Special Rate Variation Update 23-24

Federation Council has approved and adopted its Special Rate Variation (SRV) increase of 19%, inclusive of the 4.1% rate peg for the 2023-24 financial year. The SRV will take effect from 1 July 2023 for all rateable properties in the Federation Council Local Government Area. Ratepayers are encouraged to assess the impact of the SRV on their respective properties by using the general rates estimator available below.

To meet the rising costs of delivering services and maintaining and renewing our community assets, Federation Council applied for a Special Rate Variation (SRV) in February 2023 to allow Council to increase its income from rates above the ‘rate peg’ (the annual increase set by the Independent Pricing and Regulatory Tribunal each year), under the provisions of the Local Government Act 1993 (NSW).

IPART Determination

Council was granted a two-year temporary rate increase of 19% in year one (2023/24) and 17% in year two (2024/25). Council had requested a general rate increase of 19% for 2023/24, with 17%, 14% and 10% for the following three years and for the increases to remain in the rate base, (not be temporary), and reverting to the ordinary rate peg for 2027/28 onwards. Council will need to re-apply for the increases to remain in the rate base ongoing, and if Council is seeking the other two years of 14% and 10%, or any different amount. Council will further consider a new application in the coming months, following further analysis of the IPART determination and Council’s longer-term financial position and further engagement with our community. Residents are encouraged to view Council's application and determination

Special Rate Variation Background

Every day our expenses are rising beyond our income and we need to either increase our income or significantly reduce the services and assets we provide across our whole community. Our community has told us time and time again that it does not support a reduction in our services, and that in some instances it would like to see an increase in our service levels and further renewal in our core infrastructure such as roads and community buildings.   

We are a geographically large local government area with a relatively small number of ratepayers and low rates. This means we are at a critical part in our financial sustainability journey and need more income to look after our assets into the future. This income funds things like roads, footpaths, bridges, stormwater drains, parks, libraries, community buildings and swimming pools – and other valued services we provide to the community,

As an organisation, we have done extensive work over the last four years to develop a Long Term Financial plan that has planned for rate increases and further permanent rate increases above the expected rate peg. We are committed to continuing to engage with our community on further increases required to meet our financial sustainability goals and encourage you to sign up to our electronic newsletter to stay up to date with our journey and also view council news.

Why do we need an SRV?

The funding of local government is complex. The work we do is largely funded by general rates and charges, user fees and charges and a Financial Assistance Grant from the Australian Government. We also receive grants from the state and Australian government for certain projects, programs and services.

In the past, councils received close to 1% of federal taxation revenue through the Financial Assistance Grants. However over time this has reduced to 0.55%, with no indication this declining trend will change. Our fixed income base is from general rates (the base rate and ad valorem) and this is set each year by the rate peg controlled by the Independent Pricing and Regulatory Tribunal (IPART). Over the years, the annual rate peg increases have not kept pace with the inflation and rising costs. Our delivery costs have increased significantly – fueling our vehicles to repair roads, clean toilets, mow lawns, pay wages, etc – and the costs involved in purchasing materials, hiring contractors and paying suppliers has also increased.

Council has worked hard, and will continue to, to make sure we are as efficient as possible and we continue to review ways to reduce expenditure including staff restructures, improvements in our asset management processes, zero-based budgeting, and service reviews.  We have continued to deliver grant-funded assets to increase liveability and amenity in our community and this, combined with external influences such as rising costs, material shortages and unexpected expenditure associated with multiple disasters and the pandemic, has gradually led to the problem we now seek to address.

If we don’t improve our financial position over the longer term, services will have to be reduced and assets will not be renewed when needed. The value of our cash and investments will continue to decline and as any business, this is not a situation we can be in.

The gap between the increasing cost to support our assets and deliver services, and the fixed amount of income we collect is widening, so implementing our current SRV and applying for a further permanent SRV in the future is a financially responsible decision.

What if I cannot afford this SRV increase?

Council is very conscious of the hardship that this SRV increase might cause and has recently reviewed and adopted its Financial Hardship Policy. To view this policy and find out what financial support is available, residents are encouraged to call our Rates Department on (02) 60338999 or view the Hardship Policy.