AGENDA


Extraordinary Council Meeting

 

8.00pm

Monday, 10 February 2020

 

Dragon Room

Level 1, Georges River Civic Centre

Corner Dora and MacMahon Streets, Hurstville

 

 

 

 

 

 

 

 

 


Georges River Council – Extraordinary Meeting -  Monday, 10 February 2020                                                                Page 2

 

Extraordinary Meeting

 ORDER OF BUSINESS

 

1.      Opening

2.      Acknowledgement of Country

Council acknowledges the traditional custodians of the land on which this meeting is being held as the Biddegal people of the Eora Nation.

3.      Apologies / Leave of Absence  

4.      Notice of Webcasting

5.      Disclosures of Interest

6.      Public Forum

7.      Finance and Governance

CCL002-20       'Changes to Your Rates' - Community Engagement Report

(Report by Chief Financial Officer)............................................................................. 3

CCL003-20       'Changes to Your Rates' - Business

(Report by Chief Financial Officer)........................................................................ 139

CCL004-20       'Changes to Your Rates' - Residential

(Report by Chief Financial Officer)........................................................................ 145

CCL005-20       'Changes to Your Rates' - Special Rate Variation

(Report by Chief Financial Officer)........................................................................ 149

CCL006-20       Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART)

(Report by Chief Financial Officer)........................................................................ 155

8.      Conclusion


Georges River Council – Extraordinary Meeting -  Monday, 10 February 2020                                                                         Page 3

Finance and Governance

Item:                   CCL002-20        'Changes to Your Rates' - Community Engagement Report  

Author:              Chief Financial Officer, Coordinator, Communications and Local Strategic Planning Statement Lead

Directorate:      Business and Corporate Services

Matter Type:     Finance and Governance

 

 

Recommendation:

(a)     That Council notes the outcome of the comprehensive and thorough community engagement program for the proposed Special Rate Variation (SRV) and proposed consistent minimum rate.

(b)     That Council notes the broad community support for the proposed increase to general rate income of 10.6% (inclusive of 8.1% SRV and 2.5% rate peg) and a consistent minimum rate for residential properties, a consistent minimum rate for business properties and a higher minimum business rate for the Kogarah and Hurstville commercial centres.

 

Executive Summary

1.      Council resolved in 2018/2019 to develop a program for the preparation of a new residential and business rates structure for the Georges River Council Local Government area (LGA), which was also to include options that would strengthen Council’s financial sustainability and replace the cessation of the former Hurstville City Council’s Special Rate Variation (SRV) from July 2021.

2.      Council also resolved to notify the Minister for Local Government that Council was not intending to participate in a rate path freeze extension, however, Council formally reserved its right to opt into the rate path freeze extension should the harmonisation and SRV not proceed.

3.      All new councils can only maintain existing rates paths until mid-2021.

4.      In seeking a SRV or a change to the minimum rate council must consult with its community.  This requirement is set by the Office of Local Government (OLG) and IPART.

5.      This report advises Council of the outcomes of the community engagement program conducted on the proposed Special Rate Variation (SRV) and changes to the Minimum Rate to create a consistent minimum rate across the Georges River Local Government Area.

6.      Four methods of feedback were available for the community during the two month engagement program; telephone survey, mail back survey form, online survey, and community workshops and drop-in sessions (face to face engagement).

7.      There was broad community support for the proposed increase to general rate income of 10.6% (inclusive of 8.1% SRV and 2.5% rate peg) and the consistent minimum rate across all methods of engagement.

8.      Information about the proposed changes to rates achieved a potential reach of over 2.3 million contacts across 79 activities or events in the engagement period.

9.      This resulted in a very high rate of community awareness about the Changes to your Rates project - 47% of residents were aware that Council was exploring community sentiment towards proposed rate changes.

Background

10.    Council resolved in 2018/2019 to develop a program for the preparation of a new residential and business rates structure for the Georges River Council Local Government area (LGA), which was also to include options that would strengthen Council’s financial sustainability and replace the cessation of the former Hurstville City Council’s Special Rate Variation (SRV) from July 2021.

11.    Council also resolved to notify the Minister for Local Government that Council was not intending to participate in a rate path freeze extension, however, Council reserved its right to opt into the rate path freeze extension should the harmonisation and SRV not proceed.

12.    All new councils can only maintain existing rates paths until mid-2021.

13.    Council resolved in August 2019 that the General Manager formally notify the Independent Pricing and Regulatory Tribunal (IPART) that following consideration of community engagement, Council’s intention is to apply for a SRV to increase general rate income by 10.6% (inclusive of 8.1% SRV and 2.5% rate peg) plus create a consistent minimum residential rate and a consistent minimum business rate and higher business minimum rate in Hurstville and Kogarah commercial centres.

14.    The creation of one consistent rating system across the Georges River Local Government Area (LGA) will ensure equity and fairness for all ratepayers, regardless of dwelling or business type or to which previous council area they belonged.

15.    In seeking a SRV or a change to the minimum rate council must consult with its community.  This requirement is set by the Office of Local Government (OLG) and IPART.

16.    Following the Council resolution in August the biggest, most extensive community engagement program ever conducted by Council was undertaken in order to provide the community ample opportunity to express their views on the proposed minimum rates and the special rate variation options.

17.    Council procured independent community engagement specialists, ASK Insight, to facilitate, coordinate, oversee, analyse and report on the community engagement process, so that Council remained at “arm’s length” from the community engagement process and final report. Micromex Research and Consulting was also engaged to undertake a randomly selected telephone survey on the Changes to your rates project.  Micromex has extensive experience in assisting Local Government organisations in undertaking effective community research and engagement programs. Both ASK Insight and Micromex were procured through a competitive procurement process.

18.    ASK Insight provided the following feedback about the process:

“ASK Insight is pleased to have worked on behalf of Georges River Council and its community as independent facilitators and coordinators of the community engagement process for the Changes to your rates project. We have delivered an engagement process that is good practice, comprehensive and most importantly, accessible by the community as demonstrated by the exceptionally good response rates. We congratulate Georges River Council on a robust and ethical process”.

 

 

19.    The engagement process was also developed in discussion with IPART.  In discussions with IPART regarding the application process, IPART indicated that they were impressed by the response rate received by Georges River Council and by the level of support for Council’s recommended rate changes including both the minimum rates and SRV.

20.    The changes as a result of the harmonised minimum rate and the SRV will affect all rateable properties (including businesses) within the Georges River Council LGA.

21.    Community engagement commenced mid-September 2019, with a community awareness campaign (Stage 1) intended to create community awareness that formal community consultation (Stage 2) would commence in October and run through to mid-November 2019.  The community engagement period was double that required by IPART.

22.    The following community engagement methods were used to create community awareness and capture community feedback/input.

Community Engagement Methods

1. A mail-out to all residents in a letter format to create awareness that community consultation is on its way for this project – distributed across LGA mid-September 2019.

2. A mail-out to all ratepayers (including businesses) with a reply-paid survey

3. Community Information Sessions across the LGA (each ward), an additional interpreted session in Hurstville and a Business  Feedback Session plus two Drop-in Events

4. A random and representative telephone survey of 600 residents across the LGA

5. An online survey facilitated through Council’s Your Say portal

6. Council’s Your Say online panel members notified

7. Translated letters in the top 4 community languages which are: Simplified Chinese, Greek, Arabic and Nepali.

 

23.    The community engagement strategy was developed in line with IPART’s Fact Sheet – Community awareness and engagement for special variations, and is based on other councils’ community engagement materials that have been successful in their applications to IPART.

