanced budget: The Council must collect enough revenue to cover its operating costs, debt repayments, and asset depreciation
Maintaining sufficient cash reserves: The Council must have enough cash set aside to cover shortterm expenses.
Fully funded capital program: The Council must secure funding for both renewing old assets and building new ones.
Maintaining its asset base: The Council must update or replace aging infrastructure and set aside funds for future assets that are needed for the community.
Intergenerational equity: The Council must make decisions that are fair to both current and future generations.
It is important to note that many Councils in NSW struggle to meet these sustainability goals. The main challenge is the need to adequately maintain and renew old infrastructure. Studies, like the 2006 Local Government and Shires Association’s independent inquiry and the 2013 NSW Treasury Corporation (TCorp) report into financial sustainability, highlight this ongoing issue.
In 2021-22, the Office of Local Government reported that Councils had an infrastructure backlog of $5.6 billion. This shows the urgent need to increase funding for renewing infrastructure across NSW. If NSW Councils don’t increase funding soon, the backlog will continue to grow, possibly to a level that is too large to fix without affecting services.
A TCorp review further identified that if funding is not increased in the immediate term, then the infrastructure renewal backlog will continue to increase at a level which may become too great to address without serious ramifications on service delivery.
The backlog is largely due to Councils not having enough money to cover depreciation. Depreciation represents the decrease in value of assets over time. Councils often try to fit asset renewals into their budgets, but they don’t have enough funds to replace all aging assets at the end of their useful life. This isn't due to poor management; it’s because Councils can't afford to fund depreciation without cutting existing services. Rate increases, which are controlled by IPART, have not kept up with the rising costs of maintenance. Even with changes to the rate-setting method in 2024-25, Councils still face a funding gap that has built up over the past 40 years
Delaying asset renewals makes the problem worse, as older assets become more expensive to maintain. To address this, Councils are using Integrated Planning and Reporting, which focuses on managing an asset’s entire life cycle, not just maintaining it. This approach helps Councils show the community the long-term costs of not renewing assets.
How is Long-Term Financial Sustainability Measured?
A recent review undertaken by the Independent Pricing and Regulatory Tribunal (IPART) into the Revenue Framework for Local Government identified a number of key performance indicators which measure the financial performance and position of NSW Councils. The indicators measure both recurrent operations and capital sustainability.
Council will review its LTFP against these indicators as part of assessing the long-term financial health of the organisation and its capacity to fund the Delivery Program.
Achieving Long-Term Financial Sustainability
One of the biggest challenges for Council is addressing its long-term financial sustainability, specifically potential future deficits in operating results, excluding capital and reserve movements, as well as the forecasted shortfall of $94 million for asset expenditure over the next 10 years.
Council has already taken some steps to address this issue, however these won’t fully resolve the problem caused by historically low rate-pegs, resulting in a cumulative low-rate base.
To address the overall funding shortfall, Council may need to consider increasing rates instead of cutting essential services provided to the community. One option could be a one-off rate increase beyond the recommended rate peg to readjust the rate base and/or the introduction of an infrastructure levy to the east side of Bayside
A major factor contributing to this issue is the rise in Council’s depreciation expenses, which have increased due to the delivery of new, more functional and environmentally friendly assets While these assets offer benefits, they come with higher operating and maintenance costs and additional depreciation.
Analysing depreciation is important because it highlights the amount of the funding shortfall that Council needs to close for it to renew its infrastructure assets, which is currently estimated at $56 million over the next 10 years
Along with the asset renewal funding shortfall, there is an additional $38 million funding gap for maintaining infrastructure assets throughout Bayside. Combined, this results in a $94 million funding shortfall over the next decade Addressing this funding shortfall is essential for Council to maintain long-term financial sustainability and continue providing services to the community (at an appropriate level); and achieve Council’s asset maintenance and renewal financial requirements.
The funding deficit has notably reduced compared to previous projections, attributed to external funding received through grants. These grants have fuelled substantial renewals across Bayside in the last three years. Furthermore, the updated Capital Projects Program includes revised cost projections for key projects like the Boulevarde Carpark, Mascot Oval, Botany Aquatic Centre and Spring Creek Naturalisation project. Each of these projects includes asset renewals and have identified funding sources.
To address the financial challenge, Council has the following options:
Increasing revenue
Reducing expenditure
Reviewing current asset holdings.
Council must continue with its improvement plan, which has already made progress in closing some of the funding gaps outlined in the plan. Over the past five years, there has been improvement in closing the infrastructure gap, however, to sustain this progress, Council must balance its spending with its income. This includes identifying operational efficiencies, managing grants wisely, and prudent allocation of funds toward new assets, with prioritising the maintenance and renewal of existing assets It's also crucial for Council to manage community expectations around service levels, all of which will help address the financial sustainability challenges Council faces.
