Special Rate Variation

Kempsey Shire Council uses rates, along with other income, to fund community services and maintain essential infrastructure.

In NSW, rate increases are limited each year by the state government through “rate pegging.” Councils can only increase rates beyond this limit by applying for a Special Rate Variation (SRV), which must be approved by the Independent Pricing and Regulatory Tribunal (IPART).

Why a Special Rate Variation was needed

In 2023, Council identified a significant long-term financial gap, with forecasts showing a deficit of $72 million over 10 years.

This gap is largely driven by:

Costs rising faster than rate peg limits (including materials, labour and contracts)
Increasing costs shifted to local government by other levels of government
A growing backlog of infrastructure maintenance and renewal
Service level expectations
Award wage increases

Council has implemented savings and efficiency measures over several years, but these alone were not enough to address the shortfall.

Community input and decision

In April 2023, Council resolved to investigate options to improve long-term financial sustainability. This included reviewing services and assets, assessing community capacity to pay, and undertaking extensive community engagement through information materials, online channels and in-person sessions.

Following this work and community feedback, Council resolved in November 2023 to apply for a Special Rate Variation to address the financial gap and support ongoing service delivery.

Council’s application for an SRV was submitted to IPART in February 2024, requesting a 42.7% cumulative increase over 3 years.

Outcome of the application

In May 2024, IPART approved a partial SRV for a total approved increase of 24.09% over two years, permanently built into the rate base.

The approval allowed for a 7.9% increase in 2024-25 and the remaining 15% in 2025-26, for a cumulative increase of 24.09%*.

*The increases do not add together because they are compounded. This means the 15% increase is applied to the already increased amount from the previous year, the 7.9% increase, resulting in a slightly higher total increase of 24.09% overall.

Implementing the SRV

The 7.9% increase was implemented in 2024-25.

In 2025-26, Councillors resolved to implement a 7.5% increase (half of the approved IPART amount of 15%), choosing to defer the remaining 7.5% increase. This provided flexibility to respond to changing financial conditions and may reduce the need to apply the full approved increase in future years.

In June 2026, Councillors implemented the remaining 7.5% SRV increase and the rate peg, a total of 10.29% increase for the 2026-27 financial year.

Stable services and infrastructure investment

The SRV helps to:

Maintain essential services without major reductions
Maintain roads and infrastructure
Reduce reliance on borrowing for ongoing costs
Stabilise Council’s financial position
Provide flexibility if financial conditions improve

Council will continue to report annually on how SRV funds are used and the outcomes achieved. This information is reported in Part B of Council’s Annual Report which can be found here: Annual reports & publications

Why didn’t Council just cut costs?

Council has been actively reducing costs and improving efficiency, but this alone is not enough to address the financial challenge.

As of April 2026, the Financial Sustainability Program, adopted in 2019, has delivered $9.9 million in annual savings through cost reductions and increased income.

Council cannot simply cut costs without reducing the levels of service the community currently receives. Community survey responses clearly state that the community does not want to see less services and in fact wants more services.

Council does not operate like a private business focused solely on profit and has a responsibility to provide and maintain services, facilities and infrastructure that support community safety, wellbeing and quality of life, even where they do not generate significant income. This includes maintaining local roads, public spaces, parks, libraries, drainage, waste services and community facilities.

Council also has a duty of care to maintain infrastructure to safe and appropriate standards for the community, while balancing financial sustainability and the long-term needs of the shire.

Our Financial Future

Understand the issues and have a say on Council's rating options.

Applying for a Special Rate Variation

To ensure transparency and accountability, the SRV process involves several key stages.

Special Rate Variation updates

Planning docs, Councillor fees and progress on a statue for Dave Sands

At the May Council meeting, Councillors adopted three key planning documents, Mayor and Councillor fees were set for the 2025-26 financial year, and the location of a future statue commemorating the legacy of Kempsey boxing legend Dave Sands was agreed on.

Planning documents under the microscope in April meeting

At the April Council meeting, Councillors discussed the next suite of planning documents to be exhibited including the Operational Plan and Delivery Program, the successful recipients of Round 2 of the Community Grants Program, and two Notices of Motion from Councillors Bain and Coburn.

Community engagement and draft Flood Policy on this month's agenda

At the March Council meeting, Councillors will discuss the draft Community and Engagement Strategy, the draft Flood Policy, three potential grant applications from the Disaster Ready Fund, as well as a proposal to re-form a Dunghutti-Thunghutti Council Advisory Group.

February meeting to discuss financial sustainability

At the February council meeting, Councillors will discuss matters of financial sustainability, being asked to endorse the IPART approved rate rise of 15% ahead of the official decision in June. Also on the agenda is a revised grants policy, and regional collaboration for waste processing.

Horseshoe Bay units removed at last Council meeting of the year

At the final meeting of the year, Councillors discussed expanding the Revenue and Review Taskforce, the Rocks subdivision at South West Rocks, the Lower Macleay Flood Risk Management Plan, sporting masterplans for South Kempsey and Willawarrin, and proposed units at Horseshoe Bay Holiday Park.

