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Proposed Special Rate Variation

 
Gunnedah Shire Council is working hard to ensure we remain financially sustainable and is able to provide the services expected by our community, as well as meet our legislative obligations under the various acts of parliament under which we operate.

At Councils ordinary meeting on 19 June 2024, Council endorsed the 2024/25 Operational plan that included the action to start a conversation with the community about a potential Special Rate Variation (SRV).

This page contains information related to our decision to consult on a proposed SRV, details of the proposed amount, and resources to keep you informed and guide your ability to provide feedback on the proposal, including through a formal submission to Council and/or IPART.

What is an SRV?

An SRV allows a council to increase its general income above the rate peg to provide the services and infrastructure desired by their communities. SRV’s can be either for a single year or over multiple years and can be permanent or temporary.

What is the Rate Peg?

Rates increase every year in line with an amount set by the State Government. This amount is calculated every year and is called the ‘rate peg’. It is decided by the Independent Pricing and Regulatory Tribunal (IPART). The rate peg for Gunnedah Shire Council applied to the 2024/25 financial year will be 5.6%. This figure varies year to year and has been as low as 0.7% in the past five years.

Our financial position

Like many councils across NSW, Gunnedah Shire Council is facing the difficulty of maintaining its infrastructure and services within our existing income levels.

Council's long term financial plan shows that we are currently operating with an approximate $3.1m operating deficit in the General Fund (excluding domestic waste services). This essentially means that we are spending $3.1m less than we should be to maintain our assets and services to our current targeted service levels.

Without addressing this gap, the residents and visitors of the Shire will see a deterioration in service levels. Each year we fall behind, the cost of renewing infrastructure will rise and we will eventually have to catch up.

Council also has limitations on how it can spend money that is received for services. For example, income received via Water charges can only be spent on water related services. The same applies to Wastewater and Waste management services. This means that while Council may have significant funds in its bank account, only a portion of these can be used on General Fund activities such as roads, parks, gardens, libraries, and planning services. Current forecasts show that without action, either through additional income or reduced expenditure, Councils unrestricted cash balance will move to a negative value within two financial years. A negative unrestricted cash balance cannot be allowed to occur. 

While Council continues to review operational efficiencies, and will continue to do so, because of limited ability to increase revenue in other areas, we are forced to consider an increase in rates via an SRV to secure the level of funding necessary to ensure that we can continue to maintain and renew our asset base.

Further information on Council’s financial position can be found in our 2024/25 Operational Plan, which is available here: 2024/25 Operational Plan.

What is the proposed SRV?

Council intends to discuss the potential application for a permanent SRV of 38.88% over two years. The 38.88% is comprised of a 24% increase in the first year (2025/26) and a 12% increase in year two (2026/27).

   2025/26  2026/27  Cumulative
 Permanent increase above rate peg  19%  7%  
 Rate Peg (forecast)  5%  5%  
 Total Increase  24%  12%  38.88%

 

The rationale behind these two values is as follows:

The 24% increase in Year One will allow Council to address the current operating deficit and the current forecast unrestricted cash challenges,

The 12% increase in Year Two will allow Council to commence addressing the backlog of works to bring our assets to the current targeted service levels.


What does the SRV apply to?

The proposed SRV would only apply to the rates portion of the bill (usually listed as the first item on the bill e.g. “Residential Gunnedah”) and not the separately listed essential charges such as waste and water. These services are all funded through direct fees and charges.

Rates and Charges Notice

What the SRV funds would be used for

The proposed SRV will be used to fund maintenance and renewal of Councils assets and specifically.

  • Councils Transport network (roads, bridges and associated services),
  • Councils Building infrastructure, and
  • Councils Parks, gardens and Open Space.
     

How would the increase impact me?

The below tables show the impact of the increase based on averages for rates categories.

Increase Impact Table


Impacts of the SRV Options

It is important to note these values are averages and the impact of the increase will be different dependant on your property valuation.

Use the below rates calculator to estimate the impact on your property.

NB: This rates calculator is an estimate only of how the special rate variation could affect your property – it does not include any change in property valuations or charges related to water, wastewater/sewerage or waste.

 Rates Calculator btn

 

Feedback Opportunities

Community Information Sessions

Council will be hosting the following community information sessions to provide details on Council’s financial position, the proposed SRV and to provide the community with the opportunity to provide feedback.

locations

 
A copy of the information being provided at Community Information Sessions can be found here: GSC - Community SRV Information Pack PDF

 

How can people have their say?

The consultation period for the proposed SRV closed on Friday, 6 September 2024.


What happens now?

At the conclusion of the current period of community engagement, Council will consider whether to proceed with an application for a Special Rate Variation. Council would then need to notify IPART of its intent to lodge a Special Rate Variation application in February 2025.

