One-off Additional Special Variation lifeline for maintaining revenue from rates

Councils that were short changed and only received a 0.7% rate peg can now apply for a one-off Additional Special Variation (ASV) to make-up the difference.

Council has endorsed the preparation of the one-off application for the 2022-2023 financial year to the maximum level of 2.5% permissible and on a permanent basis.

In March this year the Office of Local Government announced guidelines for an ASV process for the 2022-2023 financial year. This process was in response to a significant backlash from council’s across the state after the Independent Pricing and Regulatory Tribunal (IPART) ruled that councils could not increase rate revenue (Rate peg) more than 0.7% in the 2022-2023 financial year.

General Manager James Roncon said the 0.7% was the equivalent of only $130K towards maintaining essential community infrastructure with a value of $806 million.

“To say it was a shock when we received the news last year that the annual rate peg determined was 0.7% was an understatement,” said James Roncon.

“Like many councils across the state we are juggling the increasing cost of maintaining services to the community with limited capacity to generate more income.

By applying for the maximum 2.5% one-off Addition Special Variation our revenue from rates will be on target with council’s long term financial modelling, not a reduction.”

The only way councils across NSW can generate additional rate revenue is through the annual rate peg or by applying for a Special Rate Variation. If council did not apply for the maximum one-off ASV, funding levels would be reduced from rate revenue forecast increases of 2.5% annually, recommended by IPART, and consulted on with the community in the adopted 2021-22 long term financial plan. Council’s financial outlook would worsen.

The ASV application will be simpler and not intended to address a variation to general income above an amount greater than the annual rate peg. The Office of Local Government and IPART recognise that, due to the delayed council elections and the determination of the 2022-23 rate peg at a lower rate than councils had forecast, councils may not have had sufficient time to prepare a special variation application within the normal timeframe. Council’s application to IPART is due by the 29 April.

Published on 30 Mar 2022