Late Items Agenda of Ordinary Council Meeting

Item 10 Late Reports

CS05-07/25 Adoption of the 2025/26 - 28/29 Corporate Business Plan, 2025/26 Annual Budget and 2025/26 Schedule of Fees & Charges

File Ref: 52320 – 25/167084

Responsible Officer: Chief Executive Officer

Attachments: 4

Changes to Report and Additional Information Arising from Agenda Briefing

This report was not presented or discussed at Agenda Briefing.

Issue

To consider adoption of the City of Wanneroo’s (the City) 2025/26 – 28/29 Corporate Business Plan (CBP), 2025/26 Annual Budget (the Budget) and 2025/26 Schedule of Fees & Charges.

Background

A series of Integrated Planning & Budgeting Workshops (4) were held with Council Members, which focussed on reviewing and developing the 2025/26 – 28/29 CBP, 2025/26 Capital Works Program (CWP), 2025/26 Operating Budget, 2025/26 Schedule of Fees & Charges and various other elements of the Budget.

In developing the Budget, the City applied prudent financial management practices in guiding its preparation and considered the following policies and key economic parameters:

· Strategic Community Plan (SCP);

· Strategic Budget Policy (SBP);

· Accounting Policy;

· Financial Cash Backed Reserves Policy;

· Financial Hardship – Collection of Rates & Service Charges Policy;

· Forecast 2025/26 population increase (3.5% per forecast.id);

· Forecast 2025/26 average interest rate return on investments (4.37%);

· Forecast 2025/26 Perth Consumer Price Index (CPI) (2.75% per WA State Treasury);

· Draft 2025/26 – 34/35 Long Term Financial Plan (LTFP); and

· Cost escalations of constructions, material, and labour.

The SBP, which was adopted by Council in March 2022, has the following principles and guidelines:

“To establish clear principles and guidelines that will deliver:

· Council Members’ strategic financial management directives;

· robust transparent Long Term Financial Planning processes;

· intergenerational equity;

· responsible budgeting and accountability;

· responsible stewardship of the City’s assets, ensuring the resources of the City are well protected and used efficiently to accomplish the objectives of the City;

· sustainable, fully costed level of Fees & Charges for services both now and into the future (maintenance, renewal, replacement and new);

· prudent Rates setting that reflects community’s needs and aspirations; and sustainable in non-Rates income streams;

· determine the legal mechanism and outline rational for setting Fees & Charges; and

· ensure that Fees & Charges recover actual and reasonable costs unless there are valid policy reasons not to do so.”

This report is the culmination of the development work and input from stakeholders into the 2025/26 Integrated Planning & Budgeting Process, involving four Workshops with Council Members and considers submissions from Ratepayers on Proposed Differential Rates.

Detail

2025/26 – 28/29 Corporate Business Plan

The CBP forms part of the City’s Integrated Planning & Reporting Framework (the Framework) as required under the Local Government (Administration) Regulations 1996.

The CBP activates the ten-year vision and strategic goals of the SCP and addresses operational planning and resourcing in relation to asset management, financial management and workforce management.

Reviewed on an annual basis and aligned with the budgeting process, the 2025/26 – 28/29 CBP (Attachment 1) contains the four-year priority projects, Service costings and Full Time Equivalent (FTE) allocations for each of these years. The CBP also provides an overview of the range of Services and Capital Sub-Programs that will be delivered during this timeframe.

The CBP is cascaded through Service Unit Operational Plans that provide a detailed view of core business activities planned for the forthcoming financial year.

Whilst not a statutory requirement, Service Unit Operational Planning supports the implementation of the CBP and enables prioritisation of workforce, asset and financial resources, through consideration of Service Levels and additional projects or initiatives for the year.

The key elements of the current Framework and their interactions are detailed in Figure 1 and the future Framework once the Council Plan has been adopted is shown in Figure 2.

It is important to note that this year the City will be developing a consolidated ‘Council Plan’ which will incorporate the key legislative requirements of an SCP and CBP. The Council Plan is due to be presented to Council for adoption in August 2025.

By developing the Council Plan, it will allow the City to address statutory requirements to have a ‘Plan for the Future’ as per the Section 5.56 of Local Government Act 1995 and meet the regulatory Integrated Planning and Reporting Framework guidelines set by the Department of Local Government Industry Regulation and Safety (DLGIRS) in relation to the preparation of a Strategic Community Plan and a Corporate Business Plan.

Based on this transition and the timing of this report, the final CBP does not show alignment to the current SCP strategic goals as it aligns to the new Council Plan.

Figure 1: Current Integrated Planning & Reporting Framework

Figure 2: Future Integrated Planning & Reporting Framework

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The 2025/26 – 28/29 CBP has been developed iteratively with Council Members through a series of Workshops to establish the priorities for the next four years.

2025/26 Annual Budget

In developing the Budget, consideration has been given to the local, state and national economic climate. The 2024/25 financial year was another difficult year with high cost of living, tight financial conditions in most regions and supply chain issues due to political instability in certain regions. The main reason for the tight financial condition across the globe is because of the effect of respective central banks cash rate increases post COVID19 pandemic. As a result, significant potential cost escalations have been considered in formulating the 2025/26 budget noting continuous uncertainty.

Latest Australian Bureau of Statistics (ABS) shows the monthly CPI has decreased from 2.4% in April 2025 to 2.1% in May 2025. This was a lower than anticipated result and may trigger another Reserve Bank of Australia (RBA) cash rate decrease in future. Should there be continuation of low CPI figures, further RBA cash rate cuts are possible.

Perth estimated actual CPI for 2024/25 is 2.75% (source WA State Budget Paper 2025/26).

The Budget Policy, in particular the policy on rates, has been the subject of review over the last two financial years and it is planned to finalise this review as soon as possible. The CPI in Western Australia over the past 5 years has been at times very low (pre-Covid – 2017/18 - 1.1%, 2018/19 - 1.6% & 2019/20 - 0.1%) followed by some very high rates (post-Covid – 2020/21 – 4.2%, 2021-22 – 7.4%, 2022/23 – 4.9% & 2023/24 – 4.6%). Working out a policy position whilst also taking in to account a number of variables has required several perspectives to be explored. Initially there was a new rating review prepared, then as further data gathering occurred an assets view of renewal requirements was conducted, and more recently a review of the LTFP was conducted. Certainly, the City’s recent work on the LTFP uses a model of varied rate increases over time depending on the level of requirements for new and renewal of assets. As the City works on each budget in detail there are also other things to consider.