Socio Economics
When preparing the plan, many factors are taken into consideration noting that rates, annual charges and user fees and charges make up a significant portion of Council’s total revenue so capacity to pay is an important factor.
Residential Properties
In the 2024-25 financial year there are 68,702 properties across Bayside rated as ‘Residential’. These properties include single dwellings, social housing, and multi-unit dwellings.
Housing Tenure
In Bayside, 52.4% of households were purchasing or fully owned their home, 36.9% renting privately, and 3.3% in social housing in 2021.
Analysis of the monthly housing loan repayments of households in Bayside Council area compared to Greater Sydney shows that there was a similar proportion of households paying high mortgage repayments ($2,600 per month or more), as well as a similar proportion of households with low mortgage repayments (less than $1,200 per month).
Household Incomes
Analysis of household income levels in Bayside Council area in 2021 compared to Greater Sydney shows that there was a smaller proportion of high-income households those earning $3,000 per week or more) and a higher proportion of low-income households (those earning less than $800 per week).
Overall, 26.1% of the households earned a high income and 19.2% were low-income households, compared with 30.1% and 17.9% respectively for Greater Sydney.
Indexes
The Bayside Council Socio-Economic Indexes for Areas (SEIFA) measure the relative level of socioeconomic disadvantage and/or advantage based on a range of Census characteristics.
SEIFA indexes are a good place to start to get a general view of the relative level of disadvantage in one area compared to others, but it is important to also look at these underlying characteristics as they can differ markedly between areas with similar SEIFA scores and shed light on the type of disadvantage being experienced.
In 2021, Bayside Council had a SEIFA index score of 1,004 which is slightly higher than the NSW average of 1,000.
Concessions
There are concessions available for rates and annual charges for eligible ratepayers who receive an aged or disability support pension under the provisions of the Local Government Act 1993.
Council recognises that from time-to-time certain ratepayers may have difficulty in paying their Council rates and charges. The Local Government Act allows Council to provide a range of assistance to these ratepayers in circumstances detailed in our Hardship Policy.
Economic Environment
The Bayside Council economy is part of a complex and diverse network of activities.
Business Properties and Industry
There are 4,823 properties across Bayside which are rated as ‘Business’ and account for around 6.6% of Council’s total rateable properties. The construction industry had the largest number of total registered businesses in the Bayside Council area, comprising 18.7 % of all total registered businesses, compared to 17.1% in New South Wales (ABS).
Gross Regional Product
Bayside Council’s Gross Regional Product (GRP) was $14.9 billion in the 2022-23 financial year. This represents 3% of the GRP of the State of NSW.
Population and Workers
In the 2022-23 financial year, 100,357 Bayside residents were employed from a total population of 182,987 people. In the Bayside Council area, Transport, Postal and Warehousing is the largest employer, generating 21,444 Full Time Equivalents (FTE’s) in 2022-23.
Financial Objectives
In addition to the legislated principles of sound financial management, Bayside Council has five financial objectives that it applies to its financial planning, control and management.
Deliver operating surpluses
Ensure that each year the budget has a healthy before capital revenue operating surplus, combined with strong budget management and control, to help deliver an operating surplus for Council.
Fund existing service levels
Ensure existing service levels that Council currently provide continue to be fully funded when preparing budgets and making financial decisions.
Fund infrastructure renewals
The funding allocated to annual capital works programs is as per the Asset Management Program. This will ensure that Council meets the infrastructure renewals ratio benchmark each year.
Ensure financial stability
Council can guarantee its financial stability by maintaining a strong cash position, ensuring its ability to generate its own operating revenue and having sufficient assets to cover its liabilities.
Financial legacy
Ensure that every financial decision that is made, by both Council and Council management, creates and safeguards the financial legacy of Bayside Council - a legacy of being prudent and responsible.
This is reflected in Council’s commitment to maintain a conservative risk / return portfolio.
Future Revenue Assumptions
The base year figures that have been used for operating revenue are those contained within the 202526 budget. In preparing the 2025-2035 LTFP, the following underpinning principles have been used:
Budgets will aim to maintain assets to at least the same condition as they were at the start of each financial year,
Management will continually look for ways to structurally realign resources and/or increase income opportunities without changes to service standards,
Services and Infrastructure in any new areas will be provided when they are needed,
Council will continue to improve its capacity to fund its recurrent operations and renew critical infrastructure through sustainable financial decision making
Rates
Council’s ability to align rating revenues with the increased cost of providing Local Government services has been restrained by rate pegging (since 1977), a legislative instrument whereby the maximum increase in rating revenues is currently set by IPART.
