*UPDATE – 5/11/2023* – Please note, after community consultation, Councillors have discontinued the SRV process and will not be applying to IPART for a Special Rate Variation.
Further information can be found in the latest Media Release from 5 November 2023. Future engagement sessions, including the evening session in Crookwell on Wednesday 8 November will now be cancelled due to the discontinuance of the SRV process.
Overview
Council has given in principle support for the intention to apply for a Special Rate Variation (SRV) to ensure upper Lachlan Shire Council’s ongoing long-term financial sustainability. As part of the process to clarify the need for an SRV, Council engaged AEC Group Ltd to undertake an independent financial sustainability review and prepare SRV options. The central premise of the consideration is that Council must achieve at least a break-even result in its general fund in order to be sustainable.
Consideration of a SRV is an unprecedented measure for Upper Lachlan Shire Council and Council are now seeking the community view on proposed SRV options. The decision to apply for a SRV has not be taken before by Upper Lachlan, however 67% of NSW Councils have already taken this step and a number of councils are seriously considering a special variation for the 2024/2025 financial year.
Financial Sustainability and Special Rate Variation Assessment
Council has engaged AEC Group to conduct an independent financial assessment to identify financial improvements that could provide increased value for money for ratepayers and minimise any SRV that might be required. The key findings and final report from this review can be found below:
AEC Group Financial Sustainability Review – Key Findings
AEC Group Financial Sustainability Review – Final Report published November 2023
Additional information relating to Special Rate Variations, Council’s Services/Rates guide and Improvement Plans can be found below:
Special Rate Variation Fact Sheet and Comparitive Rates
Upper Lachlan Comparative Information to other Councils
Upper Lachlan Service Profile & Improvement Plan
Fit For The Future Improvement Plan 2021 Pre-SRV-Review
AEC Group Socio-Economic Profile Report
Special Rate Variation Proposed Options:
Scenarios | 2024/2025 | 2025/2026 | 2026/2027 | Cumulative |
Base Case – Assumed Rate Peg | 3.50% | 2.50% | 2.50% | 8.74% (over three years) |
Option 1 – One Year SRV (including rate peg) | 55% | 2.50% | 2.50% | 62.85% (over three years) |
Option 2 – Three Year SRV (including rate peg) | 35% | 15% | 5% | 63.01% (over three years) |
Base Case (Rate peg only) – Assets and service levels will deteriorate, and the current infrastructure backlog will continue to grow as additional assets deteriorate below satisfactory condition. Council will be required to reduce services and close unsafe facilities. Council will rationalise assets wherever possible, selling assets where possible, reducing the range and levels of service that Council provides. For more information related to the rates modelling for the base case, click here.
Option 1 – One Year SRV (including rate peg) – This increase in revenue will enable an additional investment in asset renewals each year to stabilise the current infrastructure backlog additional investment in asset renewal to stabilise the current infrastructure backlog and to undertake additional renewal and maintenance of our roads and other assets. Current service levels will be maintained while also progressively improving the operating result. For more information related to the rates modelling for Option 1, click here.
Option 2 – Three Year SRV (including rate peg) – This increase would enable the same outcomes of Option 1 but a more gradual increase in revenue and likewise more gradual enabling of a staged additional investment in asset renewals each year to stabilise the current infrastructure backlog. For more information related to the rates modelling for Option 2, click here.
More information on SRV guidelines and the process for applying to IPART can be found below:
IPART – Apply for a Special Variation or Minimum Rate Increase
Office of Local Government – Special Rate Variation Guidelines
Community Engagement
The purpose of community engagement is to ensure that the community is adequately informed and consulted about the impact of the proposed special rate variation and the impact of not applying for a special rate variation to Council. As part of our community engagement, a number of community meetings are scheduled to provide the opportunity for residents to speak to Council and gain a better understanding of what this will mean for them. Council strongly encourages residents to attend one of the following sessions:
Town/Village | Meeting Date | Time | Meeting Venue |
Bigga | Wednesday, 1st November 2023 | 9-11am | Bigga Memorial Hall |
Tuena | Wednesday, 1st November 2023 | 1-3pm | Tuena Hall |
Taralga | Thursday, 2nd November 2023 | 9-11am | Taralga War Memorial Hall |
Crookwell | Thursday, 2nd November 2023 | 12-2pm | Emily Chalker Building |
Gunning | Thursday, 2nd November 2023 | 3-5pm | Gunning Shire Hall |
Collector | Friday, 3rd November 2023 | 10am-12pm | Collector Oval Pavilion |
AEC Group Community Engagement Presentation:
More information relating to Councils community engagement plan and the SRV letter sent to all Upper Lachlan Shire residents can be found below:
Special Rate Variation Letter to all Residents
Frequently Asked Questions
The Independent Pricing and Regulatory Tribunal (IPART) sets the amount local government councils may increase rates by each year, which is called the rate peg. A Special Rate Variation is a request by a Council to IPART to increase general rates by more than the rate peg amount. A special rate variation can be for a single or multiple years. It can also be temporary or permanently retained in the rates base. To apply for a Special Rate Variation Council needs to follow a process set out by IPART and formally apply for the variation and show how Council has met all of the criteria in the application guidelines.
