Special Rate Variation

IPART have placed Council's Special Rate Variation application on exhibition for public feedback.

View the full application and have your say by Monday 18 March 2024 at ksc.pub/IPART

At Kempsey Shire Council, we lead and work with our community to build an inspired, connected Macleay Valley, by fostering sustainable growth, enhancing community services, and maintaining the high quality of life our residents cherish.

To achieve these goals, we rely on various funding mechanisms including rates.

Since 1977 Council rate revenue and certain other Council revenues have been regulated in NSW under an arrangement known as 'rate pegging'.

Each year the NSW Government, through its rate-pegging policy, determines the percentage figure by which councils can increase their general rate income.

If councils want to apply for a larger increase they need to make a Special Rate Variation application.

Is Council requesting a Special Rate Variation?

Yes. Council carried out a lengthy investigating into whether to apply for a Special Rate Variation.

At the April 2023 ordinary meeting, Councillors voted to:

1. Conduct a detailed investigation into options for achieving financial sustainability. This will include a review of asset management plans, proposed capital programs, possible service level reductions, assessing capacity to pay and conducting community engagement; and
2. Receive a report in November 2023 recommending whether a Special Rate Variation application should be submitted with the intention of implementing a rate increase from the 2024-25 financial year. This will include consideration of the viability of service reductions.

At the November Ordinary Meeting of Council, Councillors resolved to proceed with a Special Rate Variation application to address financial sustainability and a forecast $79 million deficit over the next 10 years largely due to the cost of maintaining essential community infrastructure.

Council submitted an application to IPART on Monday 5 February seeking approval for a cumulative increase of 42.7%, including the rate peg, over three years commencing July 2024. This will consist of 7.9% in year one and 15% in years two and three which compounds to 42.7% over three years.

Council faces significant financial challenges to meet community expectations over the next 10 years with current estimates forecasting a deficit totalling $79 million. This is despite a five year financial sustainability program focused on efficiencies and reduced costs.

Many factors have contributed to making Council’s financial position unsustainable, including rising costs and interest rates, NSW Government rate pegging failing to keep up with inflation and community expectation that assets like roads, bridges and community facilities should be maintained and improved on current levels.