For the rating year commencing 1st July 2025, IPART had determined that the rate peg limit will be 6.1%, including a population factor of 2.4%.
The number of properties subject to rating in 2025-26 is as follows:
Special Rates
Includes Local Area Rates, Community Safety Levies, Community Building Levies and Infrastructure Levies. Special rates are levied on identified residential and business properties to cover the cost of any works, services, facilities or activities carried out and for the benefit of specific local areas.
Annual Charges
Section 496 of the Act requires Council to levy a domestic waste management service charge on each residential parcel of land for which the service is available, regardless of whether or not the garbage and recycling collection service is used. This charge will be recovered via the domestic waste admin fee. Almost a quarter of Council’s revenue is received through the levying of annual charges.
Section 502 of the Act then allows Council to levy users of the service an annual waste charge dependent upon the number of waste bins being utilised.
Section504 of the Local Government Act 1993 requires that the domestic waste management charges are calculated so that they do not exceed the reasonable cost to Council of providing those services. Therefore, the increases in these charges included in the plan are consistent with the increases applied to the operating expenditure incurred by the service.
It is important to note that during 2024-25 Council commenced a new waste service management. This included the rolling out green organic waste bins across the western side of Bayside. This has resulted in the harmonisation of waste fees for all residential parcels of land.
There has been no increase assumed for the stormwater management annual charge. This charge is determined under clause 125AA of the Local Government (General) Regulation 2021 and has remained at the same level since its inception. Overall increases have been set at the CPI factor.
User fees and charges
Council receives 6.5% of its annual operating revenue through user fees and charges, set under section 610D of the Local Government Act 1993. Fees and charges applied by Council for services such as the aquatic centres, the various childcare centres, commercial trade waste and the hire of community facilities such as Council’s sports fields and community halls. Some of these are set by statutory regulations and future increases are difficult to predict but have been assumed at the CPI index.
The forecast includes an assumption that the Botany Aquatic Centre will be completed by the end of 2026-27 and will re-open during Spring 2027, resulting in an uplift in user chargers and fees in 2027-28.
Other revenues
Council receives 9 4% of its annual operating revenue through other revenue streams. This revenue is primarily through rent from commercial properties and affordable housing program, revenue associated with Sydney Airport Corporation Limited agreement and through the issuing of parking infringement notices. The forecast assumes that these services will increase in line with CPI.
The forecast includes an assumption that the Boulevarde Car Park redevelopment will be completed by the end of 2028-29 and will generate income through commercial arrangements in 2029-30.
Operating grants and contributions
Bayside Council has demonstrated a moderate degree of reliance on external funding sources such as grants and contributions. There has been no inclusion of any additional grants or contributions in the plan with only those non-speculative, existing, and recurring grants and contributions being included with a very modest increase assumed across the period of the plan.
Capital grants and contributions
Council receives development contributions from property developers which are used to fund community facilities and infrastructure.
The contribution a developer pays for a new development is capped by NSW legislation. The section 7.11 (formerly S94) contributions received, and the infrastructure to be funded that are contained within this plan, are consistent with Council’s Section 7.1 1 Development Contributions Plan (2019).
Various grants are received by Council for capital projects. These grants are predominately for road construction and the number and value are determined by State or Federal Government programs. Due to the nature of their unpredictability, capital grants contained in the plan are minimal.
Gains from disposals of assets
Gains from the sale of Council’s plant and fleet assets are included in the plan. These disposals are in accordance with Council’s policy
Future Expenditure Assumptions
The base year figures that have been used for operating expenditure in this plan are those contained within the forecasted 2025-26 budget.
Employee costs
Expenditure relating to Council’s workforce accounts for over 43 % of total operating expenditure and is therefore one of the largest investments that Council makes on an annual basis.
The forecasted wage percentage increase is based on the Local Government Award 2023 and has been forecasted using historical averages up to 2025-26 As the current Local Government Award does not extend beyond 2025-26, Council has assumed that salary and wages will increase in-line with the upper threshold of the Reserve Bank of Australia (RBA) inflation target for the remaining period of the LTFP
Council’s superannuation expense is aligned to the payments required under the Superannuation Guarantee (Administration) Act 1992. The Act sees the percentage rate grow from 11.5% in 2024-25 to 12% in 2025-26 and will remain at this rate into subsequent periods. This increase has been incorporated into the plan.
