What you need to know about the 25/26 Budget
- Henry Davis
- 1 day ago
- 7 min read
Adelaide faces a financial crisis. Independent regulators have issued warnings. Ratepayers face increases of up to 500%, a total budget shortfall of $97.1 million, long term underfunding of our Asset Management Plans – Parks and Open Space is 47% underfunded, infrastructure projects being investigated without secure funding and broken promises to businesses for much needed Economic Development. To sustain current spending and manage our forecast debt, rate revenue would need to rise by 27.8% this year to fund this spending—far above inflation.
If this draft budget is adopted, it will lock in unaffordable decisions for years to come. This letter outlines the facts.
I urge you to act now.
These measures will certainly be introduced if you don’t tell the council otherwise. Below is further information about the draft budget. This is your one opportunity to have your say before decisions are locked in. Once adopted, this budget will be extremely difficult to reverse. I cannot oppose this without your support.
As a councillor, I’ve reviewed this budget line by line and cannot in good conscience support it. This letter sets out the facts so ratepayers can hold us accountable.
There are more responsible ways to manage the city’s finances—growing our rates base through an investment in economic development, reducing waste, reassessing consultant spend, seeking external partnerships and adopting phased investment in infrastructure. We must prioritise essential services and core asset maintenance first.
“The Council has no contingency, while operating close to what it considers its financial limits, despite clear risks.” - Independent ESCOSA Report
MISLEADING SURPLUS MASKS STRUCTURAL DEFICIT
The reported $8.541 million surplus is misleading. It relies on underfunding the Asset Renewal Budget, which—if properly funded—would reveal a small deficit of around $59,000. This tactic helps avoid breaching debt limits but compromises long-term sustainability. ESCOSA has flagged this as a concern, warning that the Council’s current approach is not financially viable over time. Although the asset renewal ratio is stated as 93.5%, deeper analysis shows that essential maintenance is being deferred, placing future service delivery and infrastructure at risk.
RATES DOUBLE CPI
Rate increases have consistently outpaced inflation under this Council. In the upcoming year, rate revenue is set to increase by 6.96%, more than double the 2.2% *1 Consumer Price Index (CPI) measured in the 12 months to March 2025. While the Council frames this as “budget repair,” the underlying issue appears to be a sustained pattern of expenditure growth—raising concerns that this is a structural spending issue rather than a temporary imbalance.
BROKEN PROMISES ON ECONOMIC DEVELOPMENT AGENCY
Small businesses will suffer from the Council’s broken promise by its failure to fully fund and deliver the Economic Development Strategy it adopted. The Adelaide Economic Development Agency (AEDA) was tasked with implementing key elements of this strategy, including revitalising the city’s visitor economy, driving business investment, and positioning Adelaide as Australia’s creative capital. However, Council’s budget tells a different story.
AEDA advised that a 9.5% allocation of rate revenue—approximately $14.5 million—was necessary to deliver the full scope of the strategy. Yet the Council has only committed 6.38%, or $9.138 million, creating a funding shortfall of $5.392 million. This underfunding means essential programs—such as expanding events and festivals, promoting precinct activation, enhancing Rundle Mall, and boosting investment attraction—cannot be delivered as planned.
This is not a technical disagreement over budget lines. It’s a broken commitment. Council consulted with businesses and residents to develop an economic plan with bold ambitions. Now, at the moment of implementation, it is refusing to provide the resources needed to turn that plan into reality. Without adequate funding, the plan becomes just another glossy document on a shelf—an Adelaide risks falling behind.
They promised it; but they won’t deliver it.
COUNCIL UNSUSTAINABLE – TAKE CORRECTIVE ACTION NOW
The latest report from the Essential Services Commission of South Australia (ESCOSA) reveals structural weaknesses in the City of Adelaide’s financial management.
ESCOSA is the boundary umpire in local government. Its job isn’t to chase goals but to keep the game within the lines and signal when something’s gone out of bounds. They don’t deal in opinions; they deal in facts.
Their latest ruling is clear: the Council’s current financial position may look stable today (despite the deficit), but its long-term economic plan will be potentially unsustainable if something isn’t done.
ESCOSA’s official advice says we are at risk unless corrective actions are taken. ESCOSA is warning that if plans continue unaltered, the Council will be forced to rely on uncertain grants or shift the burden back to ratepayers through rate hikes or reduced services.
“The Corporation of the City of Adelaide’s current financial performance is mostly sustainable and projected financial performance potentially unsustainable.” *3
THERE IS A $97.1 MILLION DOLLAR BUDGET BLACK HOLE
The City of Adelaide is facing a serious funding shortfall for three major infrastructure projects that will affect every ratepayer. These projects—the Torrens Weir, Adelaide Bridge, and Rundle UPark—are critical to the city’s future, yet the Council has failed to allocate anywhere near the required funding in its budget. The total unfunded shortfall for these projects could reach $97.1 million.
