Council consider Special Rate Variation options
Published on 25 January 2024
Council will consider the proposal to lodge a Special Rate Variation (SRV) application with IPART and its draft Resource Strategy 2022-2026 (which includes the Long Term Financial Plan 2024-34), at its meeting on Monday 29 January.
On 20 November, Council resolved to take the proposed options for a SRV to the community for feedback as well as to action 26 other recommendations including improving financial controls, sale of assets, efficiency and productivity measures, made in an independent financial sustainability review conducted last year.
The review of Council’s finances identified that the impacts of consecutive natural disasters and the COVID pandemic during the last five years has significantly depleted revenue and increased operational costs. During the same timeframe, substantial investment in new assets and the ongoing costs of maintenance and operating them have significantly impacted the current and future financial needs.
“Like many councils in NSW, we have experienced a growing gap between operating revenue and operating expenditure, restricting our ability to provide the services and works necessary to support our communities,” said Acting CEO, Jane Lewis.
“We are absolutely committed to doing what we can to improve our financial position, including tighter budget controls, instilling asset management systems and finding productivity improvements for the long term,” Ms Lewis said.
“It is important to understand that adjusting services and making organisational change isn’t enough to lift our investment in asset renewal without significantly increasing revenue through a rate variation,” she said.
The proposed SRV options would increase future investment in asset renewal to an amount closer to the Office of Local Government (OLG) benchmark of 100%. Currently, Council assets now hold 51.3% in category 1 and 2, with 48.7% of assets now reported in categories 3 (satisfactory) to 5 (very poor).
The financial sustainability review outlines that Council’s finances are impacted by limited income through sustained, lower average property rates for residential and business categories compared to similar-scale and neighbouring council areas. According to information on the OLG website, during the last 20 years, Shoalhaven rates have been on average $200 to $300 less than its neighbouring councils and a minimum of $100 less than the Office of Local Government Group 5 average.
The unprecedented rises in inflation have further increased the gap in its revenue and expenditure, through additional costs of construction and operating costs.
During the 9-week community engagement period about the proposed options for SRV, 2,175 survey responses were received, with 55.5% selecting ‘prefer not to choose’, 33.1% selecting Option 2 (Staged Implementation of SRV over three years being a permanent 18% in 2024-25, 13% in 2025-26 and 8% in 2026-27 including rate peg) and 11.4% selecting Option 1 (one year SRV as a permanent 32% in 2024-25 including rate peg).
Council also received 468 submissions about the proposed SRV and the draft Resourcing Strategy that related to organisational management, asset management and the affordability of increased rates.
The Council meeting business paper for Monday 29 January can be seen on Council’s website.