24.    The engagement processes were extensively promoted through the following communication channels:

·        Advertisements in the St George Leader newspaper;

·        Editorial in Council’s magazine – Community which features upcoming events, information on major infrastructure projects, environmental news and Council initiatives;

·        A fortnightly community e-Newsletter;

·        Council’s social media including Facebook and Instagram;

·        Media releases, hardcopy brochures, posters and letters to residents;

·        Council’s website and mobile app; and

·        Your Say online engagement portal accessed via Council’s website.

 

25.    Council also translated the letter to ratepayers into Simplified Chinese as well as other community languages including Greek, Arabic and Nepali. Advertisements also appeared in the Chinese Daily, El Telegraph and the Greek Herald.

26.    Information about the proposed changes to rates achieved a potential reach of over 2.3 million contacts across 79 activities or events during the two month consultation period.

 

27.    This resulted in a very high rate of community awareness about the Changes to your Rates projectThe Micromex Telephone Survey found that 47% of residents were aware that Council was exploring community sentiment towards an SRV.  This is consistent with the norm for other similar rate change consultations across NSW.

 

28.    Full details of the engagement program and the results of that engagement are contained in the attached report prepared by Ask Insight who were engaged to conduct the consultation (other than the telephone survey which was conducted by Micromex).  Ask Insight provided an independent process and review of the outcomes.

 

29.    The feedback and response rates from the community were extremely good:

·        6,363 surveys returned to Council (includes 5,734 hardcopy, 599 online and 30 from the information and drop-in sessions).  This is a response rate of close to 12%.

·        600 respondent randomly selected Micromex Telephone Survey conducted.

·        118 people attended a Community Information Session.

·        170 people were contacted at the Drop-in sessions at Kyle Bay or Peakhurst Night Market.

·        50 additional submissions sent directly to Council.

·        The Your Say Georges River Portal also had 1,600 unique aware visitors.

30.    The community engagement contained 2 key elements, a proposal for a SRV in addition to the rate peg and a proposal to introduce a consistent minimum rate.

31.    The engagement presented three proposed options for the SRV to the community:

·        8.1% plus the 2.5% rate peg – Option 1 and recommended by Council.

·        0.8% plus the 2.5% rate peg – Option 2.

·        19.8% plus the 2.5% rate peg – Option 3.

32.    The proposal presented a consistent minimum rate of $965.80 for residential and business rates with a higher minimum business rate of $1,100 in the major commercial centres of Hurstville and Kogarah.

33.    With 6,363 mail out surveys returned to Council, a response rate of close to 12% was achieved (11.86%) of all 53,646 feedback packs sent to owners of rateable properties. (Note that there are more rateable properties than packs sent out as there are owners of multiple properties with the same address for correspondence). 

34.    An overwhelming majority (78%) of respondents were supportive of a consistent application of a minimum rate across the LGA and 66% supported the proposed minimum rate of $965.80.

35.    There was also strong support for introducing a higher minimum rate for the major commercial centres of Kogarah and Hurstville.

36.    The community indicated strong support for the SRV Option 1 recommended by Council and 54% of all respondents supported this option. Under this Option, Council would apply for a SRV of 8.1% plus a rate peg of 2.5% (total increase to general rate income of 10.6%).

37.    Some 3,220 comments were received in mailed surveys, online through the Your Say portal, in surveys completed online and via emails/letters direct to Council.

 

RESULTS

Minimum Rate proposals

38.    An overwhelming majority (78%) of respondents were supportive of a consistent application of a minimum rate across the LGA. This ranged from almost 90% of drop in and information session respondents to more than three quarters of respondents through other channels.

39.    There was also strong support (66%) or the proposed minimum rate of $965.80 and introducing a higher minimum business rate for the commercial centres of Kogarah and Hurstville.

Special Rate Variation

40.    Feedback on the SRV from the community indicated support for Option1 (recommended by Council). Under Option 1, Council would apply for a SRV of 8.1% plus a rate peg of 2.5% (total increase to general rate income of 10.6%).

41.    63% of telephone survey respondents were supportive of the recommended option and 99% of telephone survey respondents ranked the recommended option as their first or second preference and only 1% ranked it third.

42.    The proportion of respondents supportive of Option 1 varied between the different channels. In total, 3,590 people across all channels were somewhat supportive, supportive or very supportive (54%).  It appears that the opportunity to discuss the rationale behind the three options presented by Council resulted in a much higher proportion of people supportive of Council’s recommended Option, with 93% of respondents at information sessions and drop-in Events being supportive of this Option.

43.    Option 2, described as a short term solution, suggested Council apply for a SRV of 0.8% plus a rate peg of 2.5% (total increase to general rate income of 3.3%) had slightly lower support than the recommended Option 1 in the telephone survey.

44.    61% of the telephone survey respondents were supportive of this option and 76% of telephone survey respondents ranked this option as their first or second preference and 24% ranked it third.

45.    In total, 3,696 people (58%) of respondents across all channels were supportive of Option 2. This Option was favoured by just under 60% of people who mailed surveys or submitted online; those who had an opportunity to discuss the rationale for the changes to rates at information sessions or drop in events were much less supportive (43% indicating some support for Option 2).

46.    Option 3 proposed a substantial SRV of 19.8% plus rate peg of 2.5% (total increase to general rate income of 22.3%) to fund enhanced services. It was clearly not preferred. Just 892 people (15% of respondents across all channels) were supportive of Option 3. About 90% of online and mailed survey respondents were not supportive of the substantial increase option.

Survey Comments

47.    The survey contained space for respondents to make comments relating to the proposed changes (SRV and minimum rate). Approximately one-third of print copy respondents and half of on-line respondents made a comment.  2,725 comments were received in mailed survey responses. Comments / submissions were also received online through Your Say, in surveys completed online and via emails/letters direct to Council, with a total of 3,220 comments.

48.    All comments were reviewed. Nine major categories emerged from the 3,220 comments received. 

·    Amalgamation

·    Improvement suggestions

·    Council should increase efficiency

·    Population increase results in increased income

·    General  (about information leaflet /survey)

·    Supportive of the changes

·    Impact on families

·    (Proposed rates) too high/reduce services

·    Impact on pensioners

 

49.    The most frequently occurring comments related to:

·    proposed rate increases being too high (25%);

·    need for Council to make efficiencies (22%); and

·    expectations of cost savings as a result of council amalgamations (15%).

50.    In many comments it was clear that respondents held the misconception that a population increase, an increase in the number of dwellings or an increase in land value meant a corresponding increase in rates revenue.

51.    At face to face sessions, these myths were able to be addressed by the General Manager or staff through the presentation or verbally. They were also addressed in the FAQs on Council’s Your Say portal.  Many residents were surprised that Council had to manage the provision of additional services for this additional population without a corresponding increasing in rates.  At one information session residents called for a petition to lobby the state government to change the way rates were generated.

52.    There was also feedback at the “face to face” consultation that:

·        Business rates were too low and the overall minimum rate for business should be higher than the residential minimum rate.

·        Council should consider the application of user pay principles for appropriate council services.

53.    Examples across the nine categories are provided in the full report attached. Most comments were able to be categorised into one category but where comments covered multiple categories they were logged in each category.

54.    Community concern about pavements and roads was raised in several information sessions and in some survey responses. The cost of governance was also queried in each information session and it was explained how the figure was derived and the inclusion of mandatory items such as the Fire and Emergency Services Levy. Some respondents were keen to see the introduction of user-pays models and there appears to be an opportunity for Council to increase awareness across the LGA of the new facilities and infrastructure.