November Council meeting highlights

The November Council meeting included the recruitment process for the new CEO to replace Craig Milburn, community management of Wigayi Cultural Park, the future of Kempsey airport, Community Grants, the draft Lower Macleay Flood Risk Management Study and Plan, and the Yarrahapinni land release were some of the items discussed.

November meeting to discuss recruitment for new GM and airport

The upcoming November Council meeting has a packed agenda, including kicking off the recruitment process for the new General Manager, a feasibility review for the Kempsey airport, approval for the Community Grants Program to award grants to the successful applicants, a request to adopt the Lower Macleay Flood Risk Management Study and Plan, and a proposal to introduce fees and charges for Kempsey

First meeting for new Council elects Deputy Mayor

In this first meeting for the new Council, Councillors elected Councillor Julie Coburn as Deputy Mayor, as well as approving the Development Application for the new Amenities and Accommodation block for the Horseshoe Bay Holiday Park, receiving an update on the Multi-purpose Pavilion on Verge Street, and finalising the formation of a Revenue Review Taskforce.

First Council meeting for new Council has packed agenda

The upcoming October Council meeting has a packed agenda, including the election of Deputy Mayor, the determination of a Development Application for the new Amenities and Accommodation block for the Horseshoe Bay Holiday Park, an update on the Multi-purpose Pavilion on Verge Street, and the formation of a Revenue Review Taskforce.

Kempsey farewells three Councillors

The final Council meeting before the September election included planning proposals at Yarrahappini and West Kempsey and naming the Kemp Street Sports Complex the Terry Giddy Sports Fields.

August meeting to address key subdivisions, renaming sports complex

The upcoming August Council meeting has a packed agenda, addressing some key residential planning proposals at Yarrahappini and West Kempsey, as well as the renaming of the Kemp Street Sports Complex to the Terry Giddy OAM Sports Fields.

SWR subdivisions, flood plans, EV fees and more at Council.

A new revenue taskforce, a plan for crown land reserves and the cancellation of the September meeting were also discussed.

July meeting agenda: subdivisions, Flood Plans, EV fees and more.

The upcoming July Council meeting has a packed agenda, addressing important community issues and planning proposals. Key topics include a new residential subdivision in South West Rocks, the public exhibition of the Lower Macleay Flood Risk Management Study and Plan, new fees for using Council-owned electric vehicle chargers, and the cancellation of the September Council meeting due to Local Gover

Council reluctantly raises rates by an average of $100

The Kempsey community have confirmation of a special increase in their rates for the coming year as councillors took the necessary, but difficult, final step in their year-long rate review process.

Budget, rate rise, DAs and community action group all approved

A 7.9% rate rise, a concept plan and community advisory group for Crescent Head, DAs for South West Rocks and the budget and plans for the coming financial year all featured on a packed June agenda for Council.

Rate rise and Crescent Head on Council's June agenda

A 7.9% rate rise, plans for the Crescent Head Holiday Park and the Crescent Head Community Advisory Group, DAs for South West Rocks and the budget and plans for the coming financial year feature on a packed June agenda for Council.

What happens next with the rate increase?

The state government’s independent regulator has given Kempsey Shire Council permission to implement a rate increase of 24%, spread over two years. The proposal is for a 7.9% increase in property rates for the first year, followed by a 15% increase for 2025-26.

Council's rate rise application partially approved by regulator

Council has been given permission to raise rates by 24% over the next two years by the NSW Government’s independent pricing regulator after applying for a 42% increase over 3 years.

Independent regulator invites community feedback on proposed rate rise

Kempsey ratepayers can have their say on the proposed rate rise over the next three weeks after the NSW government’s independent pricing regulator has called for feedback.

Kempsey Shire Council awaits IPART publication of application

Council expects IPART to publish applications from Councils across NSW for public engagement in the coming days.

Council approves supporting documents for SRV application

Council convened an Extraordinary Council Meeting to consider the amendments to plans and procedures that will be included in the Special Rate Variation application.

Kempsey residents calculate the impact of a proposed rate increase

A rate calculator tool available on Kempsey Shire Council’s engagement website is helping concerned residents understand the impact of an increase in rates that could be implemented from next financial year.

What happens next with the Special Rate Variation?

At the November Ordinary Meeting of Council, Councillors resolved to seek approval from IPART to vary property rates in Kempsey Shire over the next three years. But what happens next? Read more.

Council proceeds with Special Rate Variation application

An application will be submitted to enable Kempsey Shire Council to vary property rates by a cumulative 42.7% over three years.

What is cost shifting and how does it affect my rates?

Cost shifting is one of the most significant problems faced by Councils in NSW. Cost shifting forces Council to assume responsibility for more infrastructure and services, without additional corresponding revenue.

Thousands engage with Council’s rate rise investigation

Thousands of visits to the online engagement portal, plus over 500 survey responses and hundreds of face to face discussions at community briefings and events indicate that Kempsey Shire ratepayers are keen to have their say about a proposed special rate variation.