For the 2025/26 budget, there are higher than originally planned contributions from the Catalina Regional Council which together with the rate increase and other revenue sources (ie. fees and charges, interest revenue and other revenue) positively contributed to balancing the budget.

It is envisaged that the Budget Policy will be updated in time for the next Budget development to take into account a broader view of the revenue sources.

The RBA continues to manage the Cash Rate to lower the inflation, with the current forecast CPI within the target range of 2%-3%. Whilst the 2025/26 forecast CPI of 2.75% is within the RBA’s target range the following key elements of the budget have contributed to higher increase than the forecast CPI in the overall operating expenses:

· Employee Costs due to Industrial Agreement increases, lower vacancy rate, and minimum superannuation guarantee increase;

· Contract expenses due to increase in current market price escalations and growth in services;

· General Material expenses due to high current market prices and growth in services; and

· Refuse removal costs due to 12% increase in Gate Fees. The Mindarie Regional Council (MRC) has increased the Gate Fee to $205/T (2024/25 - $183/T);

The following costs categories also significantly increased compared to the prior year:

· Waste Levy, Emergency Services Levy, Streetlighting tariff, Insurance expenses, and Audit Fees.

The City has managed to balance the budget with the above cost escalations which are greater than the forecast 2025/26 CPI of 2.75%.

The downward trend in the RBA Cash Rate (currently 3.85%), will reduce interest income from investments in term deposits. Historically high interest income has partially eased the pressure from higher CPI.

The Local Government Grants Commission has recently announced a 50% advance payment of the 2025/26 Financial Assistance Grants (FAGs) which was paid in June 2025 ($5.4m). This has resulted in recognition of the advance payment of the grant in the 2024/25 financial year which has been quarantined in the Strategic Projects/Initiatives reserve. This has resulted in an Operating Deficit Result from Operations for the Statement of Comprehensive Income (SOCI) in the 2025/26 financial year. Were there no FAGs advance payment, the Operating position of the 2025/26 financial year would be a Surplus. The quarantined advance payment will be available to use in the 2025/26 financial year.

The proposed 2025/26 rate increase is modest in keeping with community expectations and ensuring that all services and provision of amenities are maintained. The City’s Reserves will be used again to support key Capital Works projects to meet the demand from a growing population, especially in the Northern and Eastern suburbs. Even with general cost escalations including high State Government Tariffs the City will maintain the same service level delivery.

As mentioned above, the Catalina Regional Council’s dividend will be utilised to replenish the reserves, thereby meeting the budget policy principle of intergenerational equity.

Key Considerations and Issues That Have Impacted on the Formulation of the 2025/26 Budget

Due to continued supply chain disruption, excessive cost escalations and high inflation, this year’s Budget development has again been a challenging Budget to develop, with the Council Members working through many issues to arrive at this year’s proposed Budget. Council has always maintained a commitment to be the beacon of community support and service. As a result, the Budget has considered community expectations, financial constraints, and expectations from State and Federal governments and to ensure continued investment in infrastructure to stimulate the economy. The following points were some key considerations undertaken in developing the Budget:

Rates Model

The modelling used in deriving the Rates incorporates the latest valuations provided to the City by the Valuer General, (Landgate). It should be noted that properties rated on an Unimproved Value (UV) valuation basis are revalued annually, whereas Gross Rental Values (GRV) valuation basis is used for determining the Rates for Improved Properties and revalued triennially.

The City’s last triennial Gross Rental Valuations (GRVs) from Landgate was in 2023/24 for Commercial and Residential properties.

The Rates modellings have been performed based on the latest updated Unimproved Valuations (UV) for each relevant rating category.

The City’s current adopted SBP will be reviewed incorporating the current economic conditions and the updated LTFP once adopted.

The State Treasury forecast (released in May 2025 – Table 1) of the CPI for 2025/26 is forecasted at 2.75%, and estimated 2024/25 CPI is 2.75%, which is within the RBA target range of 2%-3%. Higher CPI is evident by the recent tenders for contracts, showing significant cost increases in both operational and capital works.

In regard to forecasts on the RBA cash rate, it is expected to reduce in the short term.

Table 1 - WA Treasury Economic Forecast – 2025/26 - 28/29

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Source – WA State Budget Paper No 3

With the proposed overall rate increase of 3.5%, the City has produced a balanced Statement of Financial Activity (SOFA) for the 2025/26 budget period. It is important to note that the proposed rate increase basis will be reviewed dynamically at each rate setting cycle to ensure the City is financially sustainable in the long term noting the City’s demand for asset renewal, upgrade and maintenance is increasing rapidly.

Rates Revenue Raising Methodology

GRV is a value determined by Landgate and represents the gross annual rental income that a property might reasonably be expected to earn annually if it were to be rented, including rates, taxes, insurance, and other outgoings. Likewise, the GRV is not related to a bank valuation or the market value of a property if it were to be sold.

The Un-improved Value (UV) is the fair market value of a property and does not consider any improvements on a property such as a house or sheds.

The City needs to generate a minimum income from rates to ensure essential services and facilities can continue to be delivered to the community. Using the GRV and the UV provided by Landgate, the City divides the total rates income required for each differential rate category by the total GRV/ UV for that differential rate category to determine each differential category’s rate in the dollar. Illustration is as follows:

To calculate one’s individual rates notice, the City multiplies the GRV for your property by the applicable Rate in the Dollar (RID):

As a result of the above, rates are determined at the appropriate to enable the City to generate the required revenue to maintain the expected level of service to the community and distribute the rates equitably amongst the rateable properties of that differential rating category.

As per Local Government Act 1995 Section 6.36, the City is required to give local public notice of intention of imposing the proposed Differential Rate in the Dollar (RID) and Minimum Rates. The City advertised in the local press on the 29 May 2025 (and had advised media outlets and published it on its website). The City has proposed differential rates which showed different rates for residential and commercial categories and was based on overall 3.5% increase.

At the closure of submissions on 19 June 2025, the City has received a total of 18 submissions out of 91,853 rateable properties. Out of these submissions:

- 11 submissions expressed concerns of rates increase and the cost of living;

- 3 submissions requested that the City’s expenses should be managed to avoid cost escalations;

- 2 submissions have suggested that the City priorities are not aligned with the community expectations;

- 1 submission expressed concern over unaffordability of rates; and

- There was one objection without quoting a reason.