 

 

Conclusion

55.    The outcomes of the community engagement conducted by Council shows that there is strong support for the rates changes proposed by Council.  Support for the changes relate to the proposed increase to general rate income of 10.6% (inclusive of 8.1% SRV and 2.5% rate peg), and the proposed changes to create a consistent minimum rate for both business and residential properties and the higher minimum rate for the major commercial centres of Hurstville and Kogarah.

 

Financial Implications

56.    There are no budget impacts in adopting the recommendations of this report. The rate restructure program costs of $215,000 have been incorporated into the 2019-20 budget.

57.    Council endorsed the 2020/2021 Rate Restructure Program, which included the Community Engagement Framework and the proposed timeframe at the August 2019 Council Meeting.

 

Risk Implications

58.    The extensive nature of the engagement conducted means that Council can have confidence that the results are representative of the views of the broader community.

59.    Should Council fail to adopt the suite of reports presented, Council’s poor and deteriorating financial outlook over the 10 year period of the Long Term Financial Plan will not be addressed. Failure to address the unsustainable financial position places Council in contravention of S.8b of the Local Government Act 1993 and will compel Council to make significant cuts to or reduction to services to reduce to the unfavourable and widening gap between income and expenditure.

60.    There are also significant reputational risk associated with the failure to adopt the suite of reports, because:

·        the Council having sought the views of the community would be rejecting the views that  were expressed through the consultation;

·        the community would rightly be somewhat cynical about any future consultation about rate changes; and

·        the community is likely to view the consultation process as a waste of money at a time when we are telling the community we have a long term financial sustainability challenge.

61.    Council also runs the risk of being in breach of legislative requirements to harmonise the rates by the 2021/22 financial year as it would been extremely difficult for the newly elected council to complete all the work necessary, including the extensive community consultation,  within the legislated timeframe which includes an IPART application in February 2021.  There are currently no further extensions to rate path protection available to amalgamated councils.

 

Community Engagement

62.    Community engagement was conducted and this is discussed in detail within the body of this report.

 

File Reference

17/396

 

 

ATTACHMENTS

Attachment 1

Community Engagement Report

 


Georges River Council - Extraordinary Meeting - Monday, 10 February 2020

CCL002-20             'Changes to Your Rates' - Community Engagement Report

[Appendix 1]          Community Engagement Report

 

 

Page 23

 


 


 


 


 


 


 


 


 


 


 


 


 



 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Item:                   CCL003-20        'Changes to Your Rates' - Business 

Author:              Chief Financial Officer and Acting Chief Financial Officer

Directorate:      Business and Corporate Services

Matter Type:     Finance and Governance

 

 

 

Recommendation:

(a)     That Council, in line with the Local Strategic Planning Statement’s commercial centre classification and as per the legislative statutory obligations per section 529 of the NSW Local Government Act 1993 to harmonise Council’s business rate structure, Council adopt the following proposed business subcategories:

·        Major Commercial Centres of Hurstville and Kogarah.

·        Major Shopping Complex (greater than 150 shops).

·        Local Centres.

·        Neighbourhood Centres/Small Village.

·        Industrial.

(b)     That Council, in response to the community’s desire for a fairer and more equitable distribution of the rate burden between residential and business ratepayers and in compliance with the requirement to harmonise Council’s rate structure, Council approves for the business properties within the Business sub-category “Major Commercial Centres of Hurstville and Kogarah” to have a higher Minimum Business Rate than other business sub-categories.

(c)     That Council approves for the applications to the Independent Pricing and Regulatory Tribunal (IPART) to propose a new 2020/21 minimum rate of $1,500 for the rateable business properties within the subcategory “Major Commercial Centres of Hurstville and Kogarah”.

(d)     That in response to overwhelming community support and feedback for a fairer and more equitable rating structure, Council approves the creation of a new business sub-category named “Major Shopping Complex” and the implementation of a rate in the dollar comparable to shopping centre rates in other metropolitan councils

(e)     That Council approves for the applications to IPART to propose a new 2020/21 Minimum Rate of $1,100 for all other rateable business properties (not within the sub-categories “Major Commercial Centres of Hurstville and Kogarah” and “Major Shopping Complex”).  

(f)      That in the interest of having a harmonised, fairer and more equitable structure for Business Rates throughout the Georges River Council local government area, Council discontinues the use of the former Hurstville Town Improvement special rates across the Hurstville, Mortdale and Riverwood towns, commencing in the 2020/21 rating year. 

(g)     That Council communicate to all business ratepayers the changes to the business minimum rates as a result of community engagement activities, as soon as possible after the resolution to provide the business community the opportunity to make submissions to IPART.

 

 

 

 

Executive Summary

1.      The purpose of this report is to provide an overview of the process in establishing a fairer and more equitable new business rate structure for Georges River Council. As a result of Council resolution (FIN057-19) of 26 August 2019, it provides information to Council on the following items:

·        Background on the Rate Restructure Program to date.

·        Establishment of new business sub-categories.

·        Harmonised Minimum Rates for the Business rate structure.

·        Discontinuation of the former Hurstville Town Improvement Special Rate.

 

Background

2.      Council resolved, in 2018/2019, to develop a program for the preparation of a new Residential and Business rates structure for the Georges River Council Local Government area (LGA), which was to include options that would strengthen Council’s financial sustainability and replace the cessation of the former Hurstville City Council’s SRV from July 2021.

Councillor Workshops

3.      In December 2018, the first Rate Restructure Program Councillor workshop was held to provide a broad overview of what the restructure would entail, along with anticipated timeframes. Since this time, a further 7 councillor workshops have provided details and financial modelling on the following policy items, but not limited to:

·        10 Year Long Term Financial Plan and the impact of the cessation of the former Hurstville City Council’s SRV from July 2021;

·        Three models for rate calculation options;

·        Council’s current income split by residential and business rates;

·        Comparison of average unit and average single dwelling rates;

·        The impact of different minimum rates scenarios;

·        Comparisons of metropolitan Council rate structures;

·        Business sub-category development based on centres of activity;

·        Rate income yield split across categories and sub-categories;

·        Outcome and consideration of options based on community feedback;

·        Refinement of the Long Term Financial Plan based on 2018/2019 results; and

·        IPART application submission.

4.      Specifically, on 7 August 2019, a briefing on the current and proposed options for a Georges River Council business rating structure was discussed. At this briefing the following items were covered:

·        Business rates modelling parameters;

·        Overview of the current rate structures of the former Hurstville and Kogarah Councils;

·        Key policy decisions of a new business rate structure;

·        Draft business sub-categories;

·        Overview of minimum business ratepayers;

·        Draft rate in the dollar multipliers, comparative to residential; and

·        Comparative NSW councils’ business rate structures.

5.      Outcomes of this meeting included, investigating a business rate structure that would attempt to ensure a fairer and more equitable distribution of the financial burden of a SRV on residential ratepayers.

Rate Path Freeze Obligations

6.      Per section 377(1)(s) of the Local Government Act 1993, any request to the Minister for Local Government by a council that wishes to opt back into the rates path protection determination pursuant to Section 218CB of the Local Government Act 1993, needs to be supported by a council resolution as an application to the Minister is a non-delegable function of the council.

7.      As Council’s current position was to opt out of the extension (FIN057-19), as advised to the Minister for Local Government on 6 September 2019, Council would need to review the implications of the rates path protection to inform the decision as to whether to opt back in to the determination under Section 218CB.