The forecast incorporates employee costs associated with the anticipated opening of the new Botany aquatic centre in 2027-28.
Materials and contracts
Materials and services costs include the costs associated with operating Council, including cost associated with the purchasing of raw materials, waste collection and disposal costs and utilities and other services.
The Reserve Bank of Australia has an inflation target between 2 and 3%, however the inflation rate has only returned to within this range in the last economic quarters, with the December 2024 headline inflation rate being 2.4%. As materials and services includes a broad range of expenditure items and due to some external factors creating some uncertainty in the economy that could lead to inflationary pressure, the forecast is factoring material and services cost to increase 0.5% above the upper RBA inflation target in 2026-27, before returning into the range in subsequent periods.
Depreciation
Depreciation for Council’s assets is a non-cash expense that reflects the utilisation of Council’s assets and the degradation of their capacity to provide functionality over time.
Depreciation expense is an indicator used by the Office of Local Government to determine the level of asset renewals that Councils should be undertaking. Council’s depreciation is increasing over the period due to the costs associated with replacing outdated facilities with modern facilities that have more functionality to cater for a growing population across Bayside Council.
Bayside Council uses a straight-line method of depreciation which is very commonly applied to Local Government infrastructure.
Other expenses
Other expense primarily includes payments to other statutory bodies. Increases in the range of levies imposed by the State Government are hard to predict. Levies such as the State Emergency Services Levy, Fire Brigade Levy and Sydney Regional Development Fund contribution have grown significantly over the past few years and have been forecast to continue grow in line with inflation over the period
New and discontinued operations
The LTFP includes an assumption that the current Botany Aquatic Centre facility will close towards the end of 2024-25 financial year and the site redeveloped and enhanced over a 2-year period before reopening in Spring 2027.
The Boulevarde Car Park redevelopment has been incorporated into the forecast with the new development expecting to include some commercial precincts. The project is expected to be completed in 2028-29 financial year and be operational during the subsequent financial year.
Balance Sheet Projections
The base year figures that have been used for all balance sheet items including cash and investments are those included in the audited financial reports for the 2023-24 year.
Cash and investments
Council has several cash reserves both externally and internally restricted. The forecasted balances of cash and investments have considered the planned transaction of various reserves such as plant replacement, domestic waste reserve, employee leave entitlements, IT reserve, stormwater management, section 7.11 contributions reserve and others. Cash levels have been forecasted to ensure that adequate operational liquidity is maintained.
The balance of cash reserves which are considered funding sources in the budgeting process are based on the audited balances as at 30 June 2024 which amounts to $505 million
Inventories and other assets
The inventory that Council holds at its Works Depot, Aquatic Centre, and Community Nursery have remained stable over the past ten years. These levels have been forecasted to continue over the life of the plan.
Infrastructure, property, plant and equipment
Bayside Council has approximately $1.9 billion worth of infrastructure, property plant and equipment. The financial management of these assets are guided by the 2025-2035 Asset Management Strategy The asset renewals and upgrades incorporated in the long-term financial plan are incorporated in the 2025-2026 operational plan and the four-year development plan. The asset base maintained by Council has been subject to a program of revaluation cycles since Council was proclaimed in September 2016 and improvements in asset data information collected over the last couple of years has been used to update financial plan and strategic asset management.
Provisions
Council has made provisions for payment of employee leave entitlements which predominately consist of annual leave and long service leave. The balance of these provisions is governed by the Leave Policy and have been forecasted in line with its objectives. When determining the value of the provisions, factors such as wage and salary increases, cash rate forecasts, and factors affecting discounting rates have been taken into consideration.
Council has, as a result of past operating activities, a few former tips sites situated within Bayside that may require future restoration, and remediation works if the contamination at any point becomes significant. Provisions also includes an estimate of future costs that Council may incur to rehabilitate and reinstate the former tip sites.
Borrowings
Bayside Council’s loan with TCorp will be repaid by 30 June 2025 and the remaining loan balances repaid by 30 June 2026. The result is that Bayside Council does not have any loans and associated borrowing costs in the forecast period beyond 2025-26 as Council’s capital program is expected to be funded through existing developer contributions, reserves and grant funding.
Sensitivity Analysis
Variations to assumptions applied in this plan may occur during the life of the plan and these variations could have a major or significant impact on the results of the financial modelling.
The plan contains a range of assumptions which are developed after reviewing information from a number of various sources. Council has ensured that these sources are reputable and are the bestknown available source for that data.