There were no submissions on differential rating categories and the balance between categories.

Table 2 – Summary of Key Submissions and Responses

Key issues noted in the submissions are as follows:

The City’s Responses to the submissions are as follows:

Majority (11) of the submissions raised concerns of rates increase and the cost of living. 3 submissions requested that the City’s expenses should be managed instead. 2 suggested City priorities are not aligned with the community expectations and 1 objected without a reason.

The City needs to be financially sustainable in order to continue to deliver value for money services. The overall 3.5% rates increase for 2025/26 has been proposed based on the WA State Treasury forecast Consumer Price Index (CPI) and after a comprehensive review of the budgetary needs and future projections including:

- Operational Costs

- Infrastructure Investment in both new and renewal

- Community Services

- Reserves and Contingencies

Eligible pensioners and seniors can apply to receive a rebate on Rates and Emergency Services Levy (ESL). Further, the City has a financial hardship policy in place which is accessible to ratepayers who are experiencing financial difficulties

One (1) resident expressed concerns that the rates are un-affordable & highest in Perth.

The City can confirm that the City of Wanneroo’s rates are not the highest in Parth. The City provides competitive rates while maintaining high quality services covering:

Reliable Service Delivery: Ensuring consistent and dependable service to meet residents needs without interruptions.

Customer Support: Offering responsive and helpful customer service to address any inquiries or concerns promptly.

Advanced Technology: Pursuing in new technology to improve efficiency and service effectiveness.

Sustainability Initiatives: Implementing eco-friendly practices to promote environment responsibility.

The City needs to be financially sustainable in order to continue to deliver value for money services. The proposed residential rate increase is 3.0% for the 2025/26 financial year which is 0.25% higher than the WA State Treasury forecast Consumer Price Index (CPI) for Perth.

The City is also absorbing the State Government charges which are higher than 3.5% increase.

The City understands that some members of our community are under financial difficulty for various reasons. The City provides concessions to those who meet the State Government’s criteria, pensioners (for Waste Service Fee) and has a financial hardship policy in place which is accessible to ratepayers who are in financial difficulties.

Financial Details

The City’s financial performance has been monitored throughout the 2024/25 financial year to determine end of year forecasts and funding capacity. As the end of year processes will not be completed until September 2025, it is likely that the actual result will change with the final end of year position identified in the Statement of Financial Activity (SOFA). Any funding Surplus/(Deficit) will be managed through the City's Strategic Projects/Initiatives Reserve per Council Policy.

The City constructs the Budget using “Zero Based Budgeting” principles as per the SBP, which has been in place for a number of years. In doing so, the Operational and Capital Budgets are already precise and have limited capacity for further reductions without adversely compromising Service Levels or program outcomes.

The following documents provide a comprehensive overview of the proposed 2025/26 Budget:

· 2025/26 Statutory Budget (Attachment 2);

· 2025/26 Schedule of Fees & Charges (Attachment 3); and

· 2025/26 Capital Works Program, including 2024/25 Carry Forward Projects (Attachment 4).

The City's 2025/26 Annual Budget has been formulated based on business as usual with the following taken into account:

· Growth in the service areas is forecasted at 3.5%, in line with population growth forecasts;

· An increase of 2.75% in non-statutory fees and charges as agreed with Council Members;

· Cash Rate announcement by the Reserve Bank of Australia at 3.85%. The cash rate is the key driver of the City investment return from term deposits.

· Annual revaluation of Unimproved Values provided by Landgate for rating purposes;

· Various Reserves used to support the Budget with a drawdown of up to $71.4m;

Table 3 – Reserve Drawdown in 2025/26

· Various transfers to Reserves (replenishments) totalling $46.8m;

Table 4 – Reserve Replenishments in 2025/26

· General costs were increased by 2.75% unless they were specifically known to be increasing at a certain rate; and

· Government charges (see Chart 1 below) which are higher than the forecast CPI – as per the WA Treasury, the State Government announced the following increases of charges: Audit Fees by 6%, Streetlighting by 5.32%, Emergency Service Levy by 5.00% on Council owned properties, L1 and R1 Electricity tariffs by 2.5% and Light Motor Vehicle Licencing at 3.3%. These price increases have been incorporated against these expenditures.

Chart 1 – Comparison of Increases in Fees & Charges

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· The State Government Waste Levy will increase by $3 per tonne to $88 (3.5% increase) from 1 July 2025.

· Waste refuse expenses will increase due to increased MRC gate fees from $183/Tonne to $205/Tonne. Noting cost pressures with Waste Fees, the City has proposed to marginally increase the Waste Service Fee to $440.

It is the City’s aim to achieve a balanced SOFA bottom line and therefore, financially sustainable underlying operating result. Whilst estimated end of year result for 2024/25 is a balanced position, the final figures will be reported in the audited 2024/25 annual financial statements later this year and are subject final yearend adjustments including any audit adjustments. For 2024/25, total operating revenue is higher than the budgeted amounts mainly due to 50% advance payment of 2025/26 FAGs.

Attachment 2 provides the detailed Budget, with the SOCI (by Nature) reflecting a 2025/26 Budgeted Operating Deficit Result from Operations of $5.2m, being a decrease of $6.0m from the 2024/25 estimate. This decrease is primarily the result of 50% advance payment of FAGs in the 2024/25 financial year.. As detailed under the SOFA heading later in this report, the City has produced a SOFA for the 2025/26 financial year with a balanced position.

The Net Result forms the basis of reporting organisational performance under Australian Accounting Standards and includes Non-Operating items such as Capital Grants & Contributions and Development Contribution Plan (DCP) Income & Expenses. Furthermore, current reporting requirements expects the recognition of the value of physical assets contributed by developers as Non-Operating Income. To better assess financial performance, reference to the underlying Operating Result from Operations is recommended, as detailed below.

Comments relating to the changes in each Operating Income & Expense category comparing to the 2024/25 Estimate, are provided below:

Operating Income $268.0 million (+$5.4 million/+2.0%)

The Operating Income has increased by $6.4m when compared to the 2024/25 Estimate which primarily comes from increased Rates, Fees & Charges and Interest Revenue offset by decrease in Grants due to 50% advance payment of 2025/26 FAGs in June 2025. The Rates and Waste Service Fee represents $214m or 80% of the total Operating Income and particulars are detailed below.

