Council has resolved to make application for a special rate variation of 20.6% (including 3.6% rate peg) to provide funding for an identified shortfall in the annual maintenance of council’s infrastructure assets. The below information seeks to inform ratepayers of the reasons for this action and gauge your level of support for the application
Why is the increase needed?
Over the last three years council has undertaken a comprehensive investigation of the long term financial needs of providing services and maintaining assets.
This has shown that council’s existing rating level is $4 million short of what is required to provide existing services and maintain existing assets at current condition. This shortfall over the years has created a backlog of $48.8 million of works required to bring assets up to satisfactory condition. Assets will continue to further deteriorate at the rate of at least $4 million per year if this situation is not addressed.
Where are the funds needed?
The shortfall is related to the following classes of council infrastructure;
• Transport (roads, bridges)
• Buildings
• Stormwater
• Recreation (parks, pools, fields)
What are the alternatives?
Council is continually seeking to improve efficiencies and maximise other revenue sources. These however are only sufficient to cover other factors such as; standard rate peg deficiencies, funding reductions and cost shifting.
The only other alternatives to a rate increase are to either reduce services or service levels in council’s general operations or do nothing and allow infrastructure assets to deteriorate.
Council has strived to maintain financial sustainability without additional rates increases and has not previously applied for such a variation but feels it is now the only responsible action to take. Not addressing asset maintenance needs now will only result in accelerated deterioration of assets, placing a greater burden on future generations.
What will the impact on rates be?
The $4 million required represents an increase to ordinary rates of 17%. The other 3.6% included in the application is the standard rate peg that would be applied anyway. Ordinary rates appear on your rate notice as a particular category (Residential, Business or Farmland) and includes a Base amount and a rate on Land Value. Any charges on your rate notice are not affected by this special rate variation.
Council’s existing rates are well below the state average for similar councils and the proposed increase would still only bring council up to around the average for Group 4 councils. Please see over for tables showing the rate increase.
What is the process to increase rates?
Council must lodge an application to the Independent Pricing and Regulatory Tribunal (IPART) by 24 February 2012. IPART will assess the application and advise council in June 2012 of their decision. They may either; refuse any increase above the rate peg, allow some increase, or allow the full increase applied for. Council must then adopt an increase up to the amount approved by IPART as part of the budget approval process for 2012/13.
Council’s application needs to address a number of criteria including adequate community consultation. It will be important to show that the community has been well informed of the application and that there has been adequate community consultation.
Fact Sheet
A Fact Sheet is also available which outlines the above information and also provides:
- Estimates of the average rate increase per sub-category for the 17% special variation above the rate peg, and
- Comparison of ordinary rates per category of similar group 4 councils based on 2009/2010 comparitve data (Division of Local Government)