What is a special variation?

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Rate pegging was introduced by the NSW Government in 1977 to limit the amount by which councils can increase rate revenue from one year to the next.

Currently, council rates are determined by the Independent Pricing and Regulatory Tribunal (IPART), which sets a ‘rate peg’, however it does not take into consideration rising costs and residents’ demand for increased services. As a result, councils are able to apply for a special variation in order to set rates higher than the rate peg for up to a seven year period.

Why do we need a special variation?

Our major source of revenue has been limited in growth because of rate pegging. Despite consecutive years of returning to surplus, the community’s increasing demand for services and the rising costs associated with providing them will mean that Council will not be able to address the backlog in infrastructure.

Without a special variation, Council will only be able to upgrade roads, footpaths, kerbs and gutters that are considered a high priority and other important Council services may be compromised in order to fund infrastructure upgrades.

What are we currently spending?


 

Budget

Annual Infrastructure Upgrade Program

$3,638,000

Infrastructure Loan

$1,000,000

Stormwater Management

$435,000

Parks and playground upgrades

$940,000

*Based on 2018-19 Budget

Where will the additional funding be spent?

 
The special variation will raise $1.992m in additional income which will be used to fund road and drainage works as part of the Capital Works program.

Are there any alternatives to a special variation?

Council may apply for a discounted loan facility with NSW Treasury Corporation (TCorp) through the Office of Local Government for projects which make up part of Council’s annual expenditure programs.

Council applied for a $1 million loan for 2017/18 and is applying for a $1 million loan for drainage works in 2018/19 in order to provide additional resources to fund important capital works projects and reduce the infrastructure backlog.In saying this, Council is then required to repay the loan and interest over a set period.

In order to be eligible, Council must satisfy TCorp’s credit criteria. This will be assessed by TCorp in determining whether Council is financially sustainable to apply for a loan. If the loan is approved, Council will then seek offers from financial institutions on interest repayments.