Rates Revenue $174.7 million (+$9.2 million/+5.6%)

Rates income is budgeted at $174.7m representing an increase of $9.2m from 2024/25 Estimate. The amount is based on the following components:

· An overall average Rate Revenue increase of 3.5% (excluding growth) while ensuring that as required by the Local Government Act 1995:

o The number of Minimum rated properties within each category does not exceed the legislated 50%; and

o The highest differential general rate is not more than twice the lowest differential general rate imposed.

· The Budget allows for Rates growth income of $3.6m, which reflects a 3.5% change in properties that are developed/renovated. Of the $3.6m growth, $3.1m is from residential category and $500k is from commercial/industrial category.

· The City’s occupied private dwellings are expected to increase by 2,827 in 2025/26. The City’s forecasted population in 2025 is 243,012 people. It is expected to increase by over 194,003 people to 437,016 by 2046, at an average annual growth rate of 3%. Residential development forecasts assume the number of dwellings in City of Wanneroo will increase by an average of 3,574 dwellings per annum to 167,388 in 2046 (source – Forecast.id).

· The building approvals for 2024/25 are currently reported as 5809, significantly exceeding initial and updated forecasts. The property growth is expected to continue being high in 2025/26 with accelerated building approvals. However, RBA cash rates pressure, labour shortages, record high material costs and supply chain disruption may affect the completion of constructions.

· The City will continue to assist ratepayers facing financial hardship in accordance with the City’s Financial Hardship Policy.

· The City has received revised annual Un-improved valuations from Landgate and have been implemented in the rate database to ensure the correct revenue that will be generated. If a ratepayer believes that their valuation is incorrect, they can make an appeal to Landgate for a re-assessment.

It should be noted on the Rates Assessment a 5.0% increase of Emergency Service Levy (ESL) which is imposed by the State Government. Further, the Rates Assessment will also include an annual Swimming Pool Inspection Fee of $30.85 as per 2025/26 proposed Fees and Charges schedule.

The Rates generated allow the City to continue providing services, facilities and capital works for the community in a financially sustainable manner and at the same time provide support in maintaining employment opportunities. It considers new assets, growth in services due to increase in population and number of properties with corresponding income and expenditures. As noted in the budget setting above, the City will continue as in previous years to find savings in the Operational and Capital expenditures over the year where possible.

The City will continue to accept credit card payments via BPay at no charge to the end user.

Operating Grants, Subsidies and Contributions $8.4 million (-$9.9 million/-54%)

The main reason for the decrease is an advance payment of 2025/26 FAGs allocation in June 2024. The Local Government Grants Commission has announced 50% advance payment ($5.4m) of the FAGs prior to 30 June 2025.

Fees & Charges $58.1 million (+$4.2 million/+7.8%)

Waste Services Fees & Charges Income $38.5m

Due to increases in costs to deliver Waste Services, the Waste Fee is proposed to be increased to $440 for the 2025/26 financial year, with the total Waste Service Income projected to generate $34.4m. This increase is in order to cover some particular costs in the next 5 years including Neerabup Resource Recovery Precinct (RRP) as per the Masterplan for Neerabup RRP.

The basis of budget preparations has been with an increase in gate fees from $183/tonne (2024/25) to $205/tonne (2025/26), being a 12% increase. As per the WA State Budget the State Government’s Landfill Levy has increase by 3.75% to $88/tonne in 2025/26.

There is no change to Pensioner Waste Service Fee discount, which is currently $60.

Other Fees and Charges Income $19.6m

The rest of the Fees & Charges for 2024/25 have been adjusted by the forecast 2025/26 CPI of 2.75% and the assumption that all services are fully operational. Due to rounding some Fees & Charges may not adjust by exactly 2.75%.

There has been a reduction in Aquamotion membership fees for City staff. The fee used to align to the Gold Level for any large organisation however this year it is proposed to be lower than all other corporate memberships.

A list of the proposed Fees & Charges is detailed in Attachment 3.

Interest Earnings $23.1 million (+$1.8 million/+8.3%)

The City’s interest earning potential is steady with increased reserves balances. An average rate of investment return of 4.37% per annum has been forecasted for 2025/26 (which is 0.52% above the current Cash Rate).

Other Revenue $3.7 million (+$36 thousand/+1.0%)

The increase in other income is mainly due to increase in profit share from golf courses and verge bond retentions.

Operating Expenses $273.2 million (+$12.4 million/+4.7%)

The 2025/26 Budget has been prepared based on business as usual. The increased costs in the previous year have not changed favourably in the current year. Whilst the May – 2025 inflation was at 2.1% the average 2024/25 financial year estimated CPI will be at 3.0%. The WA Treasury has forecasted 2025/26 inflation to be 2.75% (refer Table 1, above).

The City also faces additional cost pressure reflective of an expanding and growing community which can be seen in Employee costs, Materials and Contracts and Utilities and Insurance.

The State Government Charges announced recently are available in the above Chart 1, listed below, are higher than the forecasted CPI of 2.75%, except State Government Unmetered Electricity Supply which has decreased by 0.13% and therefore the additional cost to be absorbed by the City.

· Streetlighting costs have increased by 5.54%;

· Emergency Services Levy has increased by 5.0%;

· Heavy Motor Vehicle Registration Fees by 6.0%

· Light Motor Vehicle Registration Fees have increased by 3.0%; and

· Audit Fees have increased by 6%.

Employee Costs $101.6 million (+$4.7 million/+4.9%)

The increase in Employee Costs mainly represents the projected increase in staff costs through Enterprise Agreement increases together with an increase in new FTEs.

Materials & Contracts $102.0million (+$4.6 million/+4.6%)

The main contributors for the increase are:

· Maintenance Expenses are forecasted to increase by $6.1m mainly due to the following reasons:

o Parks contract expenses are forecasted to increase by $2.0m due to increases in current market price escalations with contractors, growth in number of parks and increase due to service review recommendations.

o The City currently maintains 415 parks and expected to be increased the number by 36 new parks and streetscapes in the 2025/26 financial year.

o Buildings and engineering maintenance cost has increased $2.0m mainly due to new infrastructure (growth) such as drainage, roads and buildings. Increase in costs are primarily due to general economic inflation and rising costs in construction, labour and other service costs plus the maintenance of additional assets including inherited assets;

o Software Maintenance, Support & Licence Expenses are forecasted to increase by $1.0m mainly due to new software licences, increase in cyber security licences and 2.75% forecast CPI increase.

