FAQs
- size and resources of the council
- size (% and $) of the increase requested
- purpose of the Special Rate Variation
- current rate levels and any previous rate rises
- compliance with the applicable guideline
- any other matter IPART deems relevant including community submissions.
- All agreements must be in writing and signed
- The amount and frequency of the payments under the agreement are to be acceptable to Council
- Agreements should, where possible, seek to have the outstanding rates and annual charges cleared by the end of the current financial year
- Current rates and charges are to be paid when they fall due in addition to the arrangement plan where possible
- All arrangements are in accordance with Council policy and will be reviewed on regular basis
- The impacts of consecutive natural disasters and the COVID pandemic during the last five years has significantly depleted revenue and increased operational costs. The net cost of the disasters, including subsidies and waivers on fees and charges, reduced the unrestricted cash position by $14.6 million. The last natural disaster was declared as recently as November 2023.
- Rising cost of materials, labour and contractors in an environment of significant civil works, among others. (The past 18 months has seen an unprecedented escalation in interest rates, commodity prices, construction materials and labour that no one could have planned for. These economic factors have placed the entire local government sector into financial distress).
- Increased expense of interest rates to loan borrowings.
- Sustained lower than average residential and business rates. (Council rates have been consistently lower than its neighbouring Illawarra-Shoalhaven councils (Wollongong, Shellharbour and Kiama), as well as the average of its comparable councils (classified as OLG group 5).
- Rate Pegging – the NSW Government restricts how much councils can typically increase rates by, and in recent years rate rises haven’t kept up with inflation.
- Millions in grant funded improvements post fires and floods means we need to put more away each year to save for maintenance, renewal and depreciation costs.
- Community expectations are that maintenance and replacement of assets like roads, bridges and community facilities should be improved on current levels, requiring greater investment.
- Council is now required to assume responsibility for some infrastructure, services and regulatory functions that were not previously its responsibility. This is occurring in an environment without the addition of sufficient supporting funding.
What is a Special Rate Variation (SRV)?
Each year, the NSW Government determines a rates increase known as the 'rates peg'. This amount is calculated by the Independent Pricing and Regulatory Tribunal (IPART).
If the elected councillors agree that a council needs additional revenue beyond the maximum rates peg, Councils can request a Special Rate Variation (SRV) from IPART.
What is a rate peg?
Under NSW legislation the overall amount of money raised by rates can only increase by no more than a set percentage determined by the Independent Pricing and Regulatory Tribunal (IPART), unless special approval is gained. The amount calculated by IPART is what is known as the rate peg.
Are council requests for SRVs common?
According to IPART, 17 councils in NSW applied for increases in rates income above the rate peg through special variations in 2023.
Some of these applications include rate variations up to 92%.
How much is the proposed SRV increase?
It is proposed that rates increase 32 per cent inclusive of the rate peg in 2024-25 (option 1). For the average property ($1,459.40 in 2023-24) this would be $467 in 2024-25 and then $58 in 2025-26 and $60 in 2026-27. Council is also considering staging this over three years (option 2) being 18% in 2024-25, 13% in 2025-26 and 8% in 2026-27. For an average property this would be an increase of $263 in the first year, $224 in the second year and $156 in the third.
This would be applied to all rating categories, and the cost increase is shown in the Fact Sheet.
How much will my rates go up if the SRV does go ahead?
The increase in rates (in terms of dollars) will vary for residents and businesses across the city. The reason for this is that Council uses the land value of properties throughout the city to determine the level of rates each property owner should pay. You can see the cost increase to rates averages in each category in the Fact Sheet.
Is Council involved in land valuation?
No. The Valuer General issues new land values to councils to use in setting rates at least every three years. Council recently received the land valuations to be used for levying rates for the 2023/2024 rating year. The land valuation aims to reflect the market value of the land only, as if sold on 1 July 2022 (the base date).
If it goes ahead, for how long would the SRV apply?
The application would be for a permanent increase of the amount reached in the first year of Option 1, or at the end of the third year in Option 2. Basically, once the SRV amount is reached, the rates will increase by the rate peg on top of the SRV increase each year after that.
Would the rates increase also apply to businesses?
Yes it would. According to Office of Local Government comparative data for 2021-22, Shoalhaven’s average business rate of $2,183 is the lowest for Group 5 (*Regional Town/City) councils across NSW and significantly lower than our regional neighbours of Shellharbour at $5,191 and Wollongong at $11,607.