IPART

Further information on the SRV process, including fact sheets and information papers are available on the IPART website that can be accessed via the following link: www.ipart.nsw.gov.au/Home/Industries/Local-Government/For-Councils/Apply-for-a-special-variation-or-minimum-rate-increase

Learn more

If you would like to learn more about the ways in which local government differs from a business, click here to view a presentation by Professor Joesph Drew.
 

Additional FAQs

Why is an SRV needed?

The cost to deliver services and maintain community assets to current service levels increases above the rate peg amount each year. Combined with reduced financial assistance and ongoing cost shifting to Local Government by other levels of government, councils are under constant financial pressure to deliver the same services for less, which is not a sustainable model. 

Council also has an expanding infrastructure base as our community is growing. We view the fact that our population is increasing as very positive but we need to be able to maintain the associated infrastructure need to support this.

Council has very limited opportunity to increase our source revenue and, as a result, an increase in rates is the most viable solution for a financially sustainable council.

Council’s long term financial plan shows that we are currently operating with an approximately $3.1m operating deficit in the General Fund (excluding domestic waste services). This essentially means that we are spending $3.1m less than we should be to maintain our assets and services to our current targeted service levels.

The SRV is also needed to address Council’s current and forecast cash position. Our 2024/25 budget forecast shows that our projected cash reserves will be in decline and the unrestricted cash position will potentially move into a negative balance within the General Fund within two years without intervention. A negative unrestricted cash balance cannot be allowed to occur.

What would happen if the SRV is not implemented?

Council would need to defer necessary capital works and revise the basic range and levels of services provided to the community to avoid a deteriorating cash position, which is not sustainable in the long term. Service levels would need to reduce in the absence of additional funding being available.

What is Council doing to save money?

No matter what Council does, an SRV is required to restore the real cost of maintaining assets and providing services to grow and be sustainable. Council has a focus on continuous improvement and we work hard to keep costs under strict control. Council has introduced a program of service reviews to improve operations and maximise the use and efficiency of resources. These reviews are showing that a number of improvements have already been achieved and that, while further improvements are possible, any drop in funding will translate to a drop in service levels.

Recent improvement and savings include:

• Insurance savings
• Reduced electricity costs (street lighting and Sewer Treatment Plant)
• Service Review program commenced
• Changed unsealed roads techniques (compaction versus dry grading)
• Parks and Gardens (GPS line marking, irrigation systems)
• IT system improvements and Planning portal integration
• Library service improvements

Are other Councils in our area getting SRVs?

Yes, across the North-West and New England the following Councils have applied for and received SRVs.

• Tamworth Regional Council – 36.3% over two years (24/25)
• Armidale Regional Council – 58.8% over three years (23/24)
• Walcha Council – 57.74% across three years (23/24)
• Tenterfield Council – 43% in one year (23/24)
• Liverpool Plains Shire Council – 18.1% in one year (23/24)

What can ratepayers expect in cases of hardship?

Council recognises the community has been doing it tough and has held off as long as possible to request an increase (9 other NSW councils made applications in 24/25 and 17 in 23/24). Unfortunately, additional money is required to keep infrastructure adequately maintained so we can continue to deliver the same level of service the community expects.

For ratepayers experiencing financial hardship, Council has a “Hardship Policy” that has recently been updated to ensure we work with the most vulnerable in our community to support them as best we can during these challenging times.

How will the new land valuation from the Valuer General impact the proposed Special Rate Variation?

Residents across the Gunnedah Shire Council will be receiving new Notice of Valuation from the NSW Valuer General from January 2025. This is provided every 2 to 3 years and reflects the unimproved value of land of a property.

The new valuations will apply from 1 July 2025 for calculating general rates.

It’s important to note an increase in land value does not necessarily mean an increase in rates. Council does not receive any more money because land values increase – some people may pay more or less on their rates depending on the change in value of their land relative to changes in land values across the Shire.

Does an increase in land values mean Council can collect more general income?

Council will be receiving new land valuations from the Valuer General effective 1 July 2025.

An increase in land valuations does not result in any additional general income for councils.

The total income that Council can source from land rates is capped at the approved rate pegged amount or any approved special rate variation.

It simply means it changes the way rates are distributed within each rate category/subcategory. Some people will pay more rates, some less, some the same.

Will my rates increase if my land valuation does?

An increase in your land valuation does not necessarily mean your rates will increase. The difference is how the rates revenue is shared across ratepayers, based on the change in their property value. Some people may pay more or less on their rates depending on the change in value of their land relative to changes in land values across the Shire.

Generally, properties whose land valuation increase is lower than the average increase for that rates category (residential, business, farmland or mining) will see a reduction in rates. However, properties whose valuation increase is higher than the average for the rating category may see a rise in rates.