Councils Face Budget Pressure as Diesel and Bitumen Costs Soar

South Australian councils are preparing their annual budgets amid significant increases in the cost of diesel and bitumen. Several councils report immediate financial impacts and potential project cost escalations, leading to considerations of various financial and operational adjustments. The state's 68 councils will make independent decisions on potential responses, which may include rate changes, service adjustments, or project delays.

Financial Impact and Projected Costs

Multiple councils have quantified the immediate financial pressure from rising fuel costs.

Mount Barker District Council reports a monthly budget impact of $40,000 to $50,000. A council report stated that if the situation continues, the annual impact could reach $500,000, approximately 1% of its general rates revenue. The same report noted that the supply of bitumen is uncertain beyond one month.

Councils across the state report weekly cost increases ranging from $4,000 to $10,000 due to rising fuel prices.

Project cost estimates have also been revised. Mount Barker District Council reports that some project costs could increase by 20% to 50%, with a specific $2.25 million road upgrade project noted as being subject to increases. The council's capital works program is approximately $50 million.

Industry and Supply Chain Context

Statements from industry bodies provide context for the cost pressures facing councils.

• The Civil Contractors Federation SA reported that bitumen prices have risen by up to 40%.
• Jess Tucker, Chief Executive of the Civil Contractors Federation SA, stated there is "a risk to any project across the board" due to rapid cost escalation. The federation also warned that some businesses with fixed-price contracts for public works could face financial challenges or insolvency.

Council-Specific Considerations and Responses

Individual councils have outlined potential measures to manage the increased costs.

• Is considering delaying some road projects.
• Has asked state and federal funding bodies about the possibility of additional grant funding.
• Is exploring internal efficiencies with the aim of keeping any potential rate increases consistent with the Consumer Price Index (CPI).

• Councillors are expected to discuss a proposed rate increase of 5.6% for its 2026/27 budget. Previous modeling was based on a 5.1% increase, revised due to higher-than-anticipated inflation. The Consumer Price Index has risen from 2.5% to 3.4%.
• Council budget documents mention potential measures such as rationalizing equipment usage and reducing maintenance in areas with low visitation.
• Lord Mayor Jane Lomax-Smith stated the council is examining ways to reduce expenses.

• Wakefield Regional Council reported that the cost and availability of fuel is impacting the delivery of its capital works program and the transportation of personnel and materials.
• City of Onkaparinga stated its long-term financial plan provides limited resilience to sustained fuel market disruptions. Council agenda papers indicated that responses may include increasing rates above CPI, increasing borrowings, or reducing service levels and capital project delivery.

Broader Local Government Perspective

The Local Government Association of SA (LGA) provided a statewide overview.

• The LGA stated that essential services like waste collection have not been disrupted.
• Moira Were, an LGA board member and Mayor of Onkaparinga, said all councils are looking for efficiencies. She noted that regional councils face particular challenges due to longer travel distances.
• Potential efficiency measures cited by the LGA include reducing service hours for facilities like libraries or art galleries, or performing maintenance tasks like lawn mowing less frequently.

The LGA confirmed that each of South Australia's 68 councils will make its own independent decisions regarding rate adjustments.