The cost of renewing the Torrens Weir has been indexed to $44.7 million, but Council is assuming it will only need to fund one-third of this amount, with the remainder coming from grants that are not secured. ESCOSA warns that:
“The Council has advised that it has a low to medium confidence level in these estimates.” (p.13) ESCOSA
If the grants don’t materialise, or costs increase further, ratepayers could be left covering the entire bill. The Adelaide Bridge faces the same uncertainty. Its updated renewal cost is $65.6 million, with Council planning to fund 75% of it. Again, the assumed grants have not been confirmed, and ESCOSA cautions that the cost estimates “could be under-estimated.” (p.13)
The situation is even more stark with Rundle UPark. The Asset Management Plan forecasts $60 million is needed for full renewal, yet only $15 million has been allocated. That’s a $45 million black hole with no plan to fill it.
These shortfalls sit within a broader financial context ESCOSA describes as precarious:
“The Council has no contingency… operating close to what it considers its financial limits, despite the clear risks.” (p.2)
Without immediate corrective action, residents and businesses may face sharp rate rises, service cuts, or ballooning debt. These are not distant risks — they are already embedded in the Council’s long-term plan. Ratepayers deserve transparency and a real strategy, not financial wishful thinking.
COUNCIL’S DEBT LOAD NEARS ITS LIMITS – WE WILL FACE CRUSHING DEBTS
ESCOSA has confirmed that the City of Adelaide is operating near its prudential borrowing limit of 50% of the value of saleable property assets.
Adelaide’s capacity to borrow further for infrastructure, services, or emergencies is almost fully exhausted. Compounding this problem, ESCOSA also notes that the Council’s cash reserves are projected to remain static at just $0.8 million over the entire forward period. This leaves the city financially exposed without any meaningful buffer to manage unforeseen costs or downturns.
This leaves us dangerously exposed, with no financial capacity to respond to emergencies or cost overruns.
SOME RATEPAYERS WILL FACE A 500%+ RATE INCREASE
Although it may seem implausible, Council documents confirm that some ratepayers—particularly small businesses and office tenants—will face rate increases exceeding 500%. This decision was introduced without a supporting report or public consultation, and many affected parties are unlikely to be notified in time. According to internal figures, 741 ratepayers will see increases of more than 50%, with 379 of them facing between 100%–200% increases. Approximately 230 small offices and retail spaces are among those most affected.
“A greater focus on transparency around the performance of commercial operations... and impacts on ratepayers should be disclosed” (Essential Services Commission 2025)
In plain terms, setting the same minimum charge for every ratepayer is like charging the child that kicks the footy in the park on a Sunday afternoon and a professional footy club the same ground fees. It may look equal on paper, but it’s not fair in practice.
WASTAGE
The draft budget contains numerous examples of questionable spending. One notable case involves a $250,000 traffic study for Light Square, which proposes the removal of five of the nine lanes of North–South traffic. Local businesses expressed strong opposition, and a petition signed by 813 individuals urged the Council to halt the project. Nevertheless, the budget still allocates funding for this study—despite only 165 people indicating support. The long-term plan for this area includes an uncosted redevelopment estimated at over $30 million to create 3,000m² of green space. No funding source has been identified for this larger project, raising concerns about financial priorities and transparency.
THIS big SPENDING BUDGET REQUIRES A RATE INCREASE OF 27.8%
Based on public data and Council responses to formal questions, my estimate is that a 27.8% rate increase would be required this year to fund the proposed expenditure while maintaining financial sustainability. This figure includes the shortfall in capital renewal, covering the operating deficit, and commencing debt reduction. While the modelling used by Council administration is not publicly available, this estimate is based on conservative assumptions and should be viewed as a serious indication of the scale of the financial gap. I do not support the current budget and the legacy it leaves behind.
Here is how I have calculated it:
• $8.6 million (4.91%) to cover the renewals shortfall (capital asset maintenance)
• $4.0 million (2.28%) to plug the operating deficit
• $16.2 million (9.26%) to begin paying down debt with an assumption of 0 debt in 2033-34
• Rate revenue increase of 6.9% this year.
(Note the figures compound not add)
Here is a graph showing the adjustments to our long-term financial plan.
While I don’t have access to the full resources of Council administration, this estimate is based on publicly available data and conservative assumptions. A major risk underpinning the current budget is the expectation of significant State Government funding—support that is far from guaranteed given recent state budget constraints. If those grants don’t materialise, the shortfall will fall directly on ratepayers. Key priorities like economic development remain unfunded, debt levels are unsustainable, and essential city services are being compromised. This is not responsible planning—it’s deferral dressed as strategy.
SUMMARY
The facts speak for themselves: this budget rests on unrealistic assumptions, unsustainable spending, and a troubling lack of transparency. Independent regulators have issued formal warnings. Ratepayers face sharp and uneven increases. Critical infrastructure remains underfunded, while questionable projects continue unchecked. This isn’t about necessary restraint—it’s a preventable crisis driven by poor planning and political complacency.
This is our turning point. Once adopted, the damage from this budget will be locked in for years—difficult to reverse and costly to fix. Whether you’re a resident, worker, business owner, property holder, or simply someone who cares about Adelaide’s future—your voice matters.
Sign the petition. Contact your councillors. Share this message with others. Tell Council you expect responsible leadership, honest budgeting, and a sustainable future for our city.
Together, we can stop this budget and secure a fairer, more financially responsible future for our city.
Councillor Henry Davis
0410 466 779
*2 There will be some inaccuracy between increased growth and the real cost to service that growth, figures I don’t have, but this is a pretty fair representation.