Latest News

SRV discussions begin

Clarence Valley Council (CVC) has commenced a month-long consultation, seeking feedback on a proposed special rate variation (SRV).
“Council has listened to the community,” says Clarence Valley Council’s acting general manager and corporate director, Ashley Lindsay.
“The previously proposed 41 per cent rate increase, to address Fit for the Future benchmarks within five years, has been replaced with a longer term approach to addressing council’s sustainability into the future.”
Mr Lindsay emphasised that any “future measures taken to improve our sustainability will be done in consultation with the community”.
The council aims to convince ratepayers that the best way forward is to increase rates by 9 per cent for the 2017/18 financial year, with the increase to remain permanently in the rate base.
This can be broken down to “the 6.5% approved SRV (special rate variation) from 2016/17 plus an estimated rate peg of 2.5%”, as adopted on the mayor’s casting vote at last week’s council meeting.
The Independent Pricing and Regulatory Tribunal (IPART) rejected the council’s prior SRV proposal – an application to increase rates by 6.5 per cent over each of five consecutive years – on the grounds that CVC “did not demonstrate the need for, and financial impact of, the proposed rate increase in its Integrated Planning and Reporting (IP&R) documents; and, the council did not adequately make the community aware of the extent of the rate increase, as the cumulative impacts were not communicated effectively”.
However, IPART did grant the 6.5 per cent increase (inclusive of a 1.8 per cent rate peg) for the 2016/17 year only.
If the new SRV proposal is adopted, ratepayers can expect their general rates to increase by 1.8 per cent – plus an estimated 2.5 per cent rate peg (4.3%) – above their 2016/17 rates, followed by yearly increases at the annual rate peg set by IPART.
If the SRV application is not adopted, rates will be 4.7 per cent lower for the 2017/18 year, plus an anticipated 2.5 per cent rate peg (-2.2%).
The ultimate aim of the new SRV proposal is to assist CVC to meet its Fit for the Future sustainability benchmarks.
A decision was adopted at the August council meeting, which directed the general manager to undertake preliminary planning for an SRV, so it could be presented to the October meeting, and to write to the Office of Local Government requesting a delay in CVC’s Fit for the Future proposal “until … consideration of CVC’s financial position” after the election.
A new assessment of CVC’s financial position (at a cost of $40,000) was subsequently completed by business management consultants, Morrison Low, “to assist in identifying saving opportunities [to] … demonstrate financial sustainability” to IPART.
The Morrison Low report provided two models to achieve its aim, one of which, ‘the base case’, advocates the implementation of a one-off increase of 40.4 per cent.
The general manager, Scott Greensill, writes in his report to council that he doubts “whether the community has the appetite or the capacity for such an increase”.
The Morrison Low report identified “improvement opportunities” in the council’s management of its commercial, governance, services and facilities operations.
As a result, Mr Greensill writes that these potential improvements, combined with the rate increase, would “have the least impact on existing service levels and facility provision”.
“[These] improvement opportunities … [will] result in a funding shortfall of approximately $6.6m, which represents an additional required SRV of 6.5%, excluding the rating cap”.
Morrison Low’s “improvement plan” when modelled into CVC’s long term financial plan will achieve “recurrent surplus balances” the general manager writes, which will “allow council to address its existing infrastructure backlog”.
On the issue of the number of CVC employees, which have increased from approximately 500 fulltime equivalent (FTE) positions in 2012 to 550 FTE in 2016, the general manager writes that “forced redundancy would be a last resort and only undertaken at direction of Council”.
Over recent years the cost of employees has risen from $35.694m in 2013 to $39.135m in 2016, which includes an approximate 2.7 per cent wage increase per annum under the local government award.
Since CVC came into existence in 2004, staff numbers have increased from 440 FTE to the current 550 FTE.
The FTE measure counts fulltime and part time permanent staff, but does not include casual employees.
Councillors will decide whether or not to apply for an SRV at an extraordinary meeting on December 6, in order to meet IPART’s December 9 deadline.
Should IPART approve the application, due to be advised in May 2017, councillors will decide whether or not to include it in the 2017/18 budget in June 2017.
The community consultation is expected to cost around $40,000.