A conservative approach has been taken in the development of the plan, to ensure that the chosen option is more likely to succeed and exposes Council to the least amount of risk. Conservative financial planning is used as a tool to keep pressure on operating budgets, with any surpluses that eventuate being allocated towards infrastructure asset maintenance or capital expenditure.
Cash rates
From April 2022 to November 2023 the Reserve Bank of Australia raised the official cash rate from a historic low of 0.10% to 4.35%. Council benefited from the increase in cash rate through interest income it received from its investments in term deposits.
However, the official inflation rate has fallen to be within the RBA’s official target of 2 to 3 percent. This occurred for the September 2024 and December 2024 quarters. This resulted in the RBA cutting the official cash rate in February 2025 by 0.25 basis points to 4.10%.
The lowering of interest rates has been factored into the returns that Council is currently receiving from its investments in term deposits, with the major banks currently forecasting the official cash rate to fall to about 3.35% by December 2025.
The returns on investments in the forecast model reflect rates decreasing over the next 12 months and then remaining relatively steady for the remaining forecast term. The reduction in the cash rates has had a negative impact on Council’s investment portfolio, as investment returns are driven lower. It should be noted that the majority of Council's investments, approximately 80%, are made up of externally restricted developer contributions. Therefore, any earnings derived from investing these funds must adhere to the same restrictions as developer contributions and cannot be utilised for general operations.
The lower cash rates do result in lower borrowing costs for both owner occupiers and investors which could create a flow on effect in terms of development activity across the City.
Consumer Price Index
Consumer Price Index (CPI) assumptions are heavily used throughout the plan and is an assumption used on both expenditure and revenue which mitigates substantial impact on the results of the financial modelling should there be any significant variance.
The Australian Bureau of Statistics (ABS), in their media release on 31 January 2025 indicated that the inflation rate for the December 2024 quarter fell 0.4% compared to the September 2024 quarter to 2 4%. This means that inflation has been within the RBA’s target inflation rate of 2 to 3 percent for the last two quarters and is the reason why Council is using the RBA inflation range in future assumptions. The current inflation rates are a significant decrease from the peak of inflation in December 2022 when the annual inflation rate was 7.8%.
Employee Costs
Council has modelled employee costs using the recent Local Government (NSW) Award and gradually decreases the percentage to align with the anticipated reduction in the forecasted overall economic environment. The existing award is due to expire in 2025-2026, therefore Council has assumed that staff costs will increase by on average 3% over the duration of the LTFP Employee costs are major element of Councils cost base and any changes in wages assumptions will have an impact on Councils on-going financial performance
Monitoring Financial Performance
The Primary Model adopted in this plan has been developed to ensure that it meets Council’s five financial objectives, and the benchmarks and/or targets for an array of financial indicators which have either been internally or externally prescribed. There are a number of factors which affect the value and size of certain revenue, operating expenditure, and/or capital expenditure each financial year. However, the impact these variations have on the financial indicators are what should be measured.
Financial Indicators
The Primary Model has been developed so that its implementation will meet a set of financial indicators:
Balanced Budget
Operating Performance Ratio
Own Source Operating Revenue Ratio
Unrestricted Current Ratio
Debt Service Ratio
Asset Maintenance Ratio
Asset Renewal Ratio
Budget control
Budget control and monitoring are paramount for Council achieving the outcomes of this plan. Budgets are monitored internally on an ongoing basis using Council’s financial information systems. Monthly Financial Reports and Quarterly Budget Reviews are reported to Council and illustrate the progress against its adopted budgets.
Financial Assessment
Council’s budget has faced significant pressures including:
An increasing burden as a result of cost shifting from other levels of government,
Increases in the cost of procuring goods and services have been consistently higher than rate pegging increases as determined by IPART; and
Greater competition between Councils in the allocation of external funding such as Financial Assistance Grants.
The biggest single financial issue facing Council is the need to maintain and replace ageing assets, while providing new assets to meet the needs and expectations of the community. Council has invested significantly in new and upgraded assets, funded by developer contributions and grants since its formation in September 2016, however these are not able to be used to fully fund maintenance, operation costs or the renewal to these assets.
All the current scenarios reflect Council’s significant long-term financial sustainability challenges as follows:
Operating results: small changes in assumptions can have a significant impact over the long term. Council’s net operating result from continuing operations is positive for all modelled scenarios, however, the pessimistic model does go into deficit in 2029-30 when removing capital grants and contributions. These results are based on the statutory financial performance of Council. The results are quite different once you remove all restricted income in determining Council’s true operating result, which is a structural budget challenge that faces Council.