Former Council’s Current Business Rating Systems

8.      Council currently levies two different ordinary and special rates based on the former Councils’ rating systems.

9.      At the time of proclamation, Kogarah maintained only an ordinary rate structure, whereas Hurstville maintained an ordinary and special rate structure along with a time-bound SRV.

10.    The tables below highlight the former Councils’ ordinary business rate structure currently levied in the 2019-20 financial year:

FY 2019-20

Rate in $/Minimum

Number of Assessments

Rate Yield

Former Hurstville

Business

$0.0040559

1,691

$6,405,719

$570.88

621

$354,510

Former Kogarah

Business

$0.0031519

145

$727,421

$942.24

60

$56,534

Former Kogarah

Commercial

$0.0042025

437

$2,097,592

$942.24

410

$386,318

Former Kogarah

Industrial

$0.0042025

110

$342,177

$942.24

70

$65,957

Total Ordinary Business Rate Yield

$10,436,228

11.    The table below outlines the former Hurstville Council additional special rates currently levied for business and residential rateable properties within the relevant towns:

No. of Properties

Land Value    $'000

Category

Rate in $

Total Yield

3,702

1,003,911

Hurstville Town Improvement

$0.00056558

$567,792

130

61,773

Mortdale Town Improvement

$0.00071067

$43,900

137

84,262

Riverwood Town Improvement

$0.00068983

$58,126

Total Special Town Improvement Rate Yield 

$669,818

 

 

Proposed Business Rate Structure

12.    The Business and Residential rating structures are different in that Business has multiple layers by centre of activity. In addition the rate in the dollar (ad valorem) and minimum can be different based on centres of activity.

13.    To ensure fairness and equity in rates and annual charges across the Council LGA, harmonized, Minimum Rates and Rates in the Dollar are being proposed for business categories, along with different Minimum Rates for new “Major Commercial Centres of Hurstville and Kogarah” and “Major Shopping Complex” sub-categories. 

14.    To develop the new Georges River Council Business sub-categories, the economic centres within the draft Local Strategic Planning Statement (LSPS) have been used.

15.    To develop the new centres, the Strategic Planning team undertook a comprehensive land use and floor space audit of all business-zoned land in the LGA. Council’s Commercial Centres Strategy conducted a review of the existing economic activity and performance of each centre. In light of this review, each centres ability to support the community’s access to goods and services was considered through the development of an existing retail hierarchy where all 48 centres are classified based on the existing amount of retail floor space and facilities accommodated. The centres hierarchy is comprised of a six-tiered classification system: strategic centre, local centre, village, small village, neighbourhood centre and enterprise corridor.

16.    For the purpose of the draft Business rating structures and as per the requirements to harmonise Council’s business rate structure, the following business subcategories are proposed:

·        Major Commercial Centres of Hurstville and Kogarah.

·        Major Shopping Complex (greater than 150 shops).

·        Local Centres.

·        Neighbourhood Centres/Small Village.

·        Industrial.

17.    The feedback from the community was that both the minimum and average rate for business seemed too low, especially when compared to the Residential rate and the Business rates used by other councils.

18.    Council reviewed the business and commercial minimum rates at the 2 December 2019 briefing.

19.    Councillor feedback during that workshop of 2 December 2019 indicated a preference towards a different Business Minimum Rate of $1,100 for all rateable business properties not within the subcategories of “Major Commercial Centres of Hurstville and Kogarah” and “Major Shopping Complex”.

20.    In addition to the above change, Councillor feedback indicated support for increasing the new Business Minimum Rate for the sub-category “Major Commercial Centres of Hurstville and Kogarah” to $1,500.

Financial Implications

21.    The proposed changes to the Business Minimum Rating structure will contribute approximately 18% towards the total of the permanent increase to general permissible rate income by 10.6% (8.1% SRV and 2.5% rate peg) which is discussed in the “‘Changes to Your Rates – Special Rate Variation” paper of this agenda. 

 

22.    The cost of Rates borne by businesses is an allowable expense and effectively reduces tax payable by their operation. Changing the business rating structure and imposing a higher financial impost on them, in turn reduces the financial burden of increased rates on the residential sector which cannot claim it as an expense to reduce their tax liability. This helps distribute the net impact of increased rates in a fairer and more equitable manner.

 

Risk Implications

23.    The approval of the applications to IPART for a permanent increase to general permissible rate income (8.1% SRV and 2.5% rate peg), will strengthen Council’s financial position and contribute positively towards enhancing its financial sustainability. Adopting the proposed business rate structure ensures the burden of the rate increase is fairly and equitably distributed, consistent with community expectations.

 

24.    Councillors have been apprised of Council’s poor and deteriorating financial outlook over the 10 year period of the Long Term Financial Plan over the past two financial years. Failure to address the unsustainable financial position places Council in contravention of S.8b of the Local Government Act 1993 and will compel Council to cut and/or reduce services to ease the unfavourable gap between income and expenditure.

 

25.    The elimination and/or reduction of services may involve reducing the number of hours libraries are open, the closure of child care centres, reduction of the frequency and extent of maintenance of open spaces, parks, sporting fields, reduced maintenance of council assets leading to their deterioration etc. These may however still be insufficient to address the problem to a meaningful extent.

 

Community Engagement

26.    Comprehensive details of the community engagement program and results can be found in a separate report for the Extraordinary meeting of the 10 February 2020.

27.    An overwhelming majority (78%) of respondents were supportive of a consistent application of a Minimum Rate across the LGA. This ranged from almost 90% of drop-in and information session respondents to more than three quarters of the other groups.

28.    Over 90 people attended a Business Breakfast held on 18 September 2019. They were informed about the proposed changes to rates and provided leaflets about the Business Information and Feedback Session.

29.    6% of rateable properties are business properties.  All business ratepayers were posted letters from the Mayor and Changes to your rates packs. Some 3,544 packs with letters, brochure, survey and reply paid envelopes were sent to Business ratepayers and 288 were returned, which is a response rate of 8%.

30.    Over 100 business ratepayers who returned surveys providing a contact email address were sent a reminder invitation to the Business Information and Feedback Session which was held on 30 October 2019.

31.    The final survey question sought views on a different business rate of $1,100 for the commercial centres of Hurstville and Kogarah, reflecting the additional services provided by Council. There was a very high level of support for the different rate for the commercial centres. 68% of mail survey respondents and 87% of drop-in/information session respondents indicated support, with high numbers being very supportive. Some comments suggested the Minimum Business Rate could be set at a higher level than that proposed.

32.    If Council determines to amend the Business Minimum Rate as discussed in this report, Council must notify business ratepayers of that decision.

 

File Reference

D19/276517

 

 

  


Georges River Council – Extraordinary Meeting -  Monday, 10 February 2020                                                                Page 154

Item:                   CCL004-20        'Changes to Your Rates' - Residential 

Author:              Chief Financial Officer

Directorate:      Business and Corporate Services

Matter Type:     Finance and Governance

 

 

Recommendation:

(a)     That Council, in response to the community’s desire for a fair and more equitable and uniform rating structure, eliminating the disparity between the Hurstville and Kogarah Minimum Rates and in compliance with the legislative requirement to harmonise Council’s rating structure, approve the submission of applications to the Independent Pricing and Regulatory Tribunal (IPART) to establish a new Minimum Residential Rate of $965.80 to take effect from the 2020/21 rating year.

(b)     That as per the requirement to harmonise Council’s residential rate structure and based on the outcome of the application to IPART, Council establish one rate in the dollar (ad valorem) in 2020/21 for the entire Local Government Area (LGA) to ensure a fairer and more equitable rating structure.

