Economic Conditions Force Budget Revisions

Published 15 December 2022

budget update

Despite rising costs of materials, labour shortages, and inflationary pressures, Council has managed to stay on Budget through the first half of the financial year 2022-23.

But rising inflationary pressures have forced extensive re-modelling of Council’s estimated expenses and revenues, with Mayor Peter Flannery warning tough decisions will need to be made in 2023 if economic conditions worsen.

“While we had hoped to deliver a record $259 million capital works program this financial year, as we head into 2023 the economic reality is that this is looking less and less likely,” he said.

“Industry-wide costs have increased at least 11 per cent and in one of our recent contracts we saw a cost increase of 223 per cent, even in today’s agenda you’ll see a 100 per cent cost increase for Item 4.3 regarding road upgrades along Mount Nebo Road.

“Our operational costs have increased significantly, especially electricity and fuel for our vehicles, and we’re also grappling with rising inflationary pressures on contracts for kerbside waste collection and other Council-paid services.

“We have also seen significant delays on projects, especially road projects, due to a complex combination of factors including the availability of contractors and sub-contractors, access to construction materials, scheduling of works with utility providers like Unitywater and Energex, which have all contributed to blowing-out project delivery timeframes.

“But I’m proud to say that there are only two changes proposed to the 2022-23 Budget.

“The first Is that we’ll need to increase the land acquisitions budget by $7.8 million in order to be able to purchase several priority land parcels that will be needed for road projects and to create new community parks.

“The second is a reduction in our operational expenditure by $11.5 million because planned canal works at Pacific Harbour and Newport will not proceed as originally budgeted due to resourcing and procurement. This will now be undertaken in the 2023-24 financial year instead.

“Fortunately we used conservative forecasts in predicting what our earnings and expenses would be this financial year, but we have still had to extensively re-model our estimates to account for the impact rising inflation is expected to have on Council’s expenses and revenues.

“The fact is we are not immune to the global inflation crisis and we took a major hit in February’s floods.

“We will continue to update the community on any changes to the 2022-23 Budget so you are informed of how we’re managing Council’s finances through these difficult times.”

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