Cash remains relatively strong, however a major proportion of cash held by Council is restricted by legislation and can only be used for specific activities. While the base case model has a good operating cash balance there are less funds available for internal reserves from 2028-29 due to funding for capital projects and on-going costs of running new facilities
Council has a longstanding commitment to adopting balanced budgets. To achieve this budget outcome decisions are made around the level of asset maintenance and deferral of renewal to ensure that Council can fund the proposed budget. A balanced budget is reflected in all scenarios.
Financial Projection Scenarios
Council’s LTFP contains long-term projections based on specific assumptions. As it is difficult to accurately predict all future trends, alternative scenarios have been modelled to help provide an indication of Council’s future financial position under a variety of circumstances. These alternative scenarios are summarised below
All scenarios use the 2025-26 draft budget as the base and the same forecasted capital works program. The optimistic and base case models include an annual improvement plan that factor in transfers to the Infrastructure Maintenance Reserve with the intention to reduce the funding gap over the life of the plan.
Scenario One - Base Case
This is the business-as-usual scenario and includes the 6.1% rate peg published by IPART for 2025-26 and a population growth factor of 0.5 % Employment costs are expected to increase by 3.0% per annum over the next 10 years.
Council is expecting materials and services costs to increase between 2.5% to 3.0% per annual over the next decade from 2026-27, with the current inflation rate falling within this target range.
Council only budget for known operating and capital grants.
The base case includes assumptions in relation to operating the new Botany Aquatic Centre and the redeveloped Boulevarde Car Park once construction has been completed for these projects.
While the base case is financially sustainable there are pressures in the model that lower the availability internal reserves and unrestricted cash. This impacts the ability of Council to keep up with the maintenance requirements of its infrastructure assets. This could be alleviated through the introduction of an Infrastructure Levy on the east side of Bayside, to match the levy paid on the west side of Bayside, and/or apply for a one off rate adjustment that realigns the rate base and increases revenue to cover Councils future operating costs.
Scenario Two – Best Case (Optimistic)
This scenario uses a higher rate peg assumption compared to the base case (up 1.0% to 2.0%), as well as 1.5% population growth rate in population per annum over the next 10 years. It also includes employment costs increasing by 2.5% per annum over the next 10 years.
Council’s best-case scenario has assumed no changes to assumptions in relation to materials and services and other expenses due to Council actively managing these expenses.
The capital projects program remains the same.
Rate revenue and employee costs are a large component of Council income and expenses. A small percentage change in these assumptions have a material impact on the anticipated financial performance of Council
Scenario Three – Worst Case (Pessimistic)
In this scenario, a lower rate peg has been assumed throughout the period and a lower population growth factor of 0.2%. Employment costs are expected to increase by 3.5% per annum over the decade.
Due to supply and demand pressure for materials and services, this model assumes these costs to increase above the 2.5% inflation target set by the RBA
These 3 areas are the main drivers for the decline in the long-term financial sustainability of Council in this scenario. In this scenario Council would need to apply for a special rate variation to increase rateable income and look to reduce services provided to the community, as well as operational efficiencies to ensure that Council remained financially sustainable. The scenario provided does not include these measures, however it illustrates the impact on the financials if Council continues operating as per normal and these revenue and cost pressures occur.
For Council to achieve financial sustainability, all four financial sustainable principles must be met.
Achieving a balanced budget: The Council must collect enough revenue to cover its operating costs, debt repayments, and asset depreciation.
Maintaining sufficient cash reserves: The Council must have enough cash set aside to cover shortterm expenses.
Fully funded capital program: The Council must secure funding for both renewing old assets and building new ones.
Maintaining its asset base: The Council must update or replace aging infrastructure and set aside funds for future assets that are needed for the community.
Scenario 1 - Base Case
Scenario 2 – Optimistic Case
Scenario 3 – Pessimistic Case
Capital Works Program
It is assumed that the capital works program is the same for all scenarios.
Scenario 1 - Base Case
Base Case Income Statement
Base Cash Flow Statement
Base Case Balance Sheet
Base Case Key Performance Indicators
Asset Sustainability Ratios
Scenario 2 – Optimistic
Optimistic Income Statement
Optimistic Cash Flow Statement
infrastructure, property, plant, equipment
Cash flows from financing activities Payments
Repayment of Borrowings & Advances (121)
Repayment of lease liabilities (principal repayments)
increase/(decrease) in cash & cash equivalents
Optimistic Balance Sheet
Optimistic Key Performance Indicators
>
Unrestricted Current Ratio (Benchmark > 1.5x)
Debt Service Cover Ratio (Benchmark > 2x)
Scenario 3 - Pessimistic
Pessimistic Income Statement
Pessimistic Cash Flow Statement
Cash flows from financing activities Payments
Repayment of Borrowings & Advances (121)
Repayment of lease liabilities (principal repayments)
in cash & cash equivalents
Balance
Pessimistic Balance Sheet
Non- Current Liabilities
Pessimistic Key Performance Indicators
Unrestricted Current Ratio (Benchmark > 1.5x)
Debt Service Cover Ratio (Benchmark > 2x)
Why we developed the Strategy Commitment to Community
Guiding Principles
Local government is the third level of government in Australia. It is an elected system of government directly accountable to the local community. Each Council is an independent, statutory body responsible for administering the Local Government area over which it has jurisdiction. Leadership is provided by Council, comprising the elected representatives, or Councillors, who work together to provide good governance for the benefit of the community.