The Independent Pricing and Regulatory Tribunal (IPART) is a NSW Government agency that operates independently of the government to act as an independent pricing regulator for water, energy, public transport, and local government. Part of this role is to set the rate peg each year, and to assess any applications for Special Rate Variations by Councils. Further information is available on the IPART Special Variations webpage.
The Independent Pricing and Regulatory Tribunal (IPART) sets the amount councils can increase rates by each year, which is called the rate peg, or rate cap. IPART’s rate peg considers the annual change in the Local Government Cost Index (LGCI), which measures the average costs faced by NSW councils, in additional to a population factor based on each council’s population growth. The rate peg is the maximum percentage amount by which a council may increase its general rates income for the year.
Council is considering 2 Special Rate Variation Options, plus the base case which relies on the rate peg set by IPART each year. Residents and ratepayers are being asked for their views on whether Council should apply for a Special Rate Variation from 2024/25.
Council wants to ensure it can continue to be financially sustainable whilst maintaining service levels for infrastructure and other services provided to the community. Following a detailed analysis of our financial position and exploring efficiencies within the Council, Council has determined that an increase in rates is a critical step to take to ensure that Council can remain financially sustainable over the long-term.
Scenarios | 2024/2025 | 2025/2026 | 2026/2027 | Cumulative |
Base Case – Assumed Rate Peg | 3.50% | 2.50% | 2.50% | 8.74% (over three years) |
Option 1 – One Year SRV (including rate peg) | 55% | 2.50% | 2.50% | 62.85% (over three years) |
Option 2 – Three Year SRV (including rate peg) | 35% | 15% | 5% | 63.01% (over three years) |
Council residents are charged general rates which are classified into a rating category e.g. Residential, Residential – Non Urban, Farmland and Business.
The rates are calculated using a base amount and ad valorem amount. The base amount is a set amount that may differ from category to category and forms part of the rates levied on each rateable property.
The remainder of the rates is calculated using the ad valorem which is a rate in the dollar amount multiplied by the land value provided by Valuer General’s Office.
Under the rate peg set by IPART, Council is delivering services and infrastructure in an increasingly challenging environment. A volatile inflationary environment, impacts from the COVID pandemic and natural disasters have increased Council’s costs faster than revenue growth resulting in Operating Deficits in recent years.
Consideration of a Special Rate Variation is an unprecedented measure for Council. NSW councils are experiencing large annual cost of living price escalations in operational activities costs which are outside of our control. These exceed projected income and go beyond the annual rate peg. Examples include; Emergency Services Levy (ESL), audit fees, insurance and energy costs, materials/construction expenses, employee wages and superannuation cost increases. In addition, capital works project material costs escalations experienced in the past three years are well above the CPI increases. Council has now committed to exploring the option of a Special Rate Variation application.
No. Upper Lachlan Shire Council is one of the small number of local government areas in NSW to have never applied for a Special Rate Variation.
As part of the process to clarify the need for a Special Rate Variation, Council engaged AEC Group Ltd to undertake an independent financial sustainability review. The key findings are available on Council’s website and Special Rate Variation Options have been prepared and are available for community feedback to allow informed consideration by Council.
The Special Rate Variation only applies to the general rates charge on your Rates Notice. The % increase in general rates does not apply to Domestic Waste, Rural Waste, Sewer, Stormwater, or Water Supply annual charges.
The impact on an individual’s rates will be different depending on the unimproved land value of their property as supplied by the Valuer General’s Office.
In assessing Council’s application, IPART will consider the ability of ratepayers to pay their general rates. Council has a Rates and Charges Hardship Assistance Policy in place which provides a framework for ratepayers experiencing genuine hardship for assistance with the payment of their rates and charges. View Council’s Rates and Charges Hardship Assistance Policy.
Council also has pensioner concessions in place if you are eligible. View Council’s Pensioner Concession Policy.
The Office of Local Government groups similar councils for comparative purposes. Upper Lachlan Shire Council is in Group 10 with other Large Rural Agricultural Council LGAs. AEC Group has prepared comparative analysis of Upper Lachlan to other similar sized councils.
ESL stands for Emergency Services Levy. The State Government collects funds under the Emergency Services Levy Act 2017 from local councils, insurance companies and foreign insured policy holders, to support the work of emergency services in NSW.
Yes. If the Special Rate Variation is implemented this will be a permanent increase to your general rates.
Have Your Say
Council wants to hear from its residents on their views in regards to the Special Rate Variation please provide your feedback on the below form:
Create your own user feedback surveyMedia Releases
Consideration of Special Rates Variation – 1 August 2023
Consideration of Special Rates Variation – 25 October 2023
Special Rate Variation process discontinued by Councillors – 5 November 2023