(c)     That in the interest of having a harmonised, fair and equitable structure for Residential Rates throughout the Georges River Council LGA, Council discontinues the use of the former Hurstville Town Improvement special rates across the Hurstville, Mortdale and Riverwood towns, commencing in the 2020/21 rating year.

 

Executive Summary

1.      The purpose of this report is to provide an overview of the process in establishing a new residential rate structure for Georges River Council. As a result of Council resolution (FIN057-19) of 26 August 2019, it provides information to Council on the following items:

·        A harmonised, fairer and equitable minimum rate for the residential rate structure.

·        A new minimum residential rate.

·        Discontinuation of the former Hurstville town improvement special rate.

·        Background on the Rate Restructure Program to date.

 

Background

2.      Council resolved in 2018/2019 to develop a program for the preparation of a new residential and business rates structure for the Georges River Council Local Government area (LGA), which was also to include options that would strengthen Council’s financial sustainability and replace the cessation of the former Hurstville City Council’s Special Rate Variation (SRV) from July 2021.

Councillor Workshops/Briefings

3.      In December 2018, the first Rate Restructure Program Councillor workshop was held to provide a broad overview of what the restructure would entail along with anticipated timeframes. Since this time, a further 7 councillor workshops have provided details and financial modelling on the following policy items, but not limited to:

·        10 Year Long Term Financial Plan and the impact of the cessation of the former Hurstville City Council’s SRV from July 2021;

·        Three models for rate calculation options;

·        Council’s current income split by residential and business rates;

·        Comparison of average unit and average single dwelling rates;

·        The impact of different minimum rates scenarios; and

·        Comparisons of metropolitan Council rate structures;

·        Business sub-category development based on centres of activity;

·        Rate income yield split across categories and sub categories;

·        Outcome and consideration of options based on community feedback;

·        Refinement of the Long Term Financial Plan based on 2018/2019 results; and

·        IPART application submission.

4.      Specifically on 4 April and 23 May 2019, briefings on the current and proposed options for a Georges River Council residential rating structure were discussed. At these briefings the following items were covered:

·        Residential rates modelling parameters.

·        Overview of the current rate structures of the former Hurstville and Kogarah councils.

·        Key policy decisions of a new residential rate structure.

·        Rates calculation models.

·        Components of a rates structure.

·        Pensioner Rebates.

·        Different minimums and the impact by land value.

·        Split between single and multi/unit rate income.

·        Comparative NSW council’s residential rate structures.

 

5.      A significant outcome of these workshops included a proposed new minimum rate to present to the community during the engagement period. Councillor feedback during the workshops indicated support for one consistent, harmonised, fair and equitable minimum rate across the LGA (FIN057-19) being $965.80:

·    Former Hurstville Council minimum changing from $570.88 to $965.80

·    Former Kogarah Council minimum changing from $942.24 to 965.80

 

Rate Path Freeze Obligations

6.      The existing provisions of the Local Government Act 1993 limit the ability for metropolitan and urban councils to apply differential residential rates.

7.      Due to existing obligations for residential sub-categorisation options (refer to Section 529 of the Act), following the end of the rates path protection councils will be required to equalise residential rates by setting the same rate in the dollar (ad valorem rate), minimum and/or base.

8.      Per section 377(1)(s) of the Local Government Act 1993, any request to the Minister for Local Government by a council that wishes to opt back in to the rates path protection determination pursuant to Section 218CB of the Local Government Act 1993 needs to be supported by a council resolution as an application to the Minister is a non-delegable function of the council.

9.      As Council’s current position was to opt out of the extension (FIN057-19), as advised to the Minister for Local Government on 6 September 2019, Council would need to review the implications of the rates path protection to inform the decision as to whether to opt back in to the Determination under Section 218CB.

 

 

Former Council’s Current Residential Rating Systems

10.    Council currently levies two different ordinary and special rates based on the former Councils’ rating system.

11.    Both councils’ rating systems currently operate under a minimum rate and a rate in the dollar (ad valorem) system of rating.

12.    At the time of proclamation Kogarah maintained only an ordinary rate structure, whereas Hurstville maintained an ordinary and special rate structure along with a time-bound special rate variation.

13.    The tables below highlight the disparity between the former council’s ordinary residential rate structures currently levied in the 2019-20 financial year:

FY 2019-20

Rate in $/Minimum

Number of Assessments

Rate Yield

Former Hurstville

Residential

$0.0015895

20,464

$26,893,860

$570.88

10,668

$6,076,530

Former Kogarah

Residential

$0.0012747

11,386

$16,277,156

$942.24

10,220

$9,629,316

Total

52,738

$58,876,862

14.    The table below outlines the former Hurstville Council additional special rates currently levied for business and residential rateable properties within the relevant towns:

Category

Rate in $

No. of Properties

Total Yield

Hurstville Town Improvement

$0.00056558

3,702

$567,792

Mortdale Town Improvement

$0.00071067

130

$43,900

Riverwood Town Improvement

$0.00068983

137

$58,126

Total Special Town Improvement Rate Yield 

3,969

$669,818

 

Proposed Residential Rate Structure

15.    To ensure more fairness and equity in the rates and annual charges across the Council LGA, consistent with what the community wanted, a harmonised and equity based minimum rate and rate in the dollar is being proposed for the residential rate structure.

16.    That in line with community desires and as per the requirement to harmonise Council’s residential rate structure, it is recommended that the new minimum residential rate introduced in 2020/21 is $965.80 which is the former Kogarah minimum rate with an assumed rate peg increase of 2.5%.

17.    It is proposed that in line with Council implementing a new residential rate structure, Council discontinue the use of the former Hurstville town improvement special rate across the Hurstville, Mortdale and Riverwood towns.

 

Financial Implications

18.    The proposed changes to the Residential Minimum rating structure will contribute approximately 80% towards the total of the permanent increase to general permissible rate income of 10.6% (8.1% SRV and 2.5% rate peg) which is discussed in the “‘Changes to Your Rates’ – Special Rate Variation” paper of this agenda.

Risk Implications

19.    The approval of the applications to IPART for a permanent increase to general permissible rate income (8.1% SRV and 2.5% rate peg), will strengthen Council’s financial position and contribute positively towards enhancing its financial sustainability. Adopting the proposed residential rate structure ensures the burden of the rate increase is fairly and equitably distributed, consistent with community expectations.

20.    Councillors have been appraised over the past two financial years, of Council’s poor and deteriorating financial outlook over the 10 year period of the Long Term Financial Plan. Failure to address the unsustainable financial position places Council in contravention of S.8b of the Local Government Act 1993 and will compel Council to cut and/or reduce services to ease the unfavourable gap between income and expenditure.

21.    The elimination and/or reduction of services may involve reducing the number of hours libraries are open, the closure of child care centres, reduction of the frequency and extent of maintenance of open spaces, parks, sporting fields, reduced maintenance of council assets leading to their deterioration etc. These may however still be insufficient to address the problem to a meaningful extent.

 

Community Engagement Results Overview

22.    As outlined in the community engagement report there was very strong community support for a fairer and more equitable single consistent minimum residential rate of $965.80.

23.    An overwhelming majority (78%) of respondents were supportive of a consistent application of a minimum rate across the LGA. This ranged from almost 90% of drop in and information session respondents to more than three quarters of the other groups.

24.    There was also strong support (66%) for the proposed minimum rate of $965.80.

 

File Reference

19/754

 

 

 

Item:                   CCL005-20        'Changes to Your Rates' - Special Rate Variation 

Author:              Chief Financial Officer

Directorate:      Business and Corporate Services

Matter Type:     Finance and Governance

 

Recommendation:

(a)     That Council acknowledges it must comply with its statutory obligations pursuant to Section 8B of the NSW Local Government Act 1993 on the principles of sound financial management as detailed in the report.