The power of Local Government is controlled by Acts of State Parliament such as the Local Government Acts. Councils are concerned with matters close to our homes, such as building regulations and development, local roads and footpaths, parks and playing fields, libraries, local environmental issues, waste disposal, and many community services. These tasks would be difficult for a state government to manage because they are local issues. Councils can deliver services adapted to the needs of the community they serve.
Community Engagement
At Bayside, the community is at the heart of everything we do, which is why community engagement is vital to our work and activities. We are dedicated to ensuring that the voices of our residents are heard and that they are kept informed about Council's projects, opportunities, and initiatives.
The goal of community engagement is to ensure that the perspectives of community members and stakeholders are not only heard but valued, shaping outcomes that directly impact their lives. Community engagement, also known as public participation, involves actively involving residents in decision making processes and the development of initiatives that affect them. By engaging with the community, Council aims to align its services, solutions, and initiatives with the needs and values of Bayside residents, fostering positive relationships and building trust.
Social Justice Principles
As the level of government closest to the community, Councils are dedicated to fostering social cohesion and a sense of belonging for all residents.
We believe that everyone should have the opportunity to fully participate in society without discrimination.
This commitment includes ensuring fair access to resources and services while fostering equitable treatment for everyone, regardless of their gender, race, ethnicity, class, age, marital or parental status, sexual orientation, disability, or religious beliefs
We integrate social justice principles into all our planning and decision-making processes, which are:
Equity - fairness in decision making, prioritising and allocation of resources particularly for those in need.
Access - fair access to services, resources and opportunities to improve quality of life.
Participation - the maximum opportunity to genuinely participate in decision making.
Rights - equal rights established and promoted for people from diverse linguistic, cultural and religious backgrounds to participate in community life.
Resilient Cities Principles
The City Resilience Framework, developed the Rockefeller Foundation, assesses the strengths and weaknesses of cities within 4 ‘dimensions’ and 12 ‘drivers’. The framework was adopted by metropolitan Sydney and Bayside Council applies this framework to all its medium and long term plans.
City resilience is the capacity of people, communities, businesses and systems within a city to survive, adapt and thrive no matter what kinds of chronic stresses and acute shocks they experience.
Acute shocks are sudden events that threaten a city and include heatwaves, floods, disease outbreaks and cyberattacks.
Chronic stresses weaken the fabric of a city on a day-to-day basis and include rising inequity, housing unaffordability, family violence and inadequate public transport.
The 4 dimensions are:
Health and Wellbeing - the essential city services that safeguard human health and diverse and secure livelihoods
Economy and Society - the social and financial systems that enable urban populations to live peacefully, and act collectively
Infrastructure and Environment - the way in which built and natural assets provide critical services and protect residents
Leadership and Strategy - effective leadership and management, empowered stakeholders and integrated planning.
People, organisations, businesses, communities and cities that survive disasters all show resilient behaviours and decision making. Metropolitan Sydney can learn from these experiences including from significant floods, fires, heatwaves, droughts, infrastructure failures, cyberattacks and a global pandemic. The strategy has the below 5 directions:
Good Governance
At Bayside we have an adopted Governance Framework that articulates the corporate approach to ‘governance’. It considers the range of governance issues under the 4 main elements:
Ethics & Values
Manage Risk
Decision Making
Monitor & review
Each issue includes the principles of good governance, as well as the policies and practices of Council to achieve those principles.
Good governance is achieved by having efficient and effective decision making processes and systems. The use of appropriate policy and accountability frameworks enable Councils to focus on strategic rather than operational issues.
Council’s Governance Framework articulates our practices in order to achieve good outcomes and includes reference to our ethics and values (ie Code of Conduct, Internal Reporting, Business Ethics, Conflicts of Interest), our approach to Risk Management (ie fraud and corruption prevention, internal audit, compliance and privacy), our decision making (ie roles and responsibilities, Code of Meeting Practice, delegated authorities, policies and procedures) and the way Council will monitor and review our business (ie integrated planning and reporting, performance management, complaints handling, registers and access to information).
