Rate Peg falls short
That is the word Berrigan Shire Council deputy chief executive officer Matt Hansen has used to describe the impact of a staggeringly low rate peg determination for the council.
The figure which determines how much council can increase its total rates revenue by, Mr Hansen said the 0.9 per cent rate peg set by the Independent Pricing and Regulatory Tribunal will place the council in a difficult position.
Attempts are being made to increase the rate peg, but approval is not guaranteed.
Council has submitted a special rates variation application for a two per cent rate peg in 2022/2023.
Further, it is requesting that this 1.1 per cent increase be attributed to all future years for sustainability purposes.
Council must “demonstrate a financial need” for the special rate variation to be approved.
Mr Hansen said IPART’s rate peg determination of less than one per cent will have “a long term impact on the sustainability of the council”.
“The 2022/2023 rate peg is much less than previous years,” he said.
“It is also much less than was anticipated by most New South Wales councils, and much lower than the rate peg assumed by management when preparing its budgets and future financial plans.
“This will have a catastrophic effect on council’s operations going forward.
“The consequence of this not being approved is that it will leave us with a shortfall of about $60,000 in year one, which will compound each year of our 10 year long term financial plan.”
If saddled with the IPART determined rate peg only, council's rates revenue can only increase by up to $50,000 in the next financial year.
The figure is problematic for council, especially given increasing costs associated with the delivery of projects and services.
If its special rate variation application is approved, council will be able to levy an additional $61,489 in rates revenue.
“Even the two per cent we planned for was when interest rates were lower. It’s now five per cent, so costs are rising faster than rates.
“Not getting the special rate variation would mean we will have to go back to our budget and see where we can make savings.
“It might mean reassessing our COVID recovery projects, like tourism advertising and resuming a council funded visitor information service.
“It may mean having to cut back on sport and recreation investment.”
Mr Hansen said while variation approval is not guaranteed, he said the NSW Government does recognise the modelling is flawed. This may improve council’s chances.
“The government realises there is a problem, and we are fairly confident we can demonstrate that council will not be able to deliver on its long term financial plan without this support.”