· Refuse removal expense is forecasted to increase by $1.4m due to increase in MRC Gate Fee ($22/tonne or 12% increase) and growth in number of properties serviced (growth by 4,751 properties);

· There is an increase of $766k forecasted in General Material expenses mainly due to increased expenses in mulch management, tree planting, parks management and fertiliser;

Offset by

· Decrease in contract expenses by $2.3m due to conclusion of the Mariginiup Bushfire Recover Cleanup program by 30 June 2024.

Utility Charges $11.3 million (+$0.6 million/+5.9%)

Utility charges, which comprise electricity, gas & water costs, are based on forecast tariff together with any growth in usage.

Whilst the City’s streetlighting costs are forecasted to increase by 5.32%, other utility charges have been escalated by 2.75%.

The State Government % increase for streetlighting is 5.54% for the 2025/26 financial year. The City has considered number of factors in forecasting the streetlighting budget including the below points:

- State Government’s electricity tariff;

- Growth in number of streetlights;

- Energy usage efficiencies due to efficient luminaries; and

- Average cost per lamp per day, based on actual expenditure.

As a result, City’s streetlighting expenditure % increase is lower than the State Government’s % increase.

The overall increase compared to the 2024/25 estimated actual is $634k. This is mainly due to increase in Electricity expenses.

Depreciation $52.4 million (+$2.4 million/+4.8%)

This is a non-cash cost and is higher by $2.4m from 2024/25. It is noted that the depreciation forecast has considered estimated Contributed Assets from Developers.

The increase in depreciation compared to the 2024/25 estimate is due to the additional capitalisation of assets (inclusive of those received free of charge from Developers).

Finance Costs $4.1 million (+$6 thousand/+0.1%)

Interest Expenses relate to a loan agreement with Western Australian Treasury Corporation (WATC) secured in 2006/07 and interest on leases. The WATC loan has been fully drawn and interest only payments will be made until the principal falls due in the 2026/27 financial year.

In addition, the City is in partnership with land developers who undertook capital projects in the Yanchep/ Two Rocks area. Due to a lack of land sales, a loan was arranged, which is to be repaid back using Land Development contributions. This loan is anticipated to incur approximately $0.8m in interest per year and reported within DCP Expense line item of the SOCI.

Insurance Expenses $1.7 million (-$28 thousand/-1.6%)

The City’s 2025/26 insurance budget is calculated on the insurer’s (Local Government Insurance Scheme - LGIS) forecast of 10% increase, based on the 2024/25 actual insurance expenditure.

Non-Operating Income and Expenses:

Non-Operating Grants, Subsidies and Contributions

The City has budgeted $52.0m in Non-Operating Grants, Subsidies & Contributions, of which $239k is carried forward from the 2024/25 financial year. The balance of $51.8m relates to:

· $15.2m of State Government Grants funded capital work.

· $26.3m of Federal Grant funded capital works; and

· $4.8m of Main Roads Regional Program (MRRP) grant funded capital work.

Contributed Physical Assets

Physical Assets to be transferred to the City by various developers is forecasted to be $130m, which are mainly from developments occurring in the northern corridor and East Wanneroo areas. The maintenance of these contributed assets is a responsibility of the City and will commence soon after handover. As indicated in the Materials & Contracts Expenditure, growth related maintenance cost of infrastructure, has been factored in the 2025/26 Budget at a rate of 2% of the asset value.

Profit and Loss on Asset Disposals

Profit on Asset Disposals of $11.8m is mainly due to Catalina Regional Council’s (CRC) estimated distribution to owners from land sales.

Loss on Asset Disposals of $659k relates to Fleet & Plant replacements.

Development Contribution Plan (DCP)

The City’s DCPs are forecast to receive approximately $36.8m in contributions from Developers during 2025/26. Those funds will be placed into their applicable Reserves or Restricted Funds to use for costs relating to those areas, with $27.3m budgeted to spend on the development projects.

Significant progress is continuing across the City’s Development areas, with notable budgeted activities forecast as follows:

· Income (Developer Contributions & Interest Earnings)

o Alkimos/Eglington DCP $8.0m

o East Wanneroo Cell 2 $6.7m

o East Wanneroo Cell 6 $4.0m

o Yanchep/Two Rocks DCP $2.9m

o East Wanneroo Cell 9 $2.2m

o East Wanneroo Cell 4 $2.1m

· Expense (Land Acquisitions)

o East Wanneroo Cell 6 $14.1m

o East Wanneroo Cell 2 $7.4m

o East Wanneroo Cell 4 $1.6m

o East Wanneroo Cell 9 $1.3m

o East Wanneroo Cell 7 $1.2m

2025/26 Capital Works Program (CWP)

The 2025/26 CWP has been developed with the aim of balancing the demands for new infrastructure against the need to maintain, renew, upgrade and replace existing assets. The CWP is supported by Asset Management Plans and in 2025/26 allocates 58.4% of the Budget to new assets, 23.3% to asset upgrades and 18.4% to asset renewals (excluding carry forwards).

The CWP has been set and prioritised based on community needs balanced against the City's financial and resourcing capacity. It also supports the State Government request to local governments to continue investing in Capital to stimulate the economy.

The CWP for 2025/26 is proposed to be $132.7m (excluding carry forward projects) funded from:

Table 5 – 2025/26 Capital Works Program – Funding Sources

It is noted that the size of the CWP budget is consistent with the 2024/25 completed CWP but inflated due to the Alkimos Aquatic and Recreation Centre project ($48.9m) and the Dordaak Kepup Library and youth Innovation Hub program ($4.9m). The 2025/26 CWP budget has been estimated after a thorough review of requirements, priorities, and deliverability. The 2024/25 Carry Forward amount is estimated to be $4.9m which is mainly due to delays caused by supply chain disruptions, capacity limitations and weather.

Major projects in the 2025/26 budget year are tabulated below:

Table 6 – Major Capital Projects

A detailed listing of all individual projects comprising the 2025/26 Capital Works Program and 2024/25 Carry Forwards is included in Attachment 4.

Carry Forward Capital Projects

As at the end of the 2024/25 financial year, some projects and asset replacements are either incomplete or not commenced. This is due to:

· Multi-year projects continuing,

· Projects which suffered delays and interruptions due to supply chain disruptions; and

· Capacity limitations due to construction limitations and/or labour shortages.