What’s Council doing to support businesses in the Nowra CBD?
The Council has supported businesses across the city through sustained, low rates and remains committed to the ongoing support of businesses through its $500,000 annual funding to deliver the vision of the Nowra CBD Revitalisation Strategy via its committee.
Does the rate increase also apply to waste and stormwater charges?
It doesn’t. The Special Rate Variation would only apply to your property rates and not waste or water.
What will happen if the SRV doesn't go ahead?
If the SRV is not approved, assets such as roads, buildings and stormwater will deteriorate over time. Council will need to implement service level reductions over the next 10 years across various operations. The range of services will need to be reduced and unsafe facilities will need to be closed when the deterioration of the asset becomes unsafe.
What would the additional money be spent on?
IPART has very strict conditions on how we must allocate these funds. The additional revenue raised will go towards infrastructure renewal works, specifically to improve the condition of our public facilities and our roads.
Don’t our rates already allow for road repairs?
Yes, they do. However, the recurrent budget is outstripping recurrent costs of maintenance and services, restricting the amount of funding available for the volume of work that’s required to repair our vast road network to a quality standard.
The Shoalhaven local government area (LGA) covers a large geographic area, but our population is small in relation to our size. On average, we have 24 people per square kilometre compared to other similar council areas that have an average of 239 people per square kilometre (OLG NSW 2021 stats: Shoalhaven - Your Council NSW).
Council received grant funding to repair the roads. Where has that money gone?
Grant funding for road repairs is being spent on the works for which the funding was received. With 1,770 km of roads in our LGA there’s a lot more work to do and increasing the rates will assist us to do this.
Why would Council even consider proposing this now, given the current increase to the cost of living?
The increased costs of construction, inflation, interest rates and cost elements that all people and businesses are dealing with is also impacting the ability of Council to pay for the works and services that need to be done across the city.
After three years of returning a deficit, Council went through an independent financial review process that identified the immediate need for additional income to deliver the works necessary to maintain roads, footpaths and buildings to a suitable standard for community use.
The importance of good maintenance cannot be overstated, with quick fixes very costly in the long run. When insufficient maintenance is carried out on roads, buildings and assets, this can lead to expensive, major repairs over time. Deterioration, particularly with roads, results in soaring costs and a major financial impact on Council. It is more cost-effective to repair and maintain our infrastructure now.
How does the Independent Pricing and Regulatory Tribunal of NSW (IPART) assess the application for a Special Rates Variation (SRV) for the Shoalhaven Council?
IPART may consider the following (including but not limited to):
If approved, when would the Special Rates Variation (SRV) start to take effect?
Following the community engagement period, Council will meet again in January to determine whether or not to proceed with an application to IPART in February. If an application is lodged and approved the change in your rates would commence from the first payment of the 2024 - 25 financial year. Once the specified increase is fully in place it is permanent.
When will we know if the rate increase is going ahead?
IPART would notify Council of its decision in May 2024 and we will let the community know if this outcome is reached.
What other options has Council looked at to raise this money?
Council has set a target of $3 million in efficiency savings to be found over the next four years. There’s a number of measures Council is implementing to improve efficiencies and reduce costs, including improving governance and financial controls, establishing productivity targets and service reviews.
Some of these are already underway and include the development of stringent project management systems to qualify and interrogate information for durable forward planning, particularly for asset management and capital works projects.
Rationalising land and assets is also advised to improve the balance of unrestricted cash to rebuild the balance of Council reserves, which can be drawn on as required and saved for emergencies and disaster events.
We also apply for and receive government grants and will continue to do this in the future.
There are lots of grants available, why can't we just seek more grant funding?
Many grants require funds to be spent on capital expenditure (eg. sporting fields, new community facilities) and are not used to fund day-to-day projects like asset renewal or maintenance.
Council cannot solely rely on this form of income. In most instances grants require a co-contribution from Council. Grants are extremely competitive, and we may not be successful.
Good financial governance means we have a ratio of 60% or more, meaning 60% or more of council income is generated from our operations and not from grants.
What if I’m a pensioner? What rebates are in place?
Ratepayers who hold a pensioner concession card and meet the criteria may be eligible for a reduction on their rates. More details on our website at Pensioner Concession | Shoalhaven City Council (nsw.gov.au).
What if I can't afford the rate increase?
Council recognises that some ratepayers may experience financial difficulties in meeting their rate commitments on time.
