Special Rate Variation
After the submission of our proposal in February 2015, on 19 May 2015 the Independent Pricing and Regulatory Tribunal (IPART) determined that Eurobodalla Shire Council could increase the general rate amount by 6.5%, including the rate peg amount, for a period of three years.
The rate variation is applied from July 2015. At the end of the third year, your rates will stay at this new higher level and increase every year by the annual rate peg amount set by IPART.
Despite making considerable savings and securing grants and external funds, we would not have been able to meet the community's needs in the years ahead with the previous rates income. With the special rate variation, we do not have to cut service or maintenance levels and can invest in and renew community and transport infrastructure for the future.
Frequently asked questions
What is a special rate variation?
A special rate variation is a way for the NSW Government's Independent Pricing and Regulatory Tribunal to allow a council to increase its rates above the rate peg, which is how much rates can be increased each year, for a set period of time. To be eligible for a special rate variation, a council needs to show it is unable to provide infrastructure and services at a standard that is acceptable to the community with current revenue. It must also show how it will use the extra funds and that it has consulted ratepayers about the need, purpose and impact of any proposal to increase rates.
Why did Council apply for a rate variation?
On behalf of the community, Council is responsible for ensuring that it is financially sustainable and able to generate sufficient funds to deliver the services and infrastructure that meet our community's needs and expectations.
Our community clearly identified the services and infrastructure it wants Council to deliver during the extensive community consultation that took place when we developed the Community Strategic Plan and other key plans and policies.
Your rates, which make up 55% of our annual revenue, are Council's main source of income. They help to pay for maintenance and renewal of our community infrastructure as it ages.
Through the Independent Pricing and Regulatory Tribunal, the NSW Government sets a limit on how much these rates can increase every year. This amount is called the rate peg and is usually capped between 3 and 3.5%. Unfortunately, the rate peg is not enough to cover the increasing costs of looking after infrastructure which includes roads, libraries, swimming pools, sports grounds, community halls, parks, playgrounds and much more.
Our long term financial planning showed that we would not be able to meet the cost of maintaining and renewing infrastructure to meet your needs and expectations.
We faced a number of challenges about how we would continue to maintain and renew this infrastructure at an acceptable standard because:
- Eurobodalla rates are on average 20% lower than similar sized NSW councils
- the costs of maintaining and renewing infrastructure and providing services are increasing more than Council's income each year
- we need to upgrade existing infrastructure and keep or expand our current services to meet community needs and expectations
- we are paying more for electricity, water and gas
- the cost of telecommunications and street lighting, as well as materials such as concrete and steel, are also rising faster than our annual rate peg increase
- our infrastructure is ageing and needs to be upgraded to remain safe and operational in the future
- we have less income from Federal Assistance Grants
- Despite making considerable savings, securing grants and external funds, Council is still not able to meet the needs of the community in the years ahead with its current rates income.
A special rate variation was one way that we could fund these.
The rate variation
At its Ordinary Meeting on Tuesday 10 February 2015, Council resolved to apply to the Independent Pricing and Regulatory Tribunal for a special rate variation.
A rate variation was an important step towards being able to meet the key financial criteria required in the NSW Government's Fit for the Future funding reform package for local government.
Increasing revenue through a rate variation is a financially responsible way to:
- support economic growth by funding a $21.4 million package of community and transport infrastructure projects that the community has asked for
- deliver a broad range of social and economic benefits
- fund the increasing costs of infrastructure renewal and maintenance works on roads, bridges, sport and community facilities, playgrounds, pathways, and public toilets
- respond to the NSW Government’s Fit for the Future financial criteria
- address the funding shortfall from Federal Assistance Grants
- address the impact of the Independent Pricing and Regulatory Tribunal's rate pegging amount that has not kept up with inflation or the increasing cost of building and construction materials for several years.
Any residual funds from completed works or after we have met our loan commitments will be spent on infrastructure renewals to reduce the funding gap.
How is the money from the rate increase being used?
The special rate variation funding proposal was a way of delivering some of the new projects our community has asked for, and for Council to be able to look after our infrastructure at a standard that meets community expectations.
Every dollar of the rate increase is being used to pay for community and transport infrastructure projects that deliver broad economic and social benefits. These projects have already been identified as important to our community and include upgrades to sporting facilities, community halls and playgrounds, parks, roads and bridges and pathways.
To make sure that everyone in Eurobodalla can enjoy an active and healthy life, we will also be using the additional income to:
- improve the accessibility of our playgrounds, viewing platforms and toilets
- upgrade the Batemans Bay CBD around North and Orient Streets to support business growth
- repay bank loans that would fund the initial capital costs of the major infrastructure projects.
These community and transport infrastructure projects are in addition to the ones we already planned and budgeted for in Council's 2013–2017 Delivery Program and those that could be funded from the sale of Council land.
In the rate variation proposal, new and upgraded assets were allocated funding for their whole of life costs. This means that the ongoing maintenance, operation and depreciation costs of these assets would not be added to the previous unfunded infrastructure backlog.
The unfunded backlog of renewal and maintenance works that will be completed in the next four years as a result of the rate variation proposal include:
- Road reseals, gravelling unsealed road and upgrading bridges to improve road safety
- Maintaining the standard of our parks and reserves by renewing older playgrounds, park furniture, barbecues and stairs
- Renewing our sporting ovals through topdressing and field refurbishment and maintaining the standard of amenities
- Maintaining the current standard of our community centres, public halls, libraries, pathways, pools, and public toilets
- Renewing pathways.
How does the rate variation affect me?
Your annual Rates and Charges include a general rate (which is an environmental levy plus either a residential, farm land or business rate) and charges for water, sewerage, waste management and stormwater.
A rate variation is only applied to your general rate, and the increase is permanent.
From July 2015, your general rates will increase by 6.5% every year, for three years.
At the end of the third year, your rates will stay at this new higher level, and increase every year by the annual rate peg amount set by the Independent Pricing and Regulatory Tribunal.
We understand that there may be ratepayers in our community who could experience hardship as a result of a rate increase. Our Rate and Debtors Hardship policy outlines our provisions for those experiencing genuine hardship with the payment of rates and charges:
You can read our application for a special rate variation, submissions made by the community and IPART’s determination on the tribunal’s website:
If you have any questions about the rate variation, please contact us:
- T: 02 4474 1000
- E: firstname.lastname@example.org