Financial sustainability challenges and the delivery of essential services are front and centre in a strategy document tabled by Narrabri Shire Council.

The Financial Future Strategy 2026–31 has been developed to strengthen the council’s long-term financial sustainability and ensure the continued delivery of essential services, infrastructure and community outcomes.

It was tabled at the most recent council meeting.

“Councillors have identified financial sustainability as a key priority, reflecting a desire for greater visibility of council’s financial position, improved financial reporting, and stronger oversight of financial performance,” the business paper states.

The council’s director of corporate and community services, Mark Watt, said it was important that this document goes out to the public.

“In my view, it really just diagnoses the issue … the questions … or the problems that we face financially, in terms of where we are at right now,” he said.

“We, as a council, have expressed a need … or a desire … to look at our financial viability and that’s what we’re doing.”

Mr Watt said the council was looking at the matter seriously, including making structural financial changes to the organisation.

“It really just focuses on the commonsense elements to what we do in terms of improving cost recovery,” he said.

“We’ve already commenced that journey by the rate review and the revenue review that were done previously in the early part of April this year.”

Mr Watt said budget accountability, including minimising cost overruns and aligning services to affordability, were other important components.

“Our communities rely on the services that we provide to them,” he said.

“We never want to take those services away but we want to make them as efficient … and acceptable to the community … as much as we can.”

The strategy notes that the council’s recent financial performance shows a shift from a modest surplus to recurrent operating deficits, with expenses exceeding revenue in most years.

“This trend reflects rising costs, fluctuating grant income, and structural limitations on revenue growth, particularly due to rate caps not keeping pace with inflation,” the document reads.

“A central issue identified is the gap between the cost of delivering services and the revenue generated. Current cost recovery across general fund services is approximately 39.8 per cent, well below the benchmark for like councils of 47.4 per cent.

“This indicates a significant structural deficit and highlights the need to better align pricing, service levels, and funding sources.

“The strategy adopts a phased approach. Phase one has reviewed rates, fees, charges, and revenue opportunities, including renewable energy and the concept of a Future Fund.

“Phase two will involve the preparation of an Improvement Plan and a review of services to assess performance, efficiency, and sustainability across all council services.

“To restore financial sustainability, council will focus on revenue optimisation, cost controls, service alignment, asset management and governance and reporting.

“In the longer term, council aims to establish a Future Fund to diversify income and reduce reliance on traditional revenue sources and building financial resilience.”

The strategy also looks at the past results of the council’s general fund as well as projections through to 2030–31.

Revenue has increased steadily, but it has been consistently outpaced by growing expenditure.

The general fund is not forecast to return to a balanced operating position.

“The forecast highlights ongoing financial sustainability challenges and indicates that expenditure containment measures, additional revenue sources, or a combination of both are required to restore long-term financial balance,” the report states.

“Council’s current and projected budgets do not adequately address this issue. Reversing this trend and restoring the financial sustainability of the general fund must remain a key strategic priority for council moving forward.”

All options are on the table to address the issue of financial sustainability, with part of the document explaining what would need to occur if a special rate variation was used in combination with service reviews to achieve potential savings through efficiencies and changes in service levels.

The strategy also notes local government’s substantial service delivery obligations and an imbalance in financial support from other tiers of government.

“LGNSW’s latest cost shifting report was released in July 2025, highlighting a total cost shift to councils of $1.5 billion in 2023/24, which is the equivalent of more than $490 per ratepayer annually,” the report states.

CPI has also played a role in the financial challenges experienced by the council, with rate caps not keeping pace with rates of inflation.

Cr Jocellin Jansson said the strategy showed that the council had been as compassionate and sensible as possible with rate increases.

“But we simply have no room to move,” she said.

General manager Eloise Chaplain told the meeting this strategy was not the first piece of work in terms of financial sustainability, highlighting that the issue has been in the council’s focus in recent years.

“The work has been going on for some time in terms of financial sustainability,” she said.

Ms Chaplain said it was important that the council is resilient and isn’t as impacted by shifts in grants and funding.

Cr Greg Lamont told the meeting that communicating the new strategy to the community was “absolutely critical”.

“I would say a lot of the community would not read the business paper but some may look at what’s going on here now,” he said. “We need to make sure we cover all bases to saturate the community because that may avoid any confrontation later on when we’ve got to make harder decisions.”

Cr Lamont congratulated the team for “having the intestinal fortitude to bring this before council”.

“We’re supporting you … I know I’m supporting you all the way,” he said.

The strategy is now on public exhibition after being adopted by councillors and can be viewed on the Narrabri Shire Council website.

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