(b)     That Council, in response to strong community support and responding to its obligations  under Section 8B of the NSW Local Government Act 1993, approve the submission of the application to the Independent Pricing and Regulatory Tribunal (IPART) seeking a permanent increase to general permissible rate income of 10.6% (inclusive of 8.1% Special Rate Variation (SRV) and 2.5% rate peg).

(c)     That Council adopt the following rate structure that is designed to distribute the rate burden fairly and equitably among its ratepayers and also provide relief to the majority of residential ratepayers whilst applying rates uniformly throughout the local government area:

i.     A Minimum Residential Rate of $965.80.

ii.    A new Business Minimum rate of $1,500 for the “Major Commercial Centres of Hurstville and Kogarah” sub-category.

iii.   A new Business Minimum Rate of $1,100 for the “Other Business” sub- category.

iv.   A new Ad valorem Business Rate for the “Major Shopping Complex” sub-category.

(d)     That Council acknowledge that the approval of the application for a permanent increase to general permissible rate income of 10.6% (8.1% SRV and 2.5% rate peg), is critical to  improving the Net Operating Results and therefore the Operating Ratio of Council, without which any applications for loans/new funds to finance major capital projects, will be disadvantaged.

 

Executive Summary

1.      The purpose of this report is to provide information to Council on the background on the Rate Restructure Program to date in relation to the Special Rate Variation (SRV), as a result of Council resolution (FIN057-19) of 26 August 2019.

2.      The report recommends that Council:

·        Submit a SRV application to IPART to permanently increase general permissible rate income by 10.6% (inclusive of 8.1% SRV and 2.5% rate peg).

·        Adopt the proposed rating structure of;

o   A Minimum Residential Rate of $965.80.

o   A new Business Minimum Rate of $1,500.00 for the “Major Commercial Centres of Hurstville and Kogarah” sub-category.

o   A new Business Minimum Rate of $1,100.00 for the “Other Business” sub-category.

o   A new Ad valorem Business Rate for the “Major Shopping Complex” sub-category.

Background

3.      The Long Term Financial Plan (LTFP) of Council presents a financial projection of the next ten years based on the Community Strategic Plan, Delivery Program and Resourcing Strategy.

4.      Councillors have been appraised over the past two financial years, of Council’s poor and deteriorating financial outlook over the 10 year period of the Long Term Financial Plan. Failure to address the unsustainable financial position places Council in contravention of S.8b of the Local Government Act 1993 and will compel Council to cut and/or reduce services to ease the unfavourable gap between income and expenditure.

5.      Council’s LTFP highlights declining operating results, which informs Council’s need to take corrective action, to ensure financial sustainability.

6.      The 10 year forecast illustrates the operating results and is based on projected events. These projections form a roadmap of the operating results, which provides Council an opportunity to:

·        Assess different courses of action and quantify the potential outcomes.

·        Ensure sustainability through positive net results.

·        Structure the operations, based on affordability and financial sustainability.

7.      In summary, this LTFP illustrates that the current level of funding generated for Council through rates is insufficient to continue existing services into the future and meet the demands of our growing population.

8.      Should Council do nothing, we will inevitably face a declining financial position and a reduction in services.

9.      To strengthen our financial position and ensure continued delivery of our community aspirations, Council is undertaking an overhaul of its rates structure to bring about an equitable, fair and sustainable structure across its Local Government Area. Details of the rate restructure and associated modelling are outlined within the contents of this document.

10.    In our efforts to combat the declining operating results and reduce the reliability of rates revenue to fund our operations, Council has also established a “Georges River Council Financial Sustainability Working Group” to explore options on strengthening Council’s long term financial sustainability by applying the financial principles, strategy and associated actions within the plan, that will contribute to bringing Council’s operations to surplus.

 

Financial Sustainability Challenges

11.    Georges River Council takes great pride in its role of providing and maintaining high quality local services for our community. If Council is to continue to deliver the current level of services and facilities, we need to effectively plan for the future.

12.    Following extensive consultation with our community in 2018, Council adopted its first ever Community Strategic Plan, which details the community’s aspirations for the Georges River Council area over the next 10 years. This Plan highlights many community projects, programs, initiatives and events that require substantial funding to become a reality.

13.    Council, in preparing the LTFP for the period 2019/20 to 2028/29, recognised a number of challenges it will face in the near future. The challenges, if unaddressed, will have an adverse impact on the long term financial sustainability of Council. These challenges are summarised:

·        Experiencing declining operating results amplified by the loss of income of approximately $2.2 million from the former Hurstville Council SRV, which is due to cease in 2021.

·        The compounded impact of the expiring SRV results in a forecast loss of approximately $19.5 million from 2021/2022 to 2028/2029.

·        Operating performance, net of capital grant income, remains negative with the deficit increasing each year.

·        Increase in Council’s Net Worth is dependent on the quantum of Capital Grants received and not on the operations being cost effective.

 

14.    The operating results (actual and forecast) display a downward trend leading to negative results from 2022/23 onwards. There is a dramatic reduction of 3.2% in Rates income from 2021/22 onwards, due to the termination of the SRV that commenced over 10 years ago. The impact on the operating result is a loss of approximately $2.2 million in income in that year, compounded each year thereafter.

15.    In addition, Council's operating results are augmented by the value of capital grants received. These grants are for exclusive use on capital expenditure and are not to be used to fund operating expenditure. When these funds are excluded, the Operating Results show increasing negative returns each year. This means that Council, in its current form, is unable to fund its operating expenditure from the operating income it receives.

16.    It has also been demonstrated that there is an adverse widening gap between the increases to operating income and the increases to operating expenditure each year.

17.    When reviewing the actual results so far, Council has generated surpluses each year since amalgamation. However, these actual results have been favourably impacted by additional operating and capital grants received from the State Government, to assist with the transition to functioning as an amalgamated council. Despite the receipt of these additional operating grants, when capital grants are excluded, the operating results show a negative outcome.

 

Distribution of the Proposed SRV

18.    The nature of the SRV, occurring at the same time of harmonising the rates and setting new minimums in the rate structure, results in the distribution of the increase to general rate income as per the table below:

 

Rate Category

% Distribution of Rate Increase

Minimum Residential Rate - $965.80

80%

Minimum Business Rates for Major Commercial Centres - $1,500 and Other Business -$1,100

12%

Major Shopping Complex

6%

Ad Valorem Rate

2%

This distribution of the rate increase is consistent with the community’s expectations of a fairer and more equitable rating structure.

 

 

 

The following chart highlights this distribution of the SRV.

 

Financial Governance

19.    Council must comply with Section 8B of the Act - Principles of sound financial management; and in particular the following sub sections of section 8B:

“(a)   Council spending should be responsible and sustainable, aligning general revenue and expenses…

(d)     Councils should have regard to achieving intergenerational equity, including ensuring the following:

(i)      policy decisions are made after considering their financial effects on future   generations,

(ii)     the current generation funds the cost of its services.”

         

Amalgamation Journey

20.    The amalgamation of two organisations, whilst maintaining everyday services, is a complex task that requires the involvement of the entire organisation and the support of the community.

21.    Georges River Council has embraced the fresh start that the merge of the former Hurstville City and Kogarah City Councils presented, to build the foundations for a strong organisation that will deliver outstanding results to our community and city.

22.    While Council’s income has increased and we have made savings as a result of the amalgamation of the former Kogarah and Hurstville Council in 2016, these changes have not kept pace with the increase in costs in providing services, especially as our population continues to grow.

