Special Rate Variation

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Let's talk special rate variation

Council has applied to the Independent Pricing and Regulatory Tribunal (IPART) for a permanent Special Rate Variation (SRV) to achieve financial sustainability.

The application under section 508A of the Local Government Act 1993 requests increases to the ordinary rate income of 12.5% in 2024/2025 (including the rate peg), 12.5% in 2025/2026 (including the rate peg) and 12.5% in 2026/2027 (including the rate peg), representing a total cumulative increase of 42.38% over three years, to be a permanent increase retained within the rate base.

IPART DECISION

The IPART Tribunal sought community feedback in March 2024 on Council's application. Community members were encouraged to fill out the survey on the IPART website or lodge a submission. Feedback was accepted until 11:59pm on Monday 18 March 2024.

The Tribunal will assess our application against criteria established by the Office of Local Government, which require councils to:

  • demonstrate the need for the additional income
  • provide evidence that the community is aware of the need for and extent of a rate rise
  • establish that the impact on affected ratepayers is reasonable
  • exhibit, approve and adopt relevant planning documents
  • explain and quantify the council’s productivity improvements and cost containment strategies
  • and consider other relevant matters.

They will complete their assessments and publish their decision by May 2024. More info on the IPART website https://www.ipart.nsw.gov.au/Home/Industries/Local-Government/Reviews/Special-Variations-Minimum-Rates/Special-Variations-and-Minimum-Rates-2024-25

BACKGROUND

Council’s financial sustainability has been an ongoing concern since 2020. In 2022, in an effort to become financially sustainable, council successfully applied for a permanent 35.9% special rate variation (SRV) which came into effect over the 2022/23 and 2023/24 financial years.

Cost to Council pressures to date have further been exacerbated by the high inflation environment and an increasingly competitive employment market that has occurred post-COVID-19, as well as cost shifting from previously State Government funded services that are now at Council's cost (like the recently announced increase to the Emergency Service Levy), a continuation of rate pegging, and the normal increased service level expectations.

The findings of Professor Joseph Drew in the detailed financial analysis undertaken as part of the de-amalgamation business case review also identified the serious current underlying financial challenges faced by Council.

As a result, internal productivity savings and the 2022 SRV has unfortunately not been sufficient to achieve Council’s financial sustainability, so we are exploring opportunities to implement a new permanent SRV as part of a range of initiatives to make sure services can be delivered into the future.

Council’s funds are broken into three (3) main areas - General, water and sewer. General fund refers to all council activities except for water and sewer services.

At present, Council’s water and sewer funds are covering their respective costs. However, the General fund is experiencing a significant deficit which is projected to continue over the next 10 years.

Current modeling in Council’s 2023-2033 Long Term Financial Plan (LTFP) shows that further rate increases are needed to enable Council to maintain current service levels, adequately fund ongoing asset maintenance, reduce Council’s reliance on external grant funding for asset renewals, and ensure Council’s financial sustainability.

Council’s LTFP includes three scenarios, all based on existing service delivery levels and maintaining our growing Capital base.



Council has applied to the Independent Pricing and Regulatory Tribunal (IPART) for a permanent Special Rate Variation (SRV) to achieve financial sustainability.

The application under section 508A of the Local Government Act 1993 requests increases to the ordinary rate income of 12.5% in 2024/2025 (including the rate peg), 12.5% in 2025/2026 (including the rate peg) and 12.5% in 2026/2027 (including the rate peg), representing a total cumulative increase of 42.38% over three years, to be a permanent increase retained within the rate base.

IPART DECISION

The IPART Tribunal sought community feedback in March 2024 on Council's application. Community members were encouraged to fill out the survey on the IPART website or lodge a submission. Feedback was accepted until 11:59pm on Monday 18 March 2024.

The Tribunal will assess our application against criteria established by the Office of Local Government, which require councils to:

  • demonstrate the need for the additional income
  • provide evidence that the community is aware of the need for and extent of a rate rise
  • establish that the impact on affected ratepayers is reasonable
  • exhibit, approve and adopt relevant planning documents
  • explain and quantify the council’s productivity improvements and cost containment strategies
  • and consider other relevant matters.

They will complete their assessments and publish their decision by May 2024. More info on the IPART website https://www.ipart.nsw.gov.au/Home/Industries/Local-Government/Reviews/Special-Variations-Minimum-Rates/Special-Variations-and-Minimum-Rates-2024-25

BACKGROUND

Council’s financial sustainability has been an ongoing concern since 2020. In 2022, in an effort to become financially sustainable, council successfully applied for a permanent 35.9% special rate variation (SRV) which came into effect over the 2022/23 and 2023/24 financial years.

Cost to Council pressures to date have further been exacerbated by the high inflation environment and an increasingly competitive employment market that has occurred post-COVID-19, as well as cost shifting from previously State Government funded services that are now at Council's cost (like the recently announced increase to the Emergency Service Levy), a continuation of rate pegging, and the normal increased service level expectations.

The findings of Professor Joseph Drew in the detailed financial analysis undertaken as part of the de-amalgamation business case review also identified the serious current underlying financial challenges faced by Council.

As a result, internal productivity savings and the 2022 SRV has unfortunately not been sufficient to achieve Council’s financial sustainability, so we are exploring opportunities to implement a new permanent SRV as part of a range of initiatives to make sure services can be delivered into the future.

Council’s funds are broken into three (3) main areas - General, water and sewer. General fund refers to all council activities except for water and sewer services.

At present, Council’s water and sewer funds are covering their respective costs. However, the General fund is experiencing a significant deficit which is projected to continue over the next 10 years.

Current modeling in Council’s 2023-2033 Long Term Financial Plan (LTFP) shows that further rate increases are needed to enable Council to maintain current service levels, adequately fund ongoing asset maintenance, reduce Council’s reliance on external grant funding for asset renewals, and ensure Council’s financial sustainability.

Council’s LTFP includes three scenarios, all based on existing service delivery levels and maintaining our growing Capital base.



Page last updated: 27 Mar 2024, 11:59 AM