Hawkesbury borrowings rose from $1.3m to $54.8m. How much council debt is too much?
Hawkesbury City Council’s borrowings increased from $1.3 million in 2021 to $54.8 million by June 2025. The latest accounts show Council can comfortably service its existing loans, but the scale and speed of the increase, a major new pool project and higher rates sharpen a more important question: what should residents be told before even more debt is taken on?
Hawkesbury City Council has committed to giving residents a clearer account of its borrowings after Cr Nathan Zamprogno questioned whether one of the most basic measures of Council’s financial position was sufficiently accessible to the public.
“Do you know how much debt Council is in? No? Would you even know where to look?” Cr Zamprogno asked during a recent Council meeting.
The question comes at an important time.
Council’s audited financial statements show borrowings of just $1.306 million at 30 June 2021. By 30 June 2025, that figure had risen to $54.809 million.
That is an increase of more than $53 million in four years.
But the headline figure does not, by itself, establish that Council has borrowed irresponsibly.
In fact, the same audited accounts provide important evidence on both sides of the debate.
Borrowings fell from $58.885 million in 2024 to $54.809 million in 2025, with Council repaying approximately $4.1 million during the financial year. Its debt service cover ratio also improved to 10.4 times, considerably above the NSW Office of Local Government benchmark of greater than 2.
The real issue is therefore more complicated than whether $54.8 million sounds like a large number.
It is whether Council can explain why the debt increased so rapidly, what ratepayers received for it, what it costs each year, what other spending it constrains and what would happen if Council borrowed substantially more.
What makes up the $54.8 million?
The first step is understanding that Hawkesbury’s debt is not one undifferentiated pool of money.
The 2025 audited accounts identify three main borrowing categories.
Approximately $29.318 million relates to reconstruction of Sewer Rising Main C and is recorded against externally restricted sewer assets.
A further $10.373 million relates to the Vineyard Precinct Low Cost Loan, while approximately $15.118 million remains under Council’s Infrastructure Borrowings Program.
That means more than half of Council’s total borrowings at June 2025 related to the sewer loan.
A $54.8 million debt figure can sound as though Council has accumulated that amount through ordinary spending. The financial statements show instead that the borrowings are attached to identifiable infrastructure financing.
But identifying the purpose of the loans is only the beginning of the analysis.
Ratepayers also need to understand why borrowing was selected, what alternatives existed and how much those decisions will ultimately cost.
Debt is not automatically the problem
There is nothing inherently unusual about a council borrowing money.
Roads, drainage, sewer infrastructure, sporting facilities and other major assets can require expenditure far beyond what can sensibly be funded from a single year’s rates revenue.
NSW’s local-government financial framework recognises borrowings as a legitimate financing mechanism and assesses councils using measures of their capacity to service debt rather than imposing a simple dollar ceiling.
That is why saying “Council owes $54.8 million” is not enough to conclude that Hawkesbury is financially distressed.
The latest audited figures actually point in the opposite direction on existing debt-servicing capacity.
Council’s debt service cover ratio increased from 7.9 in 2023 to 8.5 in 2024 and 10.4 in 2025. The ratio measures the operating cash available to meet principal, interest and lease payments.
The Office of Local Government benchmark is greater than 2.
The accounts also state that there were no defaults or breaches on Council loans during the current or previous financial year.
On those measures, the latest audited statements do not indicate that Hawkesbury is presently unable to service its existing debt.
That, however, is a different question from whether additional borrowing is prudent.
The more important number may be what comes next
The redevelopment of Richmond Swimming Centre brings that distinction into sharp focus.
Council voted earlier this year to proceed with an expanded redevelopment currently estimated at $73.4 million.
Approximately $30.3 million is being provided through the NSW Government’s Western Sydney Infrastructure Grants program.
That leaves around $43.1 million requiring other funding.
Council has not said that the entire $43.1 million will be borrowed. Its public position is that the difference will require “alternate financing arrangements” and/or additional grant funding, and it has stressed that the figures remain preliminary as design and market pricing develop.
That distinction is critical.
It would be inaccurate to simply add $43.1 million to Hawkesbury’s existing $54.8 million debt and declare that Council is heading towards almost $100 million in borrowings.
But it is entirely reasonable for residents to ask what Hawkesbury’s financial position would look like if a substantial portion of that gap ultimately had to be financed through loans.
Cr Zamprogno has said the scale of the potential additional financing contributed to his decision to withdraw support for the pool project.
That creates a much more useful public debate than arguing about whether debt is inherently good or bad.
The question becomes: at what point does additional borrowing begin to constrain Council’s choices?
The cost of debt is not the headline balance
Council recorded $1.3 million in borrowing costs during 2024–25 and repaid $4.076 million in borrowings during the year.