23.    The terms of the amalgamation specified the preservation of the rates structures of the Hurstville and Kogarah City Councils for a period of four years. Council is now approaching the end of the “restricted” period and it is with the long-term vision for the Georges River area that Council has decided to apply to the IPART to change our rating structure.

24.    Along with addressing financial sustainability, there is inconsistency in the amount of rates paid across the former Kogarah and Hurstville Council areas, which Council needs to rectify to ensure a fairer approach for all ratepayers, regardless of dwelling or business type.

25.    Information on Council efficiencies to date can be further explored in the Amalgamation Journey Final Report on Council’s website.

 

Financial Strategy

26.    Based on the challenges presented in the LTFP, Council is building on the strong foundations established to ensure the delivery of community aspirations outlined in the Community Strategic plan. To achieve this, Council will take the following steps:

·        Establish a Financial Sustainability Working Group.

·        Review the Rates structure to bring consistency of rates charged to ratepayers.

·        Seek the views of the community in applying for a Special Rate Variation that will raise income to offset the loss of approximately $2.2 million from the expiring SRV and contribute towards reducing operating losses.

·        Explore potential avenues to raise new streams of income and increase current income levels through a wider application of the user pays model.

·        Explore potential savings in operating expenditure by reviewing operating processes.

·        Enquire into the rationalisation of assets without affecting the quality and extent of services currently provided.

·        Continue to benchmark activities and align operations where necessary, to yield optimum results.

·        Introduce and implement changes in focus, to view activities as “commercial” or “non-commercial”.

·        Evaluate affordability of capital projects from a “long term operating impact” point of view.

·        Evaluate the feasibility of major projects from a cost/benefit perspective and understand the payback period in respect of each.

·        Focus on bridging the gap between increases in income and expenditure.

·        Focus on works projects that are funded from externally restricted reserves.

 

Financial Implications

27.    The recommended permanent increase to general permissible rate income of 10.6% (inclusive of 8.1% SRV and 2.5% rate peg) will result in an increase to income from rates of approximately $7.5 million.

28.    The long term financial sustainability of council will be secured only when, in addition to this increased rate income, further savings in operating expenditure and options to increase other income are identified and implemented.

 

Risk Implications

29.    The approval of the applications to IPART for a permanent increase to general permissible rate income (inclusive of 8.1% SRV and 2.5% rate peg), will strengthen Council’s financial position and contribute positively towards enhancing its financial sustainability.

30.    Councillors have been appraised over the past two financial years, of Council’s poor and deteriorating financial outlook over the 10 year period of the Long Term Financial Plan. Failure to address the unsustainable financial position places Council in contravention of S.8b of the Local Government Act 1993 and will compel Council to cut and/or reduce services to ease the unfavourable gap between income and expenditure.

31.    The elimination and/or reduction of services may involve reducing the number of hours libraries are open, the closure of child care centres, reduction of the frequency and extent of maintenance of open spaces, parks, sporting fields, reduced maintenance of council assets leading to their deterioration etc. These may however still be insufficient to address the problem to a meaningful extent.

32.    The approval of the application to IPART for a permanent increase to general permissible rate income (8.1% SRV and 2.5% rate peg), is critical to making a positive contribution towards improving the Net Operating Results and therefore the Operating Ratio of Council, without which any applications for loans/new funds to finance major capital projects, will be disadvantaged.

 

Community Engagement

33.    Comprehensive details of the community engagement program and results can be found in a separate report for the Extraordinary meeting of the 10 February 2020. 

34.    The engagement presented three proposed options for the SRV to the community:

·        8.1% plus the 2.5% rate peg – Option 1 and recommended by Council.

·        0.8% plus the 2.5% rate peg – Option 2.

·        19.8% plus the 2.5% rate peg – Option 3.

35.    The community indicated strong support for the SRV Option 1 recommended by Council and 54% of all respondents supported this option.

36.    63% of telephone survey respondents were supportive of the recommended option and 99% of telephone survey respondents ranked the recommended option as their first or second preference and only 1% ranked it third.

 

 

File Reference

D19/276522

 

 

 

  


Georges River Council – Extraordinary Meeting -  Monday, 10 February 2020                                                                Page 156

Item:                   CCL006-20        Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART) 

Author:              Chief Financial Officer

Directorate:      Business and Corporate Services

Matter Type:     Finance and Governance

 

 

 

Recommendation:

(a)     That consistent with community support and desire for a fairer and more equitable rate structure, Council submits a Minimum Rate application to the Independent Pricing and Regulatory Tribunal (IPART) to harmonise the residential minimum rates for rateable residential properties to $965.80, contributing an estimated 80% of the proposed permanent increase to general permissible rate income of 10.6% (inclusive of 8.1% Special Rate Variation (SRV) and 2.5% rate peg).

(b)     That consistent with community support and desire for a fairer and more equitable rate structure, Council submits a Minimum Rate application to IPART to harmonise the ordinary business minimum rates for rateable business properties to $1,100.

(c)     That consistent with community support and desire for a fairer and more equitable rate structure, Council submits a Minimum Rate application to IPART to harmonise the business subcategory minimum rate for the Strategic Centres of Kogarah and Hurstville to $1,500.

(d)     That consistent with community support and desire for a fairer and more equitable rate structure, Council submits a SRV application to IPART to seek a permanent increase to general permissible rate income of 10.6% (inclusive of 8.1% SRV and 2.5% rate peg).

(e)     That consistent with community feedback, the need to comply with Section 8B of the NSW Local Government Act 1993 and in conjunction with the SRV application, Council commits to identifying $12 million in operating savings and/or additional operating income, to establish a financially sustainable future for Georges River Council.

(f)      That Council adopts the submissions to IPART, as attached to this report:

·        IPART Application form Part A Special Variation 2020-21;

·        IPART Application form Part B Special Variation 2020-21;

·        IPART Application form Part A Minimum Rate Increase 2020-21; and

·        IPART Application form Part B Minimum Rate Increase 2020-21.

(g)     That the General Manager be delegated authority to undertake any necessary minor administrative or editorial changes, to the submission to IPART. 

 

Executive Summary

1.      The purpose of this report is to provide information to Council on the following items:

·        The Minimum rate application to IPART

·        The Special Rate Variation application to IPART

·        Background on the Rate Restructure Program to date

 

Background

2.      Council resolved in 2018/2019 to develop a program for the preparation of a new residential and business rates structure for the Georges River Council Local Government area (LGA), which was also to include options that would strengthen Council’s financial sustainability and replace the cessation of the former Hurstville City Council’s Special Rate Variation (SRV) from July 2021.

3.      In conjunction with this process, there has been recent announcements on proposed amendments to the rating system within the Act, along with an amendment made in June 2019, enabling the Minister for Local Government to extend the rates path freeze for an additional 12 months for those councils formed in 2016 that need more time to consult with communities about rating harmonisation.

Rate Freeze Finishing

4.      Since the amalgamation of Kogarah and Hurstville Councils in 2016, Georges River Council has been required to maintain two rating systems for the LGA. We must create one consistent rating system by 1 July 2021 to ensure a fairer approach for all ratepayers, regardless of dwelling or business type.

5.      The Local Government Amendment Act 2019 was assented to on 24 June 2019 and a number of provisions came into effect on 25 June 2019. These changes enable the Minister of Local Government to extend the rates path freeze for an additional 12 months for those councils formed in 2016 that need more time to consult with communities about rating harmonisation.