A ratepayer at any time may make arrangements to pay off their outstanding accounts by regular payments, subject to the following guidelines:
To apply for An agreement to pay rates and charges, simply complete the application and return it to Council.
Has the Bioelektra Australia project contributed to the need for a Special Rate Variation?
No. Funding for the development of a new resource recovery facility came from the restricted waste fund, which is a separate charge that can only be spent on projects and items specifically related to processing and managing waste in the Shoalhaven.
How do our rates compare with other councils in NSW?
We have one of the lowest rates in the state, lower than comparable councils of a similar size and lifestyle, and of our neighbouring councils in Wollongong and Shellharbour.
Why are we talking about this so close to Christmas?
Applications for a special rate variation with IPART close 5 February. In order for Council to consider feedback from the community as well as meet the criteria under IPART’s assessment, consultation, feedback and engagement needs to occur now.
Why didn’t Council know there was a deficit before now?
During the last three years Council has returned a budget deficit and we were losing confidence in our long term financial plan, which is why we called for the review and paused a number of new capital works projects.
Council needed this external review to analyse our current and forecast income against our existing and future expenses to quantify the gap. This, coupled with the response Council has taken to COVID and the raft of natural disaster response means we need to look at the financial situation now, to ensure we are strong for the future of the Shoalhaven.
How much have you already got from disaster funding and where has it gone?
The Natural Disasters Reconstruction team has focused on resourcing and repairing roads across the city that were damaged by consecutive flood events last year with approximately $28 M of road repairs complete last financial year.
At the same time, we have secured Australian Government funding and are working with NSW Public Works to manage the contract with Symal to repair the roads damaged by landslips in Kangaroo Valley and Burrier.
Why are you spending money on the new Sanctuary Point Library if we can’t afford to fix the roads?
The Sanctuary Point District Library project is an important project for all the Bay & Basin community and is an economic stimulus project for Sanctuary Point. Council has reaffirmed its commitment to the project at the current location as approved in the current Development Application.
At Council’s Ordinary Meeting on 9 October 2023, it was resolved that Council’s commitment to the project is capped at $15 million. Council is working collaboratively across all three tiers of government to secure the funding necessary to ensure that this community asset is delivered.
More information on the project can be found here Sanctuary Point Library | Get Involved Shoalhaven (nsw.gov.au).
Why are you spending money on redesigning the Bay and Basin Leisure Centre if we can’t afford to fix the roads?
The Bay & Basin Leisure Centre was originally developed in 2001 and is now in need of refurbishments to ensure it continues to meet the changing needs to the Bay & Basin communities into the future.
We still believe this project is critical to the local community and proceeding with the development of concept designs is critical to illustrate how a refurbishment of the Bay & Basin Leisure Centre might be achieved.
Funding is yet to be committed for future phases, including construction.
What will you do with our responses to the survey?
Survey responses and submissions will be provided to Council and this will be shared with Councillors who will be voting on the proposed special rate variation.
The data will also be analysed along with other feedback collected in the community satisfaction survey taken in 2023. What is important to the people of the Shoalhaven is still critical to our decision making, and this data will continue to influence budget decisions.
If the majority of people are against the rates increase, will that influence the decision? If not, then why bother?
A community satisfaction survey in 2023 told us what you value most and this included: roads infrastructure; development/environmental control; and transport infrastructure. We want to continue to hear from residents and businesses on what they value most as this will influence our focus on where the budget should be directed.
Councillors will vote on the special rate variation proposal, and while they will listen to what the community has to say on the issue, they do not need the community's support to influence their decision.
How can you do this when people are already struggling to make ends meet?
The decision to put this proposal to the community was a difficult one and was not taken lightly. We recognise the impact of rising costs on individuals and families and your concerns are heard and valid.
Council is faced with an independent and expert financial review that strongly recommends we need to consider the special rate variation. This is to ensure that we can balance the provision of services for our community, with financial stability. Without addressing the annual shortfall of $25 million to $35 million, the deficit will continue to decrease.
The report identified that Council has a lower average rate for residential and business rating categories comparable to neighbouring councils and many other councils in the state. We do though understand that a potential rate increase will impact the community.
The timing of this announcement is necessary to ensure that Council can undertake a program of communication and engagement with the community. This is a requirement of IPART.
We are committed to being transparent with the community about the reasons behind the decision and our focus remains on repairing and maintaining our vital infrastructure for residents and businesses across the region.
How did Council allow this position to eventuate? Why has it not presented ratepayers with any viable alternatives to rate rise of this magnitude? Is this really the only way to address Council’s financial problems?
