Special Variation to Rates

Council delivers a broad range of services from roads, rubbish collection, parks, playgrounds, community facilities and events, environmental protection, asset maintenance and renewal and much more.

Council’s revenue is regulated by the NSW Independent Pricing and Regulatory Tribunal (IPART), which limits the amount by which councils can increase rates from one year to the next.

Council is facing the challenge of balancing community expectations with future financial sustainability. There is a growing gap between the cost of providing services and facilities and the available funding from rates to meet those costs.

Over recent years, Council has implemented a range of productivity savings, and reduced costs across our operations, but there are no easy solutions to addressing this increasing funding gap. If Council does not address this gap now, our community assets will deteriorate.

To address this situation, councils are able to apply for rate increases. This is called a Special Variation to Rates (SV). Council is considering a number of SV options for 2022-23 and beyond, including applying for a permanent SV. There are 4 options which ratepayers can consider. Each option will have a varying impact on what Council can deliver. 

IPART

Council met with IPART in 2018 to discuss a lapsing 10-year special variation to maintain community buildings. IPART suggested that Council consider combining all of its special variations into one submission and place this permanently into the rate base. Options 1,2 and 3 all apply this consideration.

RATE PEGGING

In NSW all councils are bound by rate pegging, which is the maximum annual increase set by IPART. Typically, this amount ranges from 2-2.5%. The only way that Council can increase this amount is to make an application to IPART and to clearly outline all of the reasons why Council is needing to increase rates. All options are subject to rate pegging.

ASSET MAINTENANCE

Council is responsible for the management of $209million worth of assets, including roads and footpaths. If our assets are not maintained properly we are faced with increased replacement costs. Special variations to rates provide us with the income necessary to properly maintain assets and therefore alleviate significant repair and replacement costs. If Council defers asset maintenance this will cause additional costs in the long run.

COST SHIFTING

The other significant factor about the need to change rates is the shifting burden of costs from other levels of government. This amount represents approximately $2million (15% of Council’s income) every year. Cost shifting is one of the biggest issues faced by NSW councils.

LAND THAT IS NON-RATEABLE

While we love the amenity of our community the Hunter’s Hill Council local government area has large parcels of land/uses that are non-rateable. Non-rateable land includes; churches, minister’s residences, schools, public land, the Gladesville Hospital site, and land owned and used by public charities.

A special variation to rates allows councils to increase their general income above the rate peg.

There are a range of reasons why councils apply to IPART for special variations to rates, including:

• addressing financial sustainability;
• funding new facilities;
• maintaining community infrastructure;
• enhancing community services; and
• for merged councils, harmonising rates.

Council has applied for a number of special variations with the most recent being:

• 2012-13: 4.8% for roads, temporary for 10 years and 2% for operations.
• 2013-14: 2.17% for environmental (bushcare and stormwater) works, 3.1% for road related infrastructure (footpaths, kerb and gutters), temporary for 10 years and 2% for operations.
• 2019-20: 4.04% for community facilities, temporary for 10 years and 3% for operations. Options 1,2,3 do not consider including this SV permanently in the rate base.

You may wonder where your rates go and what sort of projects your money funds. For every $100 spent we distribute it across the following categories:

Each of the options below includes an assumed rate peg of 2.5% per annum (this figure may change in September 2021). The figures are based on a Average Residential Rateable Land Value of $1,650,000 with a base date of 1/7/2019.

Note: Garbage and Waste Charges are excluded from this table.

If any changes to rates are made, they would not come into effect until July 2022.

Ratepayers have 4 options to consider, which all have varying impacts.

By going to Council’s website and using the online rates calculator, ratepayers can then determine which is their preferred option.

Below is a comparison with our neighbouring councils residential rates for 2021-22, based on a rateable land value of $1,650,000 (no waste charge included).

Council has implemented a commitment to shared service initiatives, put in place a Digital Asset Management Plan, diversified revenue growth, invested in improved technologies, increased State and Federal Government grants, and varied the rating base, all of which have improved our financial position.

A focus on shared service opportunities to improve service delivery and reduce costs has included agreements with Lane Cove Council (LCC) to share library services, a shared depot, waste management, road safety and rating services. The shared library service implemented on 1 July 2020 has saved $350,000 every year, equivalent to around 3.5% of rate income.

The development of a draft Property Strategy to optimise Council-owned land has commenced with commissioning of feasibility studies of developable, saleable or leasable land.

An ongoing review of fees and charges to change in line with surrounding municipalities and increase to equitably recover costs and maintain service standards is also underway.

Investment in improved technologies to support more customer-friendly systems and drive organisational change and efficiencies has been actioned. The recently upgraded development application assessment corporate business system, which is integrated with the NSW Government Online Planning Portal is just one example.

Implementation of an industry-leading digital asset management system (AMP) has been completed. This gives Council a more rigorous assessment of the condition of infrastructure assets than previous systems that relied heavily on desk-top estimates. The system enables more precise modelling of asset condition at different investment levels.

Council has also investigated its reliance on SVs. Apart from the 2% operational components in the 2013/14 and 2019/20 increases, which Council can keep permanently, the Roads, Environmental/Other Infrastructure and Buildings SVs are for a period of 10 years, which will cease in 2022, 2023 and 2029 respectively and are important for continued financial sustainability.

You can find an estimation of the impacts on your own Rates and Charges by using our online calculator.

All you need is your 2021-2022 rates notice, which has your land value, your rating category and your waste service.

Councils that were forcibly merged 4 years ago are now either trying to demerge or applying to IPART for significant rate increases to harmonise rates across the merged council areas.

Examples of this include Georges River Council receiving a 32.6% rate increase and the City of Canterbury Bankstown who have received a 36.4% rate increase.

Council will not be in a position to increase its capital works program for roads, footpaths, stormwater, kerb and gutters, bushland, parks and reserves unless maintenance and service standards are significantly reduced.

In addition, Council will also not be able to meet its statutory responsibility to maintain community assets and will ultimately not be financially sustainable into the future.

In assessing any application, IPART will look at the ability of ratepayers to pay their rates. Statistically, Hunter’s Hill Council is 10th in Australia on the Socio-economic Index for Areas (SEIFA) rankings database for the most advantaged areas in Australia. However, even though a majority of residents in Hunters Hill are socio-economically advantaged, there are still some residents who may be in a financially vulnerable position. Council has a Financial Hardship Policy in place, which provides a framework for ratepayers experiencing genuine hardship for assistance with the payment of their rates and charges.

Council has an endorsed COVID community support package, and will extend this package until the end of 2021 to help local organisations, businesses and the broader community.

There are also pensioner concessions in place if you hold a pensioner concession card and your property is your sole or principal residence, which will entitle you to rebates. Further information about this is available by visiting Council’s website www.huntershill.nsw.gov.au or contacting Council on 9879 9400.

For general information about special rates go to the IPART website: www.ipart.nsw.gov.au.