In a split vote, Clarence Valley’s councillors have voted 5-4 to apply for a special rate variation (SRV) of 6.5 per cent for each of the next five years, beginning in the 2016/17 financial year.
The mayor, Richie Williamson, proposed a lower rate than the eight per cent recommend by the general manager, Scott Greensill.
The motion was seconded by Cr Craig Howe and supported by councillors Arthur Lysaught, Sue Hughes and Jason Kingsley.
The decision means the valley’s ratepayers will see their general rate bill increase by 37 per cent over the five-year period.
The 6.5 per cent includes “the assumed 2.5 per cent rate increase allowable under the NSW Government’s rate-pegging guidelines”; a Clarence Valley Council media release states.
“Council will notify IPART of its intention to apply for a special rate rise [in December] and will make formal application in February.”
Mr Greensill said the rate rise did not apply to service charges such as sewer, water and waste charges, which “in most cases amounted to about half of a ratepayer’s bill”.
Councillors also resolved to peg any increase in water and sewer charges to 1.5 per cent over the next five years.
In real terms, this means that ratepayers will be charged one percent less than the 2.5 per cent CPI (inflation) increases that had been modelled by the council’s staff for the coming years.
Since 2007/08, water charges increased by 6.5 per cent and sewer charges increased by 8.9 per cent each year – these figures include the annual 2.5 per cent CPI.
The council’s corporate director, Ashley Lindsay, said that revised modelling had prompted the opportunity to peg the annual water and sewerage charge.
“Now that all major capital works for the Water and Sewer Services have been finalised, a review of Council’s 30 Year financial modelling is underway,” he wrote in the report to council.
“The preliminary modelling that has been completed indicates that Council can maintain increases for Water and Sewer Charges at 1% less than CPI for the next 5 years from 2016/17.”
Mr Greensill said in the council’s press release that “the combined impact on the total rate bill for residential ratepayers will be around 3.6 per cent for average ratepayers or, in dollar terms, about $90 in the first year”.
“If approved by IPART, all the additional money raised from this rate rise will be used on roads and related infrastructure,” Mr Greensill said.
“That is where the community has consistently told us money needs to be spent, and council’s asset management plans show that if we don’t do the necessary maintenance on these essential community assets now they will continue to deteriorate.
“A rate rise [is] regrettable but necessary.
“We have to be financially viable over the long term.
“Our costs have grown faster than our income and we have taken a range of measures to deliver our services more efficiently, but there is a limit to the efficiency gains that can be made.
“We need to increase our income.”
Councillors also resolved to: have the council “publish in [its] annual report, a list of projects and the cost for each project that have been achieved by the extra funds made available by any special rate variation; [have] the general manager find efficiency savings totalling $7.465million, as a minimum within the annual budget over the five-year term of the SRV, [and] report annually to the March council meeting, a proposal to achieve the annual efficiency saving”.
The $7.465million equates to the difference in revenue that would be raised with a 6.5 per cent SRV instead of the initially proposed 8 per cent increase.
Councillors also left a bit of wriggle room to vary the SRV, if it is approved by IPART, resolving to review the “percentage above the approved rate pegging limit annually … during the formation of council’s annual budgets”.
This means that councillors could choose to either apply for another SRV or to not implement an approved SRV in a specific year.
Mr Lindsay said, for example, that if there was an unexpected windfall – like an increase in federal funding for roads – councillors could choose to forego the SRV.
The council’s SRV application to IPART will be tabled at a council meeting before it is submitted.
IPART is expected to hand down its decision in May 2016.