When announcing the 2012-13 Budget almost 12 months ago, I indicated this Council's intention to address that budget's deficit of $6.6 million by bringing the budget back into balance in the 2013-14 financial year. At the time, it was expected that this would be achieved by anticipated growth, the realisation of efficiencies and savings and through a rates increase in the order of 4 – 5%.
As promised, I am pleased to present a balanced budget for 2013-14 based on an increase in the general rate yield of 3.69% with an increase in fees and charges limited to 4%.
In contrast to last year, when there was limited time following Council elections for the Council to prepare its budget, consideration of the budget today follows extensive consultation and consideration by Councillors and Management to determine a budget outcome which is fiscally responsible and which gives recognition to the broader social, economic and political pressures being experienced by the local community and businesses operating in this region.
To be in a position to deliver this budget outcome, the first twelve months of the current Council has been focussed on fundamental change to Council's structure and philosophy:
- The senior management team has been reshaped with the appointment of a new Chief Executive Officer and permanent appointments made to three existing General Manager positions. Furthermore, an organisational restructure has been completed which has resulted in the appointment of a Chief Financial Officer and General Manager Human Resources and Organisational Change to the senior management team to better focus on two of our most critical resources – our finances and our people.
- The appointment of the senior management team will provide a mix of current and new ideas to shape the way we operate and create a culture of change. It is now incumbent on management to challenge traditional ways of doing business and be more innovative in delivering projects and services.
- Council's cost base has been adjusted through a concerted effort to identify savings and efficiencies to lower the cost of operations to levels which can be sustainably funded. These initiatives have been balanced against a determination to maintain frontline services to our community.
I believe that these initiatives will result in a more focussed Council that is more responsive to community expectations, is positioned to maintain and improve its delivery of core services and is able to capitalise on future opportunities as they arise.
The Local Economy
When introducing the budget last year, I indicated that the budget was predicated on three key assumptions:
- That the region was showing increased signs of business confidence and that there were signs to indicate that an upward economic trend could be emerging;
- That Council needed to carry some of the weight in terms of the pressures faced by households and business and therefore rates should be struck at the minimum possible level; and
- That Council needed to hold its capital works program at the maximum possible level in order to stimulate local work, but at the same time not overextending itself.
Twelve months on, these three assumptions largely remain current. Whilst there are signs of improvement in the local economy, any sustained recovery is still in its infancy and is not broadly based.
However, I would suggest the overall mood and the business activity in the region are much better than anyone would have predicted a year ago. The commencement of direct flights from China and the announcement that Cairns had been chosen to host the G20 Finance Ministers and Central Bank Governors meeting next year has generated a heightened interest in our city and the region – not only as somewhere to visit, but as an attractive alternative for international investors, many of whom are emerging from China.
The current climate of fiscal restraint within the State and Federal Governments has inevitably impacted on the ability of all Local Governments to make significant investments in community infrastructure. As such, prioritisation of capital projects has been a critical component of the budget considerations.
Council is mindful of the need to maintain its capital program at the maximum possible level - $132 million in 2013-14 with further works of $296 million planned over the following two years.
Our primary role is to provide and improve our core services. In 2013-14, the capital works program includes $46 million on water and waste operations; $59 million on transport and drainage; and $17 million on community sport and cultural facilities.
Significant projects are aimed at preserving and improving our way of life – funding has been provided for the delivery of an off-road cycleway from the City Centre to Woree (in partnership with the State Government), the Bel Air walking tracks on Whitfield Hill and significant investments in community sports facilities including the Manunda Sporting Precinct and the initial stages of the redevelopment of Tobruk Pool.
Council is committed to investment in the Cairns CBD to improve its commerciality and amenity – to deliver a place which can be safely shared by both locals and visitors to our City. The initial works in this project will commence in the coming months and will be centred on Lake Street, including the opening of City Place. Project works will then extend into Shields Street as funding becomes available from other levels of Government.
It is hoped that other key projects, such as the Cairns Performing Arts Centre, Cairns Rectangular Stadium, the Port Douglas Waterfront and the final stages of the redevelopment of Tobruk Pool, will receive funding support from the other levels of Government even if this means we have to wait until the prevailing fiscal constraints ease. Nevertheless, funding commitments for these projects will be actively pursued.
I remain confident that there will be a rebound in tourism which will deliver significant benefits to the local community. The number of local tourism jobs is estimated to be 20,000 and over one quarter (28%) of the local population works in the industry or has a family member who directly benefits from tourism. The industry is estimated to generate more than $2.5 billion for the local economy. Obviously, any upturn in tourism will inevitably have a direct impact in the broader local economy.
Following the introduction of direct flights, we are now experiencing very strong growth in visitation from China (30 -40 % on last year). Also pleasing is our performance in traditional markets such as Japan, Europe and North America. Japan has been a key market for Cairns for many years and growth in this market is now being experienced following several years of contraction.
In all these key markets, percentage growth in visitation to Tropical North Queensland exceeds what is being experienced at both a State and national level. Not unexpectedly, closely following the surge in tourist numbers, there is now a heightened interest in Cairns as a place to invest with significant interest being shown by a number of international investors in major development proposals. These developments signal a potential revival in the region's fortunes which will be shared throughout the broader economy.
Next year, in addition to the G20 meetings in September, Cairns will host the most significant travel trade event on the Australian tourism calendar, the Australian Tourism Exchange – the first time this event has been held outside an Australian capital city. This will provide a valuable opportunity to showcase our region to the world.
In the 2013-14 budget, funding support of $1.6 million has been allocated to Tourism Tropical North Queensland, Tourism Port Douglas and Daintree and Advance Cairns to market our destination as a place to visit and conduct business. In addition to this, a further $2.3 million has been provided for other Economic Diversification, Industry Development and Investment Attraction initiatives.
Council will continue to financially support major events which deliver significant benefits to the local economy. These events include the Cairns Ironman, the Mountain Bike Championships and the 2014 Great Barrier Reef Masters Games. The commitment to these events is $1 million in 2013-14.
Our continued attention to promoting the region through these initiatives is critical to any sustained recovery in the local economy
This Council recognises the financial pressures and the imposts on the cost of living now being experienced by the community. In response, we have limited rate increases to a minimum and will continue our efforts to stimulate the local economy through our operational and capital works programs.
I believe this is a budget that is appropriate for this Council to adopt. It gives recognition to the need for fiscal responsibility (it is balanced); it provides for significant capital works (it is focussed on delivering core services and improving our way of life); and it positions this Council to capitalise on future opportunities as they arise.
The consideration of this budget today is not the end of the budget process – there will be a need for continued discipline and commitment to deliver budget outcomes and the program of works. There is always a need to adapt to the ever changing environment and to respond as changing conditions and priorities warrant. This is where we must now direct our attention.
In closing I would like to thank my fellow Councillors for their time and input in preparing this budget and acknowledge the efforts of Council management and staff in responding to the many issues raised throughout the budget process and preparing the reports to be considered today.