At the Lane Cove Council’s April 2025 Meeting, Lane Cove Councillors will be asked to approve the release of the Lane Cove Council’s draft budget papers for public comment.
Lane Cove Council Budget Papers must be approved before the start of each financial year. These documents set out next year’s rates, outline planned capital works and services and show whether Lane Cove Council is operating at a surplus or deficit.
The Budget Papers are:
Draft 2025-26 Budget Overview – April 2025
Draft 2025-26 Delivery Program & Operational Plan – April 2025
Draft Resourcing Strategy – April 2025
Draft Long Term Financial Plan – April 2025
Draft Strategic Asset Management Plan – April 2025
Draft Workforce Management Plan – April 2025
2025/2026 Rates Rise
Lane Cove Council (and other NSW councils) cannot set their rate increases. NSW Local Council rate increases are determined by the Independent Pricing and Regulatory Tribunal (IPART) using a rate peg methodology.
The rate peg is the maximum percentage amount by which a council may increase its general income for the year. For most councils, general income consists entirely of rates income. The rate peg does not apply to stormwater, waste collection, water and wastewater charges.
On 1st October 2024, IPART released its report on council rates and set core council rate pegs for the 2025-26 financial year, ranging from 3.6% to 5.1%. Separate rate pegs have been determined for each of NSW’s 128 councils, with the rate for each individual council area included in the IPART information paper here.
Lane Cove Council’s core rate peg for 2025/2026 is 3.8%, with an extra 0.1 per cent for population factors. Lane Cove was one of 72 of the 128 NSW councils with growing populations where a population factor increased its final rate pegs.
Lane Cove Council intends to set the 2025/2026 general rate rise at 3.9 per cent, effective 1 July 2025.
This is good news considering several other Sydney and Regional Councils have had to apply to IPART for a special rate variation.
Northern Beaches Council: They are seeking a 39.6% increase over three years to address a budget deficit and fund infrastructure projects
North Sydney Council: They are proposing an 87% cumulative rate increase over two years; 45% in 2025-26 and 29% in 2026-27.
The following regional councils have applied for a special rate variation.
- Gunnedah Shire
- Upper Hunter Shire
- Shoalhaven City,
- Federation Council
Is There a Higher Rate Rise on the Horizon in 2026/20247?
It looks like a higher rate rise may take place in the 2026/2027 financial year.
Lane Cove Council noted in the draft 2025/2026 Draft Delivery Programme and Operational Plan:
The 2025/26 Budget has proven difficult to balance. Despite an exhaustive review of all income and expenditure allocations, Council is projecting a budget deficit of $598k for 2025/26. Longer term forecasts indicate budget deficits will be ongoing without some form of strategic intervention.
Council is finding it increasingly difficult to generate sufficient recurrent income to invest in its assets at a level necessary to ensure they are maintained at a satisfactory level. Council is also experiencing difficulties generating recurrent income to maintain existing services at levels the community has come to expect. One of the options that may be explored is a special rate variation application which, if supported by the Council, would not come into effect until the 2026/27 financial year.”
Deficit Budget (after Capital Grants Excluded)
What Has Changed – Why a Budget Deficit and A Rate Rise on the Cards?
Lane Cove Council usually delivers a surplus budget.
The Long Term Financial Plan includes the following historical data table:
Lane Cove Council has cited the following as the reason why it has been difficult to balance the budget:
- rate pegging
- cost shifting by state and federal governments
- inflation
- increased service expectations
- increased depreciation
None of the above factors are new. In January 2024 ITC published an article about Lane Cove being one of the hardest hit when it came to cost shifting by state and federal government. Read more here.
Some Key Performance Indicators Below Benchmark
The key performance measures upon which a council is measured are outlined in the tables below.
For the financial year ended 30 June 2024, all indicators were in a healthy position, better than industry benchmarks.
In the 2025/2026 year it is noted by council in the Long Term Mangement Plan:
“Council is unable to continue to maintain its operating performance ratio above benchmark. For the first time in many years, Council has budgeted for an operating deficit in 2025/26 which will continue over the life of the LTFP.”
FY 2024/2025
FY 2025/2026
The Operating Performance Ratio (OPR) is a key indicator of financial management. The NSW Government on the Your Council Website defines OPR as:
“The operating performance ratio measures a council’s achievement in containing operating expenditure within operating income. The benchmark for this ratio is 0% or greater.
An operating deficit occurs when total expenses are greater than total income (excluding all capital amounts). This includes a council’s day to day income and expenses. Total expenses include depreciation, amortisation and impairment.
Councils are encouraged to budget for surplus results and to take into account the condition and maintenance requirements of assets in this process. The ratio is calculated by total continuing operating revenue (excludes fair value adjustments, net gain/loss on sale of assets, net share/loss on joint ventures) excluding capital grants and contributions, less operating expenses, divided by total continuing operating revenue (excluding capital grants and contributions).”
The OPR for 2025/2026 is set out in the table above. The projected OPR is below the benchmark and does not look like it will be above it for the foreseeable future.
The Building and Infrastructure Ratio is between 0.5 and 0.6, which means Lane Cove Council is planning to spend only half the amount required to match annual depreciation, raising a future infrastructure backlog.
Lane Cove Council has increased its asset portfolio with the construction of The Canopy, the upgrade to the 50 m outdoor pool and new grandstand and soon the Lane Cove Sports and Recreation Facility. These assets must be maintained.
Employment Costs
The Long Term Financial Plan has allowed for a 3% annual increase in employee costs for 2025/26 and 2.5% for 2026/27 and beyond.
In the April 2025 snapshot the employment vacancy rate for council was listed as 11% – so in the 2024/2025 year does this mean that savings were made due to the council not being fully staffed? What happens to the budget if these positions are filled?
Next Steps
The Draft Budget Papers (if approved by Lane Cove Council) will be on public exhibition from late April to May 2025. Residents can submit comments on the documents.
Questions to ask the council during the exhibition period include:
- How large a Special Variation Rate will be considered fro 2026/2027 and beyond?
- What productivity or cost containment measures could be undertaken to lessen the deficiency without imposing higher rates?
- Which assets face renewal shortfalls, and what is the size of the infrastructure backlog?
- Are service levels likely to change if a Special Rates Variation is not pursued or IPART does not approve?
