Hawkesbury City Council has reported a $21.7 million operating surplus before capital grants and contributions for 2025–26, reversing a substantial deficit recorded the previous year.
But the unaudited accounts also identify significant future obligations, unfinished cash classifications and millions of dollars in grant-related income still subject to payment conditions.
The figures were presented in a report to Council’s October 13 meeting recommending that the financial statements be referred to the NSW Audit Office.
They provide a more detailed picture than either a headline surplus or deficit alone.
Why last year’s deficit was so large
The report states that Council’s operating result before capital grants and contributions improved from a $137.4 million deficit in 2024–25 to a $21.7 million surplus in 2025–26.
Council attributes the earlier deficit primarily to an impairment charge against its discontinued sewer business. An impairment reduces the recorded value of an asset. In this case it as the transfer of the Windsor Sewage treatment scheme to Sydney Water. It can produce a substantial accounting loss without representing an equivalent cash payment during that year.
The $137.4 million figure should therefore not be described as a current budget shortfall rather a loss of a financial asset and business that until 2021 operated at a profit.
The financial burden also continues for Windsor Sewer Scheme property owners through a separate Sewer Infrastructure Charge payable to Council. Council says the charge $344.84 annually for 10 years recovers historical borrowing arising from the Rising Main C failure, emergency sewage cartage and associated with Council's failure to undertake restoration works in a timely manner.
It remains payable alongside Sydney Water’s wastewater bills following the July 2026 handover. This debt-recovery charge is separate from the $2.9 million deficit reported for discontinued sewer operations in the unaudited 2025–26 accounts.
At the time of the handover of the asset Council indicated that this would result in a cheaper service for residents. This claim has not eventuated.
What the surplus does and does not show
Council reports an overall net operating result of $73.9 million, alongside the $21.7 million result before capital grants and contributions.
Capital funding supports infrastructure delivery and can make a council’s headline operating result appear substantially stronger. It does not necessarily provide money available for unrelated services or discretionary spending.
Even the result excluding capital grants does not, on its own, establish Council’s ongoing financial sustainability. Residents need to know how much income is recurring, what expenditure has been deferred and what future asset costs remain unfunded.
The report says significant unspent grant funding remains associated with bushfire recovery, flood recovery and Western Sydney Infrastructure Grants projects. The Gazette is seeking further information on this.
Cash holdings are not all available to spend
Council held $138.2 million in cash, cash equivalents and current investments at June 30, 2026, an increase of $26.4 million on the previous year.
However, those holdings should not be treated as a freely available spending pool.
The report identifies $50.6 million not subject to external restrictions and $34.9 million in internal allocations. Importantly, it also states that the note explaining restricted and allocated cash had not been finalised and that the unrestricted position remained subject to change.
External restrictions can tie money to particular grants or purposes. Internal allocations earmark funds for Council priorities and obligations.
The final audited accounts should clarify how much is genuinely uncommitted and what demands are already placed upon it.
Future obligations increase
Council’s asset remediation and restoration provision rose to $27 million, including a $17.7 million remeasurement during the year.
A provision recognises an estimated obligation. It is not necessarily money payable immediately, but it signals costs that must be understood and planned for.
The report identifies the provision as a significant accounting estimate and future financial obligation.
It also records $6.547 million in contract asset income recognised for grant-related work where payment remained conditional on milestones or other requirements.
Those amounts are not the same as cash already received.
Although borrowings reduced during the year, interest and borrowing costs increased to $3.1 million.
Oasis illustrates the pressure behind the accounts
The same meeting agenda contained a recommendation to close the grant-funded Oasis Aquatic and Leisure Centre upgrade after its developed cost estimate reached $21.484 million, against a $6.716 million grant.
Expenditure had reached $956,675.52 by August 31, with forecast spending, including closure, of approximately $1.057 million. No construction expenditure had been incurred.
Council had received $672,000 in grant funding. Further reimbursement remained subject to the funding body’s assessment.
Council argues the planning and investigations prevented it committing to an unaffordable construction project and produced information that can support future works.
Nevertheless, the project demonstrates why a reported surplus cannot be assessed separately from delivery risks, funding conditions and future infrastructure commitments.
Audited figures still to come
The October report proposed presenting the audited financial statements to Council on November 17, 2026, with an explanation of key results and a presentation from the NSW Audit Office.
For ratepayers, the central questions are how much of the surplus is sustainable, how much cash is available after commitments, and whether Council can maintain existing assets while delivering its major projects.
The current figures show an improved operating result. The audited statements and supporting explanations will be needed to assess the strength of that improvement.
The Gazette has put a range of questions to Council and will report further on this matter.
Source: October 13 business paper, Item 10.4.6, pages 169–175, and Item 10.5.1, pages 177–191. Financial results are unaudited; the Oasis closure was a staff recommendation in the agenda.