Those figures help explain why residents should look beyond the outstanding balance.
Debt creates an annual claim on Council’s future cash flow.
Money required for principal and interest cannot simultaneously be spent somewhere else.
That is the opportunity cost of borrowing.
For a council, the competing demands might include road reconstruction, drainage, flood resilience, parks, community buildings, asset renewal or another piece of infrastructure that has not yet emerged as a priority.
A project can therefore be worthwhile in isolation and still represent a difficult financial choice when considered alongside everything else Council is required to fund.
That distinction becomes particularly relevant in Hawkesbury because ratepayers are also beginning to pay a Special Rate Variation.
IPART has approved Council to increase its total rates income by 8.66 per cent per year for four years from 2026–27, inclusive of the normal rate peg, with the additional revenue directed to roads and infrastructure.
The SRV and Council’s loans are not the same funding stream.
But taken together, they make financial transparency more important because residents are entitled to understand the overall pressure on Council’s finances while they are simultaneously being asked to contribute more.
How should ratepayers judge whether debt is too high?
There is no meaningful universal dollar figure at which council debt suddenly becomes excessive.
A growing council with substantial income and a strong balance sheet may safely service considerably more debt than a smaller council with weak cash flows.
Residents therefore need to judge debt through several measures rather than one headline number:
- Trajectory: How quickly are borrowings rising or falling?
- Purpose: What project or asset does each loan finance?
- Annual cost: How much principal and interest must Council pay each year?
- Affordability: What happens to debt-service ratios and cash reserves after proposed new borrowing?
- Opportunity cost: What projects or services may become harder to fund because repayments have first claim on future revenue?
- Risk: What happens if construction costs rise, grants fail to eventuate, revenue forecasts fall short or financing becomes more expensive?
- Whole-of-life cost: After a new facility is built, what will it cost to operate, maintain and eventually renew?
That last question is particularly important with large civic facilities.
A council does not merely have to demonstrate that it can afford to build an asset.
It needs to demonstrate that it can afford to own and operate it.
Transparency should come before the loan
This is where the push for clearer reporting raises a broader governance issue.
Council has agreed to develop a section in its 2025–26 Annual Report dealing specifically with borrowings and other significant financial matters.
That is useful.
But annual reports largely tell residents what has already happened.
For major borrowing decisions, the better standard of transparency would be to give residents the financial consequences before the decision is made.
If Council were considering, for example, another substantial loan associated with Richmond Swimming Centre, residents should be able to see the existing debt position alongside the proposed position.
That disclosure should include the amount to be borrowed, assumed interest rate, loan term, annual principal and interest payments, resulting total borrowings and the effect on Council’s major financial sustainability ratios.
It should also show sensitivity testing.
What happens if the project costs another 10 per cent?
What happens if another expected grant is not obtained?
What if interest costs are higher than forecast?
And what happens to Council’s ability to undertake other capital works?
Those questions should not require a financially sophisticated resident to extract figures from several hundred pages of financial statements, budget documents and long-term plans.
Hawkesbury’s figures contain both a warning and a reassurance
There is a risk of oversimplifying this story in either direction.
The first oversimplification would be:
Debt rose from $1.3 million to $54.8 million, therefore Council must have a financial crisis.
The audited accounts do not support that conclusion.
Existing debt servicing appears strong, borrowings fell during 2024–25, more than half the outstanding balance relates to an externally restricted sewer loan, and the Auditor-General’s report identified no material deficiencies in Council’s accounting records or financial statements.
But the opposite conclusion would also be premature:
Council can presently service its debt, therefore additional borrowing should not concern ratepayers.
A debt-service ratio describes the position created by decisions already made. It does not automatically establish the affordability of the next project, or the project after that.
That is particularly important when a council is contemplating a project with a $43.1 million funding gap, even though some or all of that gap may ultimately be met without borrowing.
The real transparency test
Cr Zamprogno’s push for a dedicated borrowing section in Council’s Annual Report is therefore a useful first step.
But the standard Hawkesbury should aim for is higher than simply making the $54.8 million figure easier to find.
Residents should be able to understand how Council got there and where it may go next.
For each substantial loan, Council should clearly explain what was borrowed, why borrowing was chosen, what remains outstanding, what the annual repayments cost and what financial capacity remains after those payments are made.
And before taking on significant new debt, Council should show ratepayers the projected financial position with and without the borrowing.
That is the distinction between disclosure and genuine financial transparency.
The most important question facing Hawkesbury is therefore not whether $54.8 million is too much debt.
On the latest audited figures, Council appears capable of servicing what it already owes.
The question is how much additional financial capacity Council should commit, what it is giving up when it does so, and whether residents are being shown those trade-offs clearly enough before the next borrowing decision is made.