6.      Based on the considerable work conducted and the consideration of the community feedback, it is recommended that Council harmonise the rate structure for Georges River LGA to commence in the 2020/2021 rating year.

2020/21 Rate Restructure Program

Councillor Workshops

7.      In December 2018, the first Rate Restructure Program Councillor workshop was held to provide a broad overview of what the restructure would entail along with anticipated timeframes. Since this time, a further 7 councillor workshops have provided details and financial modelling on the following policy items, but not limited to:

·        10 Year Long Term Financial Plan and the impact of the cessation of the former Hurstville City Council’s SRV from July 2021;

·        Three models for rate calculation options;

·        Council’s current income split by residential and business rates;

·        Comparison of average unit and average single dwelling rates;

·        The impact of different minimum rates scenarios;

·        Comparisons of metropolitan Council rate structures;

·        Business sub-category development based on centres of activity;

·        Rate income yield split across categories and sub categories;

·        Outcome and consideration of options based on community feedback;

·        Refinement of the Long Term Financial Plan based on 2018/2019 results; and

·        IPART application submission.

Special Rate Variation and Productivity Commitments

8.      At the time of proclamation, former Kogarah City Council maintained only an ordinary rate structure, whereas former Hurstville City Council maintained an ordinary and special rate structure along with a time-bound SRV, which expires on 1 July 2021. When the SRV expires, this results in a reduction to Council’s rate income in that rating year of approximately $2.2 million. Since this reduces Council’s general rates income base, the impact of this reduction increases each year by the percentage rate peg increase that Council would otherwise have received. This equates to approximately $19.5 million from 2021/2022 to 2028/2029, as outlined in Council’s Long Term Financial Plan, adopted 25 November 2019. Due to this, the Net Results of Council reduces substantially in 2021/2022 financial year and deteriorates further from that year onwards.

9.      Councillor feedback during workshops and the community feedback have indicated support for Option 1 (recommended option) of the Georges River Council 2019/2020 to 2028/2029 Long Term Financial Plan.

10.    Option 1 outlines a SRV of 8.1%, overall permanent increase to general permissible rate income of 10.6% (inclusive of 8.1% SRV and 2.5% rate peg), and a commitment to bridge the widening gap between income and expenditure by identifying $12 million in operating savings. In this premise, Council established a Georges River Council Financial Sustainability Working Group with the purpose of exploring options available to strengthen Council’s long term financial sustainability, which may include service efficiencies, user fees and charges and the rationalisation of assets.

 Minimum Rate and Sub Categories

11.    Council currently levies two different ordinary and special rates based on the former Council’s rating systems. The 2019/2020 financial year minimum rate for the former Hurstville City Council is $570.88, and is $942.24 for former Kogarah City Council.

12.    To ensure equity in the rates and annual charges across the Council LGA a harmonised and equity based minimum rate and rate in the dollar is being proposed, for residential and business categories, along with a different minimum rate for a new Commercial/Strategic Centre sub-category. These changes are based on the LGA’s centres of activity and high mix of units and single dwellings. 

13.    Councillor feedback during the workshops has indicated preference towards a harmonised rate of $965.80.

14.    Community feedback was supportive of a higher minimum rate for business strategic centres.

Community Engagement Framework

15.    Council conducted extensive community engagement in order to provide the community ample opportunities to gather the community’s views on the proposed harmonised minimum rates and the special rate variation options.

Applications to IPART

16.    The attachments to this report will be submitted to IPART if Council adopts the recommendation. IPART will announce the tribunal’s decisions in May 2020. All applications are available for viewing on IPART’s website.

17.    The minimum rate application is composed of two documents, one being a written submission and the other a rate data workbook. The written submission requires the following points to be addressed:

·        Rationale for increasing the minimum rates above the statutory limit.

·        Impact on ratepayers.

·        Consultation on the proposal.

 

18.    The Special Rate Variation (SRV) application is composed of two documents, one being a written submission and the other a rate data workbook. The written submission requires the following points to be addressed:

·        Need for the variation.

·        Community awareness and engagement.

·        Impact on ratepayers.

·        Exhibition of IP&R documents.

·        Productivity improvements and cost containment strategies.

 

Financial Implications

19.    Project costs to date are approximately $215,000, which includes the financial modelling and community engagement work undertaken throughout 2019/20. $215,000 does not account for the internal resourcing costs and the Councillors time in participating in over 7 briefings, since December 2019.

20.    If IPART approve Council’s SRV application, Council will receive approximately $7.5 million in additional non-budgeted operating revenue to commence in 2020/21. This will make a major contribution to placing Council in a position to make operating surpluses, which will contribute towards the continuation of services, maintenance of assets and investment into new local community assets.

 

Risk Implications

21.    The approval of the applications to IPART for a permanent increase to general permissible rate income (inclusive of 8.1% SRV and 2.5% rate peg), will strengthen Council’s financial position and is critical to achieving financial sustainability.

22.    Councillors have been appraised over the past two financial years, of Council’s poor and deteriorating financial outlook over the 10 year period of the Long Term Financial Plan. Failure to address the unsustainable financial position places Council in contravention of S.8b of the Local Government Act 1993 and will compel Council to make significant cuts or reduction in services to ease the unfavourable gap between income and expenditure.

23.    The elimination and/or reduction of services may involve reducing the number of hours libraries are open, the closure of child care centres, reduction of the frequency and extent of maintenance of open spaces, parks, sporting fields, reduced maintenance of council assets leading to their deterioration etc. These may however still be insufficient to address the problem to a meaningful extent.

 

Community Engagement

24.    Upon submitting the applications to IPART, members of the community are able to make a submission to IPART for the tribunal to consider in determining the outcomes of Council’s applications.

 

File Reference

Application Documents - SF19/2330

 

ATTACHMENTS

Attachment 1

IPART Application form Part A Special Variation 2020-21

Attachment 2

IPART Application form Part B Special Variation 2020-21

Attachment 3

IPART Application form Part A Minimum Rate Increase 2020-21

Attachment 4

IPART Application form Part B Minimum Rate Increase 2020-21

Attachment 5

Resourcing Strategy (Long Term Financial Plan) Revision 20 Dec 2019

Attachment 6

Community Engagement Report

 


Georges River Council - Extraordinary Meeting - Monday, 10 February 2020

CCL006-20             Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART)

[Appendix 1]          IPART Application form Part A Special Variation 2020-21

 

 

Page 160

 


 


 


 


 


 


 





 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



Georges River Council - Extraordinary Meeting - Monday, 10 February 2020

CCL006-20             Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART)

[Appendix 2]          IPART Application form Part B Special Variation 2020-21

 

 

Page 334

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Georges River Council - Extraordinary Meeting - Monday, 10 February 2020

CCL006-20             Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART)

[Appendix 3]          IPART Application form Part A Minimum Rate Increase 2020-21

 

 

Page 338

 


 


 


 


Georges River Council - Extraordinary Meeting - Monday, 10 February 2020

CCL006-20             Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART)

[Appendix 4]          IPART Application form Part B Minimum Rate Increase 2020-21

 

 

Page 379

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Georges River Council - Extraordinary Meeting - Monday, 10 February 2020

CCL006-20             Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART)

[Appendix 5]          Resourcing Strategy (Long Term Financial Plan) Revision 20 Dec 2019

 

 

Page 577

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Georges River Council - Extraordinary Meeting - Monday, 10 February 2020

CCL006-20             Submission of Harmonised Minimum Rates and Special Rate Variation Applications to the Independent Pricing and Regulatory Tribunal (IPART)

[Appendix 6]          Community Engagement Report

 

 

Page 590