Many factors have contributed to making Council’s current financial position unsustainable:
Council is committed to identifying further efficiency savings, further income must be generated to provide Council sufficient resources to deliver required services.
Since 2015, rates increased by 60%. This increase, compared to an absolute inflation rate of 26%, generated an additional $100M in revenue to spend on services. Has Council honoured the reasoning and undertakings behind these significant rate increases?
Since 2015, Council has faced a forced amalgamation proposal (which impacts forward planning of budgets, services and operations), natural disasters, the consequences of an international pandemic. As a result, the Council finds itself in need of a current plan for financial sustainability.
Since 2015, 83% more was spent on wages and on-costs; three times inflation and over $140M more in the past eight years. Employee numbers rose from 792 in 2017 to 1200 in 2023. What have the increases delivered and are staff reductions being considered?
The number of Full Time Equivalent (FTE) numbers have increased from 911 in 2016 to 1,050 in 2022 or 80 positions. Headcount (including F/T, P/T, casuals, contract, parttime) was 1,224 in Dec 2016 and 1,457 in February 2022.
Fifty of those positions relate to bringing back in-house the waste management services. Others are made up of specific positions created as a direct consequence of the previous SRV (which nominated those specific positions) including infrastructure renewal and fulfilling legislative requirements.
Benefits for community include infrastructure renewal and reactive repair, which can be achieved within budgetary constraints; cleaning of facilities used by the community; the development of an industry–leading waste management system and the creation of markets for recycled product and continuity of employment for members of the community working for the Council.
Mayoral Minute from April 2022 - which was fully supported by all councillors - provided permanency to long-standing fixed term employees – some of whom had been with council for up to 8 and 9 years. The conversion of such roles is now legislated.
The percentage of part-time or casual work in the Shoalhaven is much higher than the national average and this is reflected in much lower average weekly earnings. Can residents dealing with a cost-of-living-crisis afford to pay a 44% rate increase?
The cost of living for residents is increasing. This is clear and absolute and Council is very aware of this. Increases in interest rates, inflation and other goods and services all contribute to this. Cost of undertaking operations and services on behalf of the community is increasing for the Council and it is for this reason that the community is being asked its view on the proposed rate structure over the next three years. Council is not able to absorb all of its own cost increases to offset cost of living increases in areas it cannot control.
It is interesting to note that in the Shoalhaven, 28% of the population are greater than retirement age of 67 and of those, many own their home outright and choose to work parttime.
In fact, 43% of properties in the Shoalhaven are owned outright, which is 16% more than Greater Sydney and the number of people working part-time in the Shoalhaven is 10% more than Greater Sydney. (Stats: ABS Census 2021)
Shoalhaven Entertainment Centre loses $37,000 per week ($1.9M annually). The aquatic centres lose $89,000 per week ($4.6M annually). Does Council plan to reduce these losses to place these and other business units in a sustainable financial position?
The numbers are correct and are taken from the audited special purpose financial statement. These services are subsidised as Council considers them community services.
Shoalhaven Entertainment Centre (SEC) Access to performing arts centres are a vital social hub, keeping people connected, giving our communities a place to perform, to see professional theatre and music, and celebrate our achievements. These venues are all subsidised by one or more levels of government – local, state and federal – whether they are owned and operated by government, or the management is outsourced.
Our community tells us they can’t imagine life in the Shoalhaven without the entertainment centre and it rates 4.1 out of 5 in the independent community satisfaction survey.
Attendance has bounced back strongly since the pandemic with the 2022-23 figures showing that ticketed attendance was 20% higher than the pre-COVID period and projection for 2023-24 is 57,000 ticketed patrons.
Aquatic Centres
Across Council’s 13 facilities, Shoalhaven Swim Sport Fitness (SSF) has an annual visitation of over 800,000 patrons a year. More than 4,000 Learn to Swim lessons are held each year.
Council previously had various external management companies operating its facilities, however, these management contracts proved to be a more expensive management model to Council, fees typically left the Local Government Area and income generated through the facility remained with the operator.
In 2015 the General Fund Debt was $39.4M and by 2023 it had grown threefold to $118.1M, or $2,111 for each residential ratepayer. How will Council pay this debt off?
Loans are taken out to fund vital infrastructure that will benefit current, and future, generations of ratepayers. Prior to taking out a loan, Council models the required repayments and builds them into Council’s Long Term Financial Plan, ensuring Council’s capacity to repay the loan.
