Council proceeds with Special Rate Variation application
Published on 21 November 2023
An application will be submitted to the Independent Pricing and Regulatory Tribunal (IPART) to vary Kempsey Shire Council property rates by a cumulative 42.7% over three years.
At the November Ordinary Meeting of Council, Councillors resolved to proceed with a Special Rate Variation application to address financial sustainability and a forecast $79 million deficit over the next 10 years largely due to the cost of maintaining essential community infrastructure.
Council’s application will seek approval for a cumulative increase of 42.7%, including the rate peg, over three years commencing July 2024. This will consist of 7.9% in year one and 15% in years two and three which compounds to 42.7% over three years.
The outcome of an extensive investigation to determine whether an application for Special Rate Variation would be required was the basis of the report considered by Councillors. This included a review of asset management plans, proposed capital programs, possible service level reductions, assessing the community’s capacity to pay and a comprehensive community engagement program.
Leo Hauville, Mayor of Kempsey Shire Council, emphasised that Councillors faced a very challenging decision and arriving at a resolution was not taken lightly.
“Careful consideration has been given by myself and fellow Councillors of the detailed report prepared by Council staff outlining the findings of the Special Rate Variation investigation,” said Cr Hauville.
“Financial and asset data as well as the significant feedback in community surveys and submissions were considered before Councillors voted to proceed with an application.”
“This decision does not mean the rates will definitely go up by more than the rate peg set by the NSW government. It means that if approved, a special rate variation is still one of the options available come June next year when Council will ultimately be aiming to set a sustainable financial path.”
Coincidently at around 10am today, IPART released the rate peg for NSW councils for 2024-25, announcing Kempsey Shire Council’s rate peg as 4.7%. This means should Council’s application to IPART be successful the most Council would seek above the rate peg is 3.2% for next financial year.
IPART advised that the decisions for the 2024-25 rate peg were based on the new methodology and take into account employee cost increases, forecast inflation and council-specific changes in Emergency Services Levy contributions and population growth.
The application to IPART will be submitted no later than 5 February 2024 and will be followed by an additional period of community engagement.
Stephen Mitchell, Director of Corporate and Commercial said that despite identifying additional cost savings, the rising cost of operations and limits on income generating capacity means Council is still faced with a forecast deficit of $79 million over the next 10 years.
“Through our investigation, we’ve worked through all the assumptions and calculations and as a result have updated the Long Term Financial Plan,” said Mr Mitchell.
“We’ve found an additional $2.7 million in savings each year, which includes a commitment to $500,000 in productivity savings and $583,000 savings on interest from lower predicted loan borrowings. This is why we were able to propose a lower rate variation than initially predicted.”
“If IPART does approve the application, then Councillors will decide in June 2024 by how much to increase the rates. In the meantime, Council staff will continue to search for viable cost savings and productivity improvements that could potentially reduce the rate increase, should it be implemented. Additionally, efforts will be directed towards advocating to government levels for improved and increased funding for the local government sector.”
Several key documents have been revised to reflect updated financial and asset data, which Councillors endorsed for public exhibition from Wednesday 22 November 2023 to Friday 19 January 2024.
“We really encourage the community to keep engaging with Council, to view these documents and to have their say,” concluded Mr Mitchell.
The revised documents include:
- Long Term Financial Plan 2023-33
- Strategic Asset Management Plan 2022-32
- Hardship Relief to Rate Payers procedure, and
- Recovery of Unpaid Rates, Charges and Other Debts procedure.
To view these documents and have your say.