We thank the community for providing feedback about Council’s application to the NSW Independent Pricing and Regulatory Tribunal (IPART) for a Special Variation (rate rise).

Council submitted its application to IPART in February 2021.

The Independent Pricing and Regulatory Tribunal (IPART) approved a 15 percent Special Variation (SV) rates increase for the Central Coast for three years starting from the 2021-22 financial year on the 17 May 2021.

Council sought community feedback on options for a proposed rate rise between 8 January and 1 February 2021 through two online surveys (an updated survey was launched on 22 January following community feedback).

The total number of responses for both surveys was 10,229. Survey one received 3,944 responses and survey two received 6,285 responses.

In addition, Council received over 378 written submissions as at 1 February 2021.

Throughout February, Council undertook a separate phone survey on the 15% special rate variation and continued to receive written submissions up to 26 February 2021.

• A majority of survey respondents do not support a rate rise.
• Those who do not support a rate rise feel that ratepayers should not shoulder the burden of Council’s mistake/s.
• There is concern about the affordability of a rate rise for either themselves or others in the community.
• Some respondents feel Council’s maintenance of roads, open space and natural assets are already poor.
• Some respondents feel they already don’t get value for money paid due to a perceived lack of maintenance of Council assets, or lack of expected infrastructure in their immediate area, such as kerb and guttering.
• Some suggestions about alternatives to a rate rise include (but are not limited to) seeking NSW Government funds, increasing revenue from fines, selling assets, reducing staff, employee pay cuts, reduction of capital works and scaling back services and expenditure in general.
• A minority of survey respondents support a rate rise.
• The key reasonings behind support is to ‘fix the problem’, maintain services and/or to create a sustainable pathway forward for Council.
• Some respondents who support a rise also expressed a desire to improve the Central Coast through improved assets and economic growth and investment.
• General sentiment from respondents (either in support or against a rate rise) showed the community would like to understand who is accountable for the financial issue and what actions will be taken against these individuals or entities.
• Some respondents will continue to distrust Council, with others stating their expectations of better financial management and accountability in the future.
• There are some suggestions from respondents that corruption or fraud has occurred.
• There is overall strong support for the appointment a financial controller.

Preference out of three options from survey two results:

• 10.2*% preferred Option 1 – Temporary Fix - 10%
• 17.4% preferred Securing our Future – 15%
• 72.4% preferred No rate rise – rate peg only

*figures have been rounded

Council commissioned Micromex Research to undertake a separate phone survey to measure levels of support and preferences for either a 15% Special Variation, or the rate page only option. This survey involved a randomly selected sample of residents to reflect and represent the population makeup of the Central Coast resident/ratepayer base. Summary:

• When respondents were exposed to the 15% increase option, 55% of residents were at least ‘somewhat supportive’ on a standalone rating question.
• Those unsupportive of the 15% rate increase nominated concerns around Council’s financial mismanagement and the community affordability issues.
• Those supportive of the increase did not want to see service levels decline and see that the increase is the only way that Council can address a serious financial shortfall.
• When respondents were exposed to the rate peg only option, 51% of residents were at least ‘somewhat supportive’.
• The overall preference between the two options was split with 55% of the community preferring the rate peg only and the other 45% preferring the 15% Rate Increase – with the difference between the two scores not significant.

The results of consultation can be found in the February 2021 consultation report and telephone survey report. These have been provided to IPART along with written submissions.

On the 8 February 2021 Council resolved to apply to IPART for a 15% one-off permanent special rate increase. Council adopted the revised Long-Term Financial Plan (General Fund) as well as the Debt Recovery and Hardship Policy for purpose of public exhibition.

Council continues to have a serious financial situation.

Council has already commenced a number of measures to manage costs and increase income to address the situation and long-term financial sustainability. These include significant staff reductions ($31M), restrictions on spending ($22M), and the proposed sale of assets ($49M). The spend on infrastructure has also been reduced from $225M to $170M annually. These steps achieve 70% of the $76M annual savings target needed to action the financial recovery.

The remaining 30% ($23M excluding rate peg) will need to come from additional income to pay back the restricted funds unlawfully accessed. This income target can only be achieved with a 15% rate peg. It is for this reason that it is now recommended that Council proceed to apply to IPART for a rate increase of 15% (13% special rate increase and 2% rate peg increase).

Council resolved to consult on a 10% one-off special rate variation staying in the rating base for 7 years and a permanent rate variation of 15% one-off. This consultation was undertaken with most respondents not supporting any rate rise. Of those who did support a rate rise, when presented with the three options, 15% was preferred more than 10%.

It is clear from the community feedback that any decision to increase rates will be unpopular as our community are rightly concerned about this increase.

The primary purpose of the Special Variation application is to deliver financial sustainability by reimbursing the unlawfully accessed restricted funds that have been spent on projects and infrastructure brought forward over the past two years, delivering significant benefits to the community. Council have a legal obligation to reimburse the restricted funds.

Council’s revised Long-Term Financial Plan shows that with a 15% variation, Council will be able to repay approximately $100M of the externally restricted funds within 10 years, with the remainder being reimbursed from asset sales and internal restriction write-offs. There is a very real risk that should Council not obtain a 15% increase it will impact the status of the bank loans with a potential early call on these loans.

A rate increase is the final option being considered as part of Council’s financial recovery. Council has obtained loans, reduced spending and cut staff. Without a rate rise of 15% Council may find itself again in a dire financial situation.

Read the Report presented to Council here.

Council is proceeding with rates harmonisation (as required by legislation) to address the current rates imbalance from the rates path freeze which has been in place since amalgamation by aligning the rating structure across the LGA from 1 July 2021. Rates harmonisation does not result in any additional income for Council. This is separate to the IPART Special Variation process. View more information about this process on our dedicated page.

IPART will make determinations on all NSW Council Special Variation applications in May 2021.

The Draft Operational Plan and Budget will be publicly exhibited in May 2021 for community feedback.