It is estimated that the carry-forward projects from 2024/25 will amount to $4.9m. This will bring the total Capital Works Program for 2025/26 to $137.6m. The 2024/25 Carry Forward balance of $4.9m considered to be the lowest ever reported historically, showing a strong CWP delivery position at the end of 2024/25 financial year.

The carried forward projects estimated at $4.9m are fully funded from the 2024/25 Budget (Attachment 4). Actual amounts will however be adjusted based on the final, end of year results. The carry forward projects are supported by the following funding sources:

Table 7 – Carry Forwards – Funding Sources

Roads to Recovery (RTR) Program

The RTR Program supports the construction and maintenance of the nation's local road infrastructure assets, which facilitates greater accessibility and improves safety, economic and social outcomes for Australians.

From 1 July 2024, a new five-year funding period commenced with increased funding as announced by the Australian Government in November 2023. The City is expected to receive a RTR funding allocation of $17.0m from the Federal Government which is to be expended over the five-year funding period from 1 July 2024 to 30 June 2029.

The 5-year instalment represents a significant increase to the corresponding Roads and Traffic Treatments Sub Programs. The RTR allocation for the 2025/26 Capital Works Program is $3.1m.

State Government Grants Funded Projects

The City’s 2025/26 CWP (including Carry Forward of $222k) has $15.4m worth of projects that are funded from the State Grants program.

Reserves

In order to meet the funding requirements of the Budget and long term financial sustainability (per LTFP), a range of Reserve transfers are proposed. Details of these transfers are provided as part of the Notes to Statutory Budget (Attachment 2, Note 7). The below table depicts reserve utilisation for the 2025/26 CWP.

Table 8 - Transfer from Reserves

This year, as in recent years, significant Reserve Balances are being used amounting to $71.4m (refer above Table 3), of which:

· $60.4m is to fund the Capital Works Program (see the above table);

· $5.5m drawdown of 2025/26 quarantined FAGs received in advance:

· $3.1m transferred for operations by lowering the cash backed leave reserve balance ($2.7m) and transfer from Strategic Projects/Initiatives ($368k);

· $1.6m from Carry Forward reserve to fund Municipal funded carry forward projects

· and

· $1.2m is to recoup Developer Contribution Plan administration costs.

Additional draw on Reserves may be called upon during the year if determined.

The breakdown of 2025/26 Reserve replenishments (totalling $46.8m – refer above Table 4) is as follows:

· Transfer of $16.9m interest income to respective reserves;

· Transfer of $9.7m Development Contribution Plan contributions;

· Transfer of $2.5m to the Asset Renewal/Enhancement Reserve to accommodate future Asset Renewal demand;

· Transfer of $2m to the Information, Communication & Technology (ICT) Reserve to accommodate future ICT capital and operating funding requirements;

· Transfer of $3.2m to the Strategic Land Reserve to enable the City to fund future strategic property development and acquisition projects;

· Transfer of $2m to the Strategic Projects/Initiatives Reserve to enable the City to fund new initiatives.

· Transfer of $3.2m to the Golf Course Reserve to accumulate funds for the capital improvements of the Carramar and Marangaroo Golf Courses;

· Transfer of $6m to the Plant Replacement Reserve to fund future replacement of City’s Fleet, Plant & Equipment;

· Transfer of $564k to the Neerabup Development Reserve; and

· Transfer of $364k to the Waste management Reserve

Of the above reserve replenishments, $11.7m will be funded from Catalina Regional Council’s land sale profit distributions.

As previously mentioned, administration will continue to find savings which can be allocated to reserve replenishment.

Statement of Financial Activity (SOFA)

The SOFA represents a composite view showing source and application of the finances of the City. It highlights the movement in the Surplus/(Deficit) which is primarily based on the Operations and Capital Revenue & Expenditure, as well as all Funding Transfers (Financial Reserves and Development Contributions Plans).

There are three main sections in the SOFA, i.e., Operating Activities, Investing Activities and Financing Activities. The non-cash components of each section have been eliminated to show the true picture of funding movements.

The City has prepared and presented the SOFA for the 2025/26 financial year with a balanced closing position noting that the opening funding position is an estimate which is subject to the financial year end audit and actual carry forward adjustments.

The City was able to achieve a position which is closer to the balanced than ever reported in the past by close monitoring and tight budget controls.

As a result of constraints in supply chain, skilled labour shortages, escalated market prices, certain budgeted capital projects in the 2024/25 financial year have not been commenced or completed as planned. The 2024/25 carry forwarded capital projects are recorded at $4.9m. Having considered the quantum of carry forwards and internal/external resourcing capacities the total Capital Works budget for 2025/26 was set at $137.6m.

The Rates generation of $174.7m will allow the City to continue with running its operations and delivering capital programs in a financially sustainable manner. It considers growth in services due to increase in population and number of properties with corresponding increases in income and expenditures.

Calculations for the 2025/26 SOFA identified the need to raise $174.7m, to balance the budget, through Rates, which equates to a 4.0% increase for the current base of properties which is due to new properties expected to be built next year and 3.5% overall average Rates Revenue increase.

The City will closely monitor its reserve requirements and strive to maintain appropriate level of balances for financial sustainability. This review will also confirm compliance with the City’s Financial (Cash Backed) Reserves Policy.

Consultation

This document has been prepared based on extensive consultation with Council Members (four Workshops), the Executive Leadership Team and Service Unit Managers. Feedback has also been received from the community through submissions from the advertising of proposed Differential RID.

In addition, the budget includes capital projects, some of which have been through consultation processes with community.

Comment

The Statutory Budget Process is a part of the Integrated Planning & Reporting Process, which considers the LTFP and SCP, which is then activated by the formulation of the CBP and driven operationally by the development of the Annual Budget. The process also incorporates informing strategies using the Workforce Plan and Asset Management Plan.

After application of an overall 3.5% Rates increase for 2025/26, the City has been able to contain the average Rates increase for Residential Improved GRV category at 3% compared to the average Residential Rates charge for 2024/25, with the Commercial/Industrial GRV category increasing by 5.5% compared to 2024/25.

The City understands that some of our community members are under financial pressure, and ratepayers who are experiencing financial difficulties may apply for assistance from the City under the Financial Hardship – Collection of Rates & Service Charges Policy.