A copy Council’s Governance Framework can be found on Council’s website via this link Bayside Governance Framework
How Council makes decisions
Effective decision making demonstrates to the community and other stakeholders that Council is operating with transparency, probity, and in the best interests of all concerned. Sound decisions withstand scrutiny by regulators, courts, and the media.
Decision making occurs at many levels within Council – it is supported by various forums that comprise Councillors, staff, community members and/or independent specialists. Council strives to have effective decision making processes in place through its robust governance framework.
There are principally four groupings of meetings:
Council meetings
Statutory Committees (Local Planning Panel, Audit Risk & Improvement Committee (ARIC), Flood Plain Management and Traffic)
Committees (City Planning & Environment, City Services, City Works & Assets, and City Performance)
Administrative Committees (Executive and Leadership, Strategic Asset Management Committee, IT Steering Committee)
How you can be involved
Attend our meetings in persons and/or watch online via Council’s YouTube Channel - Bayside Council - YouTube
Read the Business Papers (Agendas and Minutes) for the meetings, they are available on Council’s website via this link
Address Council and/or Committee meetings. You can address Council on a report that is on the agenda for that meeting prior to a decision being made by Council. Requests to address Council at Public Forum can be found on Council’s website via this link
Decision Making
Manage RisK
Integrated Planning & Reporting
Integrated Planning & Reporting (IP&R) is the framework developed by the NSW State Government to guide Councils in the planning, reporting and delivery of its community’s priorities.
IP&R enables Council to allocate resources to projects and activities based on the needs and direction provided by our community, and to ensure these align to the community’s values and vision for Bayside. It is where we Identify , Plan , Fund & Report on services and outcomes for our community. Council also has an important role to play in advocating for, and partnering with, other agencies to achieve local outcomes.
The key elements of the IP&R framework are a suite of documents described below:
Community Engagement Strategy Community engagement is at the heart of Local Government. It enables communities to be active participants in shaping their future. It is critical for Councils to open opportunities for the community to be involved in the strategic planning process. This strategy supports the development of all plans, policies, programs and key activities, demonstrates a commitment to genuine and inclusive engagement and is based on social justice principles.
Community Strategic Plan Identifies the main priorities, vision and aspirations of our community for the future. It includes the themes, outcomes and strategies Council plans to achieve them.
Delivery Program Council’s 4 year commitment to achieving the prioritised strategies and outcomes of the Community Strategic Plan during its term of office. It sets out the key priorities that Council will deliver and how our performance will be measured. All plans, projects, activities, funding, and resource allocations are directly linked to the Delivery Program. It is supported by strategies and plans developed to focus on areas of Bayside’s environment, people and other priorities.
Resourcing Strategies To support the Delivery Program, Council is required to develop Resourcing Strategies. The strategies ensure Council has the necessary people, funds and infrastructure available to deliver its commitments. Three interrelated documents make up the strategy: The LongTerm Financial Plan; Workforce Management Strategy and Asset Management Strategy.
Supporting Strategies & Plans Council has developed plans, strategies, codes and policies to set the standards and direction for the services and outcomes we deliver. These Supporting Strategies & Plans sit below the Community Strategic Plan in the IP&R hierarchy and reflect its principles, values and objectives. The supporting strategies, in turn, inform the Resourcing Strategy, Delivery Program and Operational Plan. Examples of the key strategies and plans are the Local Strategic Planning Statement; Customer Experience Strategy; Arts & Culture Strategy; Reconciliation Action Plan; Disability Inclusion Action Plan, Information Management & Governance Strategy; Land & Property Strategy; Environment & Resilience Strategies etc.
Operational Plans (& budgets) These specify the detailed actions and funding for each activity that will be delivered and reported on annually to achieve the priorities of the Delivery Program.
Reporting Council produces 3 main reports under this framework, 6 monthly Operational Plan reports, an Annual Report and at the end of every term of Council, a State of our City Report.
Online
Email: council@bayside.nsw.gov.au
Website: www.bayside.nsw.gov.au
Phone
1300 581 299 or +61 2 9562 1666
Visit our Customer Service Centres
Monday to Friday 8:30 am – 4:30 pm
Rockdale Library, 444-446 Princes Highway, Rockdale Westfield Eastgardens, 152 Bunnerong Road, Eastgardens
Post
Bayside Council PO Box 21
Rockdale NSW 2216