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SRV operational plans adopted

Clarence Valley Council (CVC) last week adopted revised documents to meet its operational planning obligations prior to applying to the Independent Pricing and Regulatory Authority (IPART) for a special rate variation (SRV).
At an extraordinary meeting held on Tuesday February 9, councillors Richie Williamson, Craig Howe, Sue Hughes and Jason Kingsley supported the council officer’s recommendation to adopt revised versions of the: 2014-2017 Delivery Program, 2015-16 Operational Plan, Revenue Policy, 10 Year Long Term Financial Plan and Asset Management Strategy.
Councillors Jim Simmons and Andrew Baker voted against the recommendation.
Councillors Arthur Lysaught, Karen Toms and Margaret McKenna lodged apologies and did not attend the meeting.
The council must submit its SRV application to IPART by February 15.
The IPART will announce its determination, which will consider whether or not CVC has demonstrated “the need for the additional income [and provided] evidence of adequate community awareness and an assessment of the [SRV’s] impact on ratepayers”, on May 17.
The council is applying for an SRV of “6.5 per cent per annum (inclusive of 2.5 per cent assumed rate peg), for five years, commencing in 2016-17”.
This will result in a cumulative increase in the general rate of 37 per cent by 2020-21, which will be “permanently built into the general rate base from that point forward”.
All additional revenue (above the actual rate peg) collected by CVC will be spent on “roads and roads-related infrastructure renewals and maintenance”.
The actual rate peg for 2016-17, which is set annually by the IPART, is 1.8 per cent.
The rate peg is set, according to the IPART, “based on changes in council costs as measured by the Local Government Cost Index and consideration of a productivity factor”.
The IPART’s chairperson, Dr Peter Boxall, said in a media release that “the modest increase in the rate peg reflects the continuing low inflationary environment, including significant falls in the cost of electricity and fuel”.
The council did not receive any submissions during the documents’ exhibition period, from December 10, 2015 to January 29, 2016; however, the public can make submissions to IPART regarding CVC’ SRV application up until March 14, 2016.
Councillors also resolved to utilise its “borrowing capacity when possible, using external loan borrowings” of $15m, from 2019/20 to 2024/25, to “further reduce the Infrastructure Renewal Backlog”, which was $66m at June 30, 2015 and includes a road-related backlog of $49.855m.
The annual maintenance gap for the council’s roads assets is $4.292m.
According to the report to council, the adopted revised plans and policies will result in “all Fit for the Future Sustainability criterion and Infrastructure and Service Management criterion [being] met for [the] General Fund, with the General Fund achieving a Net Operating Surplus before Grants and Contributions provided for Capital purposes of $4.024M in 2018/19”.
Councillors also reindorsed their November 2015 decision to instruct the general manager to find $7.465m in savings over the five year period of the SRV.
This is the “gap” in revenue between the adopted 6.5 per cent SRV application and the 8 per cent rise first put to the valley’s ratepayers.
These savings, which are to be found in the proposed (unknown at this time) service cuts and the rationalisation and review of the council’s assets, will result in “ongoing efficiency savings of $7.465m p.a. from 1 July 2021, to make Council financially sustainable”, the report to council states.
The council expects to gain an extra $18,538,958 in income (above the rate peg) as a result of the SRV over the five-year period.
While increases to sewer and water charges were 8.9 per cent and 6.5 per cent, respectively, in 2015/16, “due to the completion of all major capital works for Water and Sewer Services,” the report to council states, “from 2016/17 onwards [the water and sewer charges] will now increase by 1.5 per cent [each year] through to 2020/21” – or 1 per cent less than the assumed 2.5 per cent CPI over the next five years.

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