Federation Council receives Special Rate Variation determination

Published on 15 June 2023

The Independent Pricing and Regulatory Tribunal (IPART) yesterday (14/06/23) announced determinations on the 17 Councils who had applied for rate variations (increases) above the ordinary allowable rate peg amounts to commence 1 July 2023.  IPART has partially approved Federation Council’s Special Rate Variation application to temporarily increase its general rate income above the rate peg for a two-year period and not the four-year as applied.

Council has been granted a two-year temporary rate increase of 19% in year one (2023/24) and 17% in year two (2024/25). Council had requested a general rate increase of 19% for 2023/24, with 17%, 14% and 10% for the following three years and for the increases to remain in the rate base, (not be temporary), and reverting to the ordinary rate peg for 2027/28 onwards.

IPART determined the application and only applied the two year temporary increase due to it considering Council had shortcomings in the community awareness factor/criteria, including not communicating the cumulative increase of 74.59%, and only using each years proposed % increase, and also they considered Councils financial documents did not including in the early engagement stages, the impacts of a baseline (non-SRV scenario).  Council successfully met the other criteria including demonstrating the financial need, the increase being a reasonable impact on ratepayers, the quality of Councils Integrated Planning and Reporting documents, and the productivity improvements and cost containment strategies.

The partial approval means Council can increase its rates by 19% and 17% across 2023/24 and 2024/25 respectively should it choose to do so, inclusive of any allowable rate increase (for 23/24 for Federation Council it is 4.3%).   The 23/24 rate increase will be determined as per normal practice at the June 27 Council meeting.  Council needs to re-apply if it wishes for the increases to remain in the rate base ongoing, and if the Council is seeking the further two years of 14% and 10%, or any different amount.   Council will likely consider this in the coming months further analysis of the IPART determination and Councils longer-term financial position and further engagement with the community,

Federation Council Mayor Pat Bourke said this decision by IPART will allow Council to consider the reasons for the partial approval, and further analysis on the many submissions received by IPART from our community. 

“If Council chooses to resubmit a further application, of course Council will undertake further work.  This will include additional engagement with our community, further work on efficiencies and productivity improvements including service reviews, and adjustments to the forward financial plans, to allow Council to continue to work on the significant infrastructure backlog across some of our key service areas such as roads,” he said.

“For now, the 19% and 17% temporary increase across the next two years should Council apply it in full, and apply it to the projects as outlined in the draft plans, or as varied at the final meeting, will allow Council to deliver on additional commitments to our community that we would not have been able to do so without these funds. The proposed works to be undertaken using the year one 2023/24 funds from the SRV are clearly outlined in Councils Delivery Program.  Council will adopt a final version, when considering public submissions at the June 27 Council meeting.”

Mayor Bourke said whilst this might not be the overall outcome we were hoping to achieve, I believe it still is a positive one given the current economic conditions and the cost of living pressures on both Council and the community, and I thank the many people who have engaged with Council along the way and continue to do so, including the many who made submissions to IPART.

“I would like to take this opportunity to thank everyone involved in the application process,” he said.

“The many different elements of our application were driven with professionalism and with the best long-term outcome for our community at the forefront.  Long-term decisions like these are never easy.”

Mayor Bourke also said Council would workshop the determination to discuss relevant steps in the lead up to its June Council meeting.

“I look forward to workshopping the determination with my fellow councillors and continuing to engage with our community moving forward on how we can best achieve our financial sustainability benchmarks/ratios as set by the Office of Local Government, to deliver the services that our community expect and value and manage our assets with a longer term outlook,” he said.

“Council knows, and I think the community understands broadly, that Council’s core services such as roads and other infrastructure need additional ongoing funding to get on top of the backlog caused by years of underfunding.  Council should they apply the increases in full, have two years of additional funds now to commence the road back to true financial sustainability, such as injecting required funds to allow preventive maintenance on our road networks, such as bitumen reseals to avoid total road failures that costs 10 times as much to then fix.  The next 6 to 12 months especially is the time to engage further with the community on service level expectations and work on the financial solutions together to get to these levels. The journey will and must continue.  We are not a Council that is broke, we are simply a Council who is taking a longer term view on being financially sustainable while delivering services that are important to the community.”

View more information on IPART’s website, including more detail of the decision here.