Special Rate Variation
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?
Council is investigating 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.
Applying for a Special Rate Variation
A Special Rate Variation allows Councils to increase rates above the rate peg increase, which is determined each year by the Independent Pricing and Regulatory Tribunal (IPART) under delegation from the NSW Minister for Local Government.
Councils can apply for two types of Special Rate Variation:
- An increase in general income in a single year (i.e. a 'one-off' variation)
- An increase in general income in more than one year (i.e. between 2 and 7 years)
Applications for Special Rate Variations must be submitted to IPART for assessment. IPART is the State's main independent regulator. IPART sets prices and/or licenses certain water, electricity, gas and transport businesses and also has a role in setting local Council rates. IPART is also an economic and policy think tank for the NSW Government, similar to the Productivity Commission at the Commonwealth level.
The SRV Application Process
To ensure transparency and accountability, the SRV process involves several key stages
Building on the engagement conducted to develop the Community Strategic Plan and Delivery Program, Council must carry out engagement to ensure the community clearly understands the need for and impact of the proposed SRV.
Council develops a comprehensive financial plan that outlines the proposed rate increase, its impact on ratepayers, and the specific projects or services it will fund. This planning is an extension of the Long Term Financial Plan.
IPART carefully evaluates Council's financial plan, considering factors such as community consultation, affordability, value for money, and the alignment of proposed projects with community needs.
IPART determines whether to approve the proposed SRV, considering the overall financial viability and the benefits it will bring to the community. If approved, IPART may set conditions or requirements for Council's implementation and monitoring.
Special Rate Variation updates