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What the IPART decision means for CVC and ratepayers

The IPART wrote in its decision to only approve Clarence Valley Council’s (CVC) application for a special rate variation of 6.5 per cent for one year, rather than the five cumulative years applied for, that “our decision means that CVC may increase its general income in 2016-17 by an estimated $1.8 million, including the rate peg…” “The increase above the rate peg is to be removed from the council’s rate base after 2016-17. “After 2016-17, the council’s general income can increase by the annual rate peg unless we approve further special variations.” The IPART stated that CVC could “review its forecasts, and re-engage with its community”. “We consider that the partially approved special variation for 1-year should give the council sufficient time to make reasonable progress in addressing its financial sustainability concerns,” the report states. “We note that this will also provide the council with additional time to consider any proposed revisions to a potential future special variation application, and/or changes to its rating structure and minimum rates.” Meanwhile, for ratepayers, the IPART stated that by “approving the special variation application on a temporary basis”, it had “sought to balance the council’s financial need against the proposed rating impact”. “In order to retain the additional income provided by this special variation permanently, the council would have to lodge a special variation application for 2017-18, after conducting sufficient community consultation,” the report states. “IPART sets the allowable increase in general income, but it is a matter for each individual council to determine how it allocates any increase across different categories of ratepayer, consistent with our determination. “In the absence of any further special variation approval, average rates will decrease on 30 June 2017, as the special variation will be removed from the council’s rate base.” During the council’s consultation process, 169 written submissions and 115-signature petition were lodged, which identified the following reasons to oppose the SRV: ratepayer affordability, inability of the council to meet loan borrowing commitments, requests to cut expenditure, changing the distribution of the rating burden, and cost of roads maintenance should be borne by those who benefit from the roads. There were three submissions that were in “clear support” of the proposal. The IPART received 56 submissions – including one petition with around 2,000 signatures – and 268 online submissions opposing the application, mainly on the grounds that: “the rate increase is unaffordable given socioeconomic conditions in the local area (included in 88% of submissions); the rate levels are already too high in comparison with other comparable areas (included in 30% of submissions); the survey conducted as part of the community consultation was inadequate or unclear, and the cumulative cost of rate rises was not clearly explained (included in 32% of submissions); and, large deficits have resulted from council mismanagement, with a range of local issues cited (included in 68% of submissions).”