In summary, the proposed budget has the following aspects incorporated:

1. Overall 3.5% Differential Rate increase, impacting on Rates Revenue positively by +$5.6m;

2. Interim Rates estimated of $3.6m, as a result of expected growth in number of properties;

3. Introduction of new rates smoothing arrangement allowing rate payers to pay rates weekly, fortnightly and monthly during the year which will provide significant cash flow relief;

4. Continuation of the reduced interest rates on outstanding balances at 5% (less than the maximum of 8.45% allowed under legislation) and 0% interest on instalments;

5. Continuation of the City’s Financial Hardship – Collection of Rates & Service Charges Policy for those who are experiencing financial difficulties;

6. An increase to Fees & Charges increase of 2.75% is in line with the 2025/26 forecast CPI;

7. The annual Waste Service Fee increasing to $440.

8. The City will continue to offer a discount in 2025/26 to certain pensioner groups as part of its ongoing concessions (Waste Service Fee) equating to approximately $680k;

9. It is proposed to waive the 2025/26 Council Rates (excluding Emergency Services Levy) for land leased by the City to various community groups (totalling approximately $152k) (Recommendation 3);

10. Businesses will continue to have the ability to access budgeted business support activities under the program promoted through the Enterprise Funding Policy, which is still in place;

11. Operating Deficit Result from Operations of ($5.2m) resulting from an early payment of the FAG’s;

12. Proposed utilisation of the Reserve Funds where possible to supplement revenue sources and enable services and capital projects to continue; and

13. Capital projects (including Carry Forwards) of $137.6m are budgeted, which will assist in stimulating the local economy.

The SOFA has proposed balanced budget with an overall 3.5% Rate increase.

The City will continue to review its rating strategy and will update the Strategic Budget policy accordingly.

Statutory Compliance

· The Local Government Act 1995 sections relating to Annual Budget, Integrated Planning and Reporting Framework and Local Government (Financial Management) Regulations 1996 have been utilised to develop the Budget;

The specific section of the Local Government Act 1995 of note against which the Rates Relief Concessions that has been applied is:

“Section 6.47 - Concessions

Subject to the Rates and Charges (Rebates and Deferments) Act 1992, a local government may at the time of imposing a rate or service charge or at a later date resolve to waive* a rate or service charge or resolve to grant other concessions in relation to a rate or service charge.”

* Absolute majority required

Strategic Implications

The proposal aligns with the following objective within the Strategic Community Plan 2021 – 2031:

7 ~ A well governed and managed City that makes informed decisions, provides strong community leadership and valued customer focused services

7.1 - Clear direction and decision making

Risk Appetite Statement

In pursuit of strategic objective goal 7, we will accept a Medium level of risk as the City balances the capacity of the community to fund services through robust cost-benefit analysis and pursues evidence-based decision making to be effective stewards of the Council and City for future generations.

Risk Management Considerations

Risk Title	Risk Rating
ST-S20 Strategic Community Planning	Low
Accountability	Action Planning Option
Director Corporate Strategy and Performance	Manage

Risk Title	Risk Rating
ST-G09 Long Term Financial Planning	Low
Accountability	Action Planning Option
Director Corporate Strategy and Performance	Manage

Risk Title	Risk Rating
CO-017 Financial Management	Medium
Accountability	Action Planning Option
Director Corporate Strategy and Performance	Manage

Risk Title	Risk Rating
ST-S24 Strategic Asset Management	Medium
Accountability	Action Planning Option
Director Assets	Manage

Policy Implications

The Budget has been developed in accordance with the Strategic Budget Policy, Accounting Policy, Financial Cash Backed Reserves Policy and Financial Hardship – Collection of Rates & Service Charges Policy. Whilst the 2025/26 Rate increase is not compliant with the City’s Strategic Budget Policy adopted in March 2022, the intent of the Policy has been met by utilising other funding sources (Catalina Regional Council share) to replenish reserves.

Financial Implications

Adoption of the 2025/26 – 28/29 CBP and 2025/26 Budget will allow for the timely implementation of identified actions and associated Capital Works Program. This Budget is not in line with the current LTFP, however the LTFP is being updated and to be submitted to Council Members for consideration and adoption later in the 2025 calendar year.

Voting Requirements

Absolute Majority

Recommendation

That Council, by ABSOLUTE MAJORITY:-

1. ADOPTS the 2025/26 – 28/29 Corporate Business Plan (unbranded) as shown in Attachment 1;

2. ADOPTS the 2025/26 Annual Budget (Attachment 2), incorporating:

a) Statement of Comprehensive Income, showing Total Comprehensive Income of $197,639,390;

b) Statement of Cash Flows, showing cash at end of year position of $53,924,015;

c) Statement of Financial Activity shows the amount generated through the levying of General Rates $174,680,029;

d) Statement of Financial Activity shows a balanced closing funding position;

e) The Notes To and Forming Part of the Budget;

f) 2025/26 Schedule of Fees & Charges (Attachment 3), effective from 23 July 2025, including the Pensioner Rebate on Waste Service Fee for those who are entitled; and

g) 2025/26 Capital Works Program of $137,558,649 (Attachment 4), including 2024/25 Carry Forward Projects of $4,904,303.

3. APPROVES to waive the 2025/26 Council Rates (excluding Emergency Services Levy) for the following community groups, in accordance with Section 6.47 of the Local Government Act 1995:

a) AJS Motorcycle Club of WA Inc.;

b) Kingsway Football & Sporting Club Inc.;

c) Kingsway Little Athletics Centre;

d) Community Hairdresser (18 Linto Way, ALEXANDER HEIGHTS, 6064);

e) Olympic Kingsway Sports Club;

f) Pinjar Motorcycle Park Inc.;

g) Quinns Mindarie Surf Lifesaving Club Inc.;

h) Quinns Rocks Sports Club Inc.;

i) Community Hairdresser (11 Patrick Court, GIRRAWHEEN, 6064);

j) The Badminton Association of WA Inc.;

k) The Scout Association of Australia, Western Australia Branch (76 Ashley Road, TAPPING, 6065);

l) Tiger Kart Club Inc.;

m) Vietnamese Community in Australia – WA Chapter Inc. (1 Curtis Way, GIRRAWHEEN, 6064);

n) Vikings Softball Club Inc. & The Wanneroo Giants Baseball Club Inc.;

o) Wanneroo Agricultural Society Inc.;