Many of Council’s historical loans were taken out in a low interest rate environment. It was a conscious decision of Council to take advantage of these fixed rate loans while it was attractive to do so. The unprecedented rapid rise in RBA cash rates (from May 2022 onwards) required Council to reconsider its approach to borrowings.
Moving forward, loan borrowings will be significantly reduced. Loans will only be considered if the project for which the loan is expended has an income generating source that will be used to repay the loan. Council continues to pay down its existing loans, noting that these loans were taken out to construct vital infrastructure for the city.
The Mayor and seven Councillors approved a General Fund deficit of $61.4M which means there will only be $2.4M available in June 2024. This won’t cover employee wages for a week. Why was this decided when the current dire financial situation was known?
Response: Council adopted a General Fund Cash deficit of $61.4M as part of the 2023-24 budget which is reported in the General Fund Statement of Cash Flows on page 106 of the Delivery Program Operation Plan 2023-24.
The Statement of Cash Flows summarises the net cash movement for the 12-month period.
The major negative cash movement in the budgeted cash flows is the $145M planned expenditure on infrastructure, property, plant and equipment. It is not until Council enters into a contract to deliver a particular project that Council is committed to that expenditure.
Council can revise its capital spend in each of its budget reviews, which it did at the end of Quarter One (July to September 2023), when it adopted the current the current capital works program taking into consideration the most recent financial position and resource constraints.
As reported to Council at the 11 December 2023 meeting, the revised program is funded through multiple fundings sources, with $13M or 6% coming from General Fund Revenue (rates, charges and interest income). The rest of the program is funded through grants, developer contributions, loans and other reserves.
It is considered that under all of these circumstances, Council was acting responsibly in its adoption of the 2023/24 budget and subsequent first quarter review. (NOTE: In the context of this question, ‘General Fund’ refers to all Council operations, excluding the ShoalWater business.)used to repay the loan. Council continues to pay down its existing loans, noting that these loans were taken out to construct vital infrastructure for the city.
Councillors have not met NSW legislative reporting deadlines for the past two years. Why aren’t the Auditor General and Minister for Local Government demanding Council comply with its statutory obligations?
For the year ended 30 June 2022, 57 councils (including Shoalhaven City Council) did not lodge their audited financial statements by the 31 October deadline. For 30 June 2023, 63 councils (including Shoalhaven City Council) did not lodge their audited financial statements by the 31 October deadline.
Shoalhaven City Council is not unique in this regard. The challenges with the current external audit process and timelines are widespread across the local government sector.
Council has however, met its statutory obligations, albeit that, as described above, deadlines were exceeded in the last two years. It should also be noted that since that time, Council has appointed a new Chief Financial Officer, who has brought to the Council an operational discipline and systems and processes that are already improving financial reporting quality at Council.
Does Council have a viable plan to address the essential increase in funding for basic road maintenance? Is it time to stop non-essential capital projects and spent the rates income on roads?
Question: A decade ago, Council spent $15 million annually on sealed road maintenance. This represented 24% of General Fund Rates and changes. By 2023, the annual expenditure dropped to $10.6 million, or 9.3% of rates and charges. This is despite Councillors voting for a special rate increase in 2017/18 to cover extra expenditure on roads. Does Council have a viable plan to address the essential increase in funding for basic road maintenance? Is it time to stop non-essential capital projects and spent the rates income on roads?
Answer: Road maintenance costs are largely driven by the ability to understand which road asset needs maintenance, what that maintenance needs to be and when it needs to be undertaken. This understanding comes from Asset Management Plans (AMPs).
Asset Management Plans commence with an Asset Management Strategy. Council’s updated Asset Management Strategy, currently on public exhibition, includes a self-assessment of Council’s Asset Management Maturity Assessment. Council’s main objective is to elevate its maturity to the ‘Core’ level. The Asset Management Improvement Plan and related implementation schedule identifies existing gaps and deficiencies in asset data, systems maturity and resources that are to be addressed to meet Council’s Asset Management vision.
The next stages are to:
1. progress a thorough update of the condition data for Council’s roads network in early 2024 and the development of a consultant brief and accompanying operational budget bid in FY24/25 for a more substantial overhaul of the Strategic Asset Management Plan for inclusion in the Resourcing Strategy 2025-26 (Feb 2025).
2. continue the review into the updating of asset-class specific Asset Management Plans (AMP). This is ongoing, with the capacity of the Asset Custodians to deliver these documents being assessed.