Inverell Shire Council special rates variation approved by IPART

COUNCIL: Inverell Mayor Paul Harmon (right) says council would take a backward step if it did not resolve to take the full rate variation.

COUNCIL: Inverell Mayor Paul Harmon (right) says council would take a backward step if it did not resolve to take the full rate variation.

Residents who supported an Inverell rate rise in a survey early this year were given three options for answers: pay higher rates, receive less services or give another option.

Fifty-nine percent voted to raise rates. The survey in February, which had 300 respondents, found that 38 per cent did not want a rise and about 3 per cent were unsure.

It followed an earlier phone poll of 400 residents during the Christmas period in which emergency and disaster management, and roads and bridges, were listed as the most crucial council services.

Inverell Mayor Paul Harmon said roads and maintenance would be the key areas targeted with funds from a rates rise, stating the money would not “just be going to a general fund to keep council afloat”.

The University of Technology Sydney conducted the Christmas survey and found residents were not prepared to accept a decrease in services and "identified increasing rates as the preferred mechanism for addressing council's financial sustainability issue".

Cr Harmon said council would take a “backwards step” if it did not resolve to increase rates by the full special rate variation approved by the Independent Pricing and Regulatory Tribunal last week.

"I cannot speak for my colleagues, but I am very mindful of the fact that if we put in for a special rate variation up to the 6.25 percent, 4.25 percent above the rate peg, then we would be silly to not take that full amount," Cr Harmon said.

"I think it would be a backwards step if we didn't take that full amount that we can levy." - Inverell Mayor, Paul Harmon

Cr Harmon said that the revenue would be put towards improving the shire's rural road network and infrastructure backlog.

"You will see an increase of maintenance activity and an increase in the renewal of our rural road network,” he said.

The 2017/18 budget will be tabled at the June general meeting where council will vote on the amount rates will be increased above the rate peg of 1.5 percent.

Inverell Shire was one of two councils in the state to have its application for a rate variation approved in full.

Residents can expect to pay between $26 and $58 more in 2017/18, before 7.25 percent increases in 2018/19 and 2019/20 respectively. The increase is tipped to generate $3.3 million over three years.

IPART approves special rates variation in full

General Rates account for the bulk of council's operating expenses and are set against an annual rate peg, determined by IPART. But the three year special rates variation does not include water and sewerage costs.

Inverell Shire Council lists community services, sporting services, environmental planning, public health, environmental protection and waste collection as services funded by rates.

IPART CEO Hugo Harmstorf said eight NSW councils applied for a special rates variation this year - a number he described at the lower end of applications. In previous years, he said, as many as 30 or 40 councils applied to increase general rates above the rate peg.

Of the eight councils, four were approved to increase their rates over several years - Inverell Shire Council among them - two were approved to increase rates in the first year, and two were declined.

Mr Harmstorf said rates rise applications were judged against five criteria - among them, the need for money for a council and the efficiency of council's community consultation during the application.

The cumulative total increase in general rates over the term of the variation is a maximum 22.21 percent.

The most recent rate peg is set at 1.5 percent and accounts for economic inflation on the cost of services provided by council in the previous year.

"The idea of the rate peg is that if councils bought exactly the same thing next year as they did this year, they would have enough money (from) the rate peg increase to be able to afford to do that," Mr Harmstorf said.

"(It) aims to recognise the increase in council's costs, like wages and other costs."

Mr Harmostorf said the 1.5 percent rate peg suggested a very low inflation rate.

"(It) reflects that inflation is lower than it has been in previous years. It used to be higher," he said.

"The rate peg is uniform acorss the state. Every council's increase is limited to the rate peg. But councils are starting from different places. Some councils choose to be high-rates-high-service. Some councils choose to be low-rates-low-service. 

"You would hope that that typically reflects what the needs and desires of the local population are."

Rates rise impact “significant, but reasonable”, IPART says

IPART Chair Dr Peter Boxall said the special variation would enable the council to fund the maintenance and renewal of its infrastructure assets and improve financial sustainability.

“Special variations are designed to give councils the flexibility to generate additional income above the rate peg to meet their specific needs, with an independent process to assess the increase,” Dr Boxall said.

“In the case of Inverell Shire Council, we are satisfied the council has demonstrated the need for additional revenue, which the community was aware of the need for, and extent of, the rate rise, and that it is taking steps to improve productivity and contain costs.”

The application was assessed by IPART against the NSW Government’s published criteria, taking into account the council’s financial need for the additional revenue, its community consultation on the proposed changes and the capacity and willingness of ratepayers to pay the requested increase.

Submissions received directly from stakeholders were also considered.

The impact on individual ratepayers will vary due to land valuations and the decisions made by the council about how to allocate rate changes among its community.

“The impact of the rate increases over the three years is significant, but reasonable taking into account the need and purpose of the special variation, the community’s preferred service levels, the differential rating structures, and the council have not previously applied for a special variation.”

IPART has attached conditions to the approval requiring the additional income to be used for the purposes outlined in the application, and that the council reports to the community each year about how the additional revenue is spent.

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