p) Wanneroo Amateur Boxing Club Inc.;

q) Wanneroo Amateur Football Club Inc., Wanneroo Cricket Club Inc., Wanneroo Junior Cricket Club Inc. and Wanneroo Junior Football Club Inc. (Wanneroo Showgrounds Clubrooms);

r) Wanneroo BMX Club Inc.;

s) Wanneroo City Soccer Club Inc.;

t) Wanneroo Districts Cricket Club Inc. (Indoor Facility);

u) Wanneroo Districts Cricket Club Inc. & Wanneroo Districts Hockey Association Inc.;

v) Wanneroo Districts Netball Association Inc.;

w) Wanneroo Districts Rugby Union Football Club Inc.;

x) Wanneroo Horse & Pony Club Inc.;

y) Wanneroo Repertory Inc. (Limelight Theatre);

z) Wanneroo Shooting Complex Inc.;

aa) Wanneroo Sports & Social Club Inc.;

bb) Wanneroo Tennis Club Inc.;

cc) Wanneroo Trotting Training Club Inc.;

dd) West Australian Rifle Association Inc.;

ee) Wildflower Society of Western Australia Inc.;

ff) Yanchep Community Garden Group Inc.;

gg) Yanchep Golf Club Inc.;

hh) Yanchep Sports & Social Club Inc.; and

ii) Yanchep Surf Lifesaving Club Inc.;

4. APPROVES to waive the 2025/26 Waste Service Fee for the Scout Association of Australia, Western Australia Branch (76 Ashley Road TAPPING WA 6065);

5. In accordance with the provisions of Sections 6.32, 6.33 and 6.35 of the Local Government Act 1995:

a) IMPOSES Differential Rates and Minimum Rates for the 2025/26 Financial Year; and

b) IMPOSES the 2025/26 Gross Rental Value Differential Rates & Minimum Rates as follows, subject to the provisions of Sections 6.32, 6.33 and 6.35 of the Local Government Act 1995: -

GRV Category	Rate in the Dollar (cents)	General Minimum Rate $
Residential Improved	7.0902	1,138
Lesser Minimum Strata Titled Caravan Parks	7.0902	166
Residential Vacant	14.1803	949
Commercial & Industrial Improved	8.4541	1,588
Commercial & Industrial Vacant	8.2585	1,588

c) IMPOSES the 2025/26 Unimproved Value Differential Rates & Minimum Rates as follows, subject to the provisions of Sections 6.32, 6.33 and 6.35 of the Local Government Act 1995: -

UV Category	Rate in the Dollar (cents)	General Minimum Rate $
Residential Improved	0.3323	1,138
Residential Vacant	0.5622	949
Commercial & Industrial Improved	0.2881	1,588
Commercial & Industrial Vacant	0.3291	1,588
Rural & Mining Improved	0.3352	1,131
Rural & Mining Vacant	0.4337	1,069

6. APPROVES to offer the following payment options and incentives for the payment of Rates & Charges, Waste Service Fee, Private Swimming Pool Inspection Fees and Emergency Service Levy in accordance with the provisions of Section 6.45 of the Local Government Act 1995 and Regulation 64(2) of the Local Government (Financial Management) Regulations 1996:

a) One Instalment:

i. Payment in full within 35 days of the issue date of the Annual Rate Notice (24 September 2025); and

b) Two Instalments:

i. The First Instalment of 50% of the total current Rates & Charges, Waste Service Fee, Private Swimming Pool Inspection Fees, Emergency Service Levy, plus the total outstanding arrears payable within 35 days of date of issue of the Annual Rate Notice (24 September 2025);

ii. Second Instalment 63 days after due date of First Instalment (26 November 2025);

c) Four Instalments:

i. The First Instalment of 25% of the total current Rates & Charges, Waste Service Fee, Private Swimming Pool Inspection Fees, Emergency Service Levy, plus the total outstanding arrears payable within 35 days of date of issue of the Annual Rate Notice (24 September 2025).

ii. The Second, Third and Fourth instalments each of 25% of the total current Rates & Charges, Waste Service Fee, Private Swimming Pool Inspection Fees, Emergency Service Levy and Instalment Charge, payable as follows:

a. Second Instalment 63 days after due date of First Instalment (26 November 2025);

b. Third Instalment 63 days after due date of Second Instalment (28 January 2026);

c. Fourth Instalment 63 days after due date of Third Instalment (1 April 2026);

7. IMPOSES, In accordance with the provisions of Sections 6.13 and 6.51 of the Local Government Act 1995, interest on all arrears and current charges in respect of Rates & Charges, Waste Service Fees and Private Swimming Pool Inspection Fees (including GST where applicable) at a rate of 5% per annum. This amount will be calculated on a simple interest basis on arrears amounts that remain unpaid and current amounts that remain unpaid after 35 days from the issue date of the Original Rate Notice (24 September 2025), or the due date of the Instalment and continues until all Instalments are paid, excluding:

a) Deferred Rates;

b) Instalment current amounts not yet due under the four payment options;

c) Registered Pensioner portions;

d) Current Government Pensioner Rebate amounts; and

e) Where the debtor is a person or organisation considered by the City of Wanneroo to be suffering financial hardship.

8. ADOPTS in accordance with Regulation 34(5) of the Local Government (Financial Management) Regulations 1996, for the purposes of reporting material variances in the Statement of Financial Activity for the 2025/26 Financial Year, a percentage of 10% together with minimum values of $100,000;

9. APPROVES the change in name and purpose of the Strategic Land Reserve to Strategic Property Reserve as follows:

From “Strategic Land Reserve”

For the purpose of receiving the proceeds of the sale of significant property assets, acquisition, leasing, development and/or disposal of land under the City of Wanneroo Strategic Land Policy.

To “Strategic Property Reserve”

For the purpose of receiving the proceeds of the sale of significant property assets, acquisition, leasing, development and/or disposal of property under the City of Wanneroo Strategic Land Policy.

10.

Attachments:

1 ⇩.	Attachment 1 - 2025-26 - 2028-29 - Corporate Business Plan	25/194210
2 ⇩.	Attachment 2 - 2025/26 Statutory Budget	25/254816
3 ⇩.	Attachment 3 - 2025/26 Schedule of Fees & Charges	25/239697
4 ⇩.	Attachment 4 - 2025/26 Capital Works Program (including 2024/25 Carry Forward Capital Projects)	25/239688