Council raises rates from four
to six per cent to curb debt
By DANIEL CLARKE
02/07/26
Kangaroo Island Council will increase rates from four to six per cent according to its proposed 2026/27 budget plan released this week.
The rate hike is part of council’s “unwavering focus on reducing debt”, the plan states. It means the average rate charge will rise from $1590 to $1679 this financial year.
Council’s rate increase is less than that proposed by Yankalilla Council at 7.9 per cent and Victor Harbor’s 6.4 per cent, but more than Alexandrina’s 4.5 per cent.
The draft budget plan for the coming financial year states total rates income will rise from $9.14 million in 2026 to $9.69 million in 2027 and rules out any further borrowing or new capital projects.
The plan’s adoption is subject to community consultation until July 24 that includes four public meetings at Parndana, American River, Penneshaw and Kingscote.
KI Mayor Michael Pengilly said he was "not happy about six per cent", preferring to limit the figure to between 5.5 and 5.7 per cent but "six per cent is what the administration has recommended".
“I have to be comfortable because I’m only one vote on council but it’s democracy," he said. "We talked about it sensibly and that's what we think we can hold rates at to match our debt reduction strategy to keep the show operational and to keep the work being done.
"Now if 90 per cent of the people came back after the consultation and said we only accept a five per cent rise we'd have to seriously look at that. But that would put us in a bit of bother in terms of rates.
"The problem we’ve got is that we’re still picking up the colossal waste of money and resources during the second decade of the century. We can't change what happened but the point I'm trying to make is that we are wearing the ramifications of blue sky policy.
"We're trying to meet as many demands as possible of the rate payers and be steady as she goes. We're going to have two hard years of budgets before we can actually get things in gear so that the council at the time can do a few things that we need to do."
The tightening of council spending and increase in rates comes after CEO Daryl Buckingham revealed to the Island Independent in May that the organisation had come within six weeks of administration and would now need to save $4 million over four years to stay afloat.
On top of the rate increase, charges for the Community Wastewater Management Schemes (CWMS) Service will increase 12.5 per cent per connection in 2027, raising the connection charge for those living in townships to $872.10, up $95.60 on last year.
Mayor Pengilly said he and three councillors were “not comfortable about that”.
“I think we've got to wait and see how much that's picked up in the consultation and if there’s a huge backlash against it,” he said. “A lot of people on CWMS are pensioners and they’ve got no money to throw around but the scheme is one in, all in.”
The report also states that council’s total 2026/27 operating income of $20.46 million will be exceeded by its operating expenditure of $24.70 million but this expenditure figure includes depreciation of about $7.21 million. Excluding depreciation and accounting for council's projected capital works of $7.41 million which will be funded by about $5.41 million in grants and subsidies, council expects a surplus of $192,355 for 2027.
Mr Buckingham said that an internal review and external assessment had made it clear that council’s financial position “reflects the cumulative impact of historical settings, optimistic assumptions, and organisational practices that were not sufficiently aligned to long-term financial capacity”.
“While these challenges are significant, they are not insurmountable,” he said. “This plan sets out a pragmatic and responsible path forward. It prioritises fiscal repair, the restoration of a sustainable operating position, and the disciplined retirement of debt over time.
“While this necessarily limits discretionary expenditure in the short term, it ensures that council operates within its means and rebuilds a sustainable platform for future investment and growth.”
A review of Kangaroo Island property values by the Valuer-General has resulted in an average increase across most rating categories except primary production.
“Overall, valuations increased across residential, commercial, and vacant land,” the report states. “However, significant devaluations resulted in primary production. This decrease in primary production valuations resulted in an overall valuation increase of just under one per cent, reflecting an increase of $26.097 million.”
The public will be given the chance to ask questions of the CEO and Mayor at the following budget information sessions:
American River Hall at 2pm on 16 July
Penneshaw Town Hall at 5pm on 16 July
Parndana Town Hall at 2pm on 17 July
Kangaroo Island Council Chambers (Kingscote) at 5pm on 22 July
A report containing all submissions on the draft Annual Business Plan and Budget 2026-2027 will then be presented to the Special Meeting of Council held on 30 July.
The public can view the draft annual business plan and budget for 2026/27 here: https://www.kangarooisland.sa.gov.au/__data/assets/pdf_file/0022/2005681/20260629-Special-Council-Agenda.pdf