Thursday, 22 February 2018

Bellingen Shire Council, The Facts Re Proposed Rate Rise




Additional Community Frequently Asked Questions

The following additional information is provided to assist the community and is based on submissions and comments received by BSC to date.

General Overview of Council
·       Custodian for $0.5 billion asset base
·       149 approved staff positions
·       2017/18 budget (in thousands)
o   Income -                 $31,870
o   Expenditure -      $28,943
·       FTE per 1000 residents 9.5 – NSW is 9.3
·       Remuneration as a % of operating expenses 35% less than the State average of 38%



1.     Claim: IPART set the rate peg and Council should stick to it
Unfortunately the Local Government Cost Index that IPART uses to works out the rate peg does not take into account councils’ true costs.
·       For example, local government’s biggest cost is employee benefits and on-costs. IPART look at the Public Sector NSW Wage Price Index which, for 2015/16 rose by 1.9% and NOT the Local Government Award that councils are required to pay staff under which for the same period rose by 2.8%.
·       IPART uses CPI for things like electricity which also doesn’t take into account the service charges which have seen increases between 18% - 33%
·       IPART does not consider depreciation or loan borrowings as well as the Community Strategic Plan which councils have a legislative requirement to prepare and implement
·       The Local Government Cost Index that IPART uses to develop the rate peg also does not take into account the funding needed to address the infrastructure backlog  or future service requirements
·       IPART are basing the index expenditure weightings on a survey conducted in 2010 as opposed to current figures


2.     Claim: Financial Assistance Grants not used for fixing the roads

This is completely false!

Council receives approximately $850K per year for the roads component of the Federal Financial Assistance Grant and every dollar is spent on transport infrastructure. In 2016/17, Council spent well over $5M renewing and maintaining road and bridge infrastructure.  Council also spent more than $3.3M in 2015/16.

In 2010-11, Council spent $2.6M on its infrastructure of which only $0.742M was the FAG component. This refutes any statements made regarding money spent from the FAG roads component on the Raleigh Depot.
On average, the FAGs road component makes up 31% of the annual road and bridge maintenance budget.

The maintenance investment on roads and bridges has increase by approximately 5% per annum since 2010-11.

The Financial Assistance Grant comprises of a General component and a Roads component. The Road component is calculated on the Council’s road length.

While there is no legislated requirement for these funds to be spent on roads, Council’s road maintenance expenditure is significantly higher than the Road Component of the FAG Grant

Council’s Long Term Financial Plan sees an investment of $50 million dollars on its roads and bridges infrastructure over the next 10 years!


3.     Claim: Council has some of the highest rates in the State

This is incorrect.
A comparison of rates across the State in 2015/2016 shows Bellingen Shire Council has one of the lowest rates in NSW. Out of the 151 councils, Bellingen ranked 118th in the State when looking at the average rate (total ordinary rates divided by the number of assessments in each shire).  A ranking of 1 refers to the highest rates. This means the Bellingen Shire is in the lowest 25% for rates.


4.     Claim: Overspend of rate payer money on Town Beautification Project

This is incorrect. The Bellingen Town Beautification Project was not funded by ‘rate payer’ dollars.  The project was fully funded through Roads to Recovery and Roads and Maritime Services (RMS) grants as well as Section 94 funds.


5.     Claim: Council has not done enough to save money/cut costs

As outlined in the community brochure and FAQ documents available on the Create site, Council has been implementing a number of cost saving initiatives and efficiencies that has helped contribute to a massive reduction in Council’s operating result. This is evidenced in Council’s audited financial statements that show a reduction in its financial deficit of $9 million in 2014 to a surplus of $0.28 million in 2017. This is a net improvement of $9.3 million over the last 3 years.

More information can be found in Council’s Financial Statement Summary which can be found on the Create website.

Savings/Efficiencies Achieved to Date
Item
Saving/Efficiency
Comment
Review of Print Services
$50,000 annual reduction
Reduction in printing costs due to new contracts, education and awareness initiatives across the organisation.
Workers Compensation Insurance
$202,000 reduction over past 3 years
Reduction due to a number of educational and awareness initiatives across the organisation to reduce ‘lost time injury’ and lower insurance premiums. Council has seen a 43% reduction in workers compensation claims since 1st July 2010.
Electricity and Heating Costs
$255,000 reduction over past 3 years
Reduction due to negotiating new contracts along with a number of energy efficiency initiatives including solar installations, lighting replacements and in-house educational programs.
Leave Liability Reduction
$309,000 reduction over past 2 years
Leave Liability Reduction initiative resulting in an 10% reduction.
Shared Learning Management System
$45,000 over 4 years
Joint procurement of a shared learning management system involving 6 councils across the MIDROC group resulted in significant savings.
Recruitment Costs
$40,000 per year
Implementation of an online careers site to manage Council’s recruitment has resulted in significant savings for Council.
Review of banking services
$21,000 per year
Due to renegotiation of new banking contract savings are to be realised from 2017/18 year onwards.
Electronic Communication Channels
$10,000 + per year
Council implemented electronic rate notifications with the objective of improving productivity and customer service. To date this has realised a 13% take up rate.
Organisational Reviews
$100,000’s of savings
A number of organisational reviews undertaken resulting in multiple staffing efficiencies and a reduction in staffing levels (FTE’s).
Other Efficiencies
$100,000 + of ongoing savings
Multiple other savings achieved by creating a culture of efficiency that actively rewards innovation and savings. Including but not limited to reductions in:
·       training
·       travel
·       internal audit
·       tender evaluation expenses
·       stores operations savings
·       IT efficiencies
·       Procurement
·       PPE controls and other efficiencies






Estimated Future Savings/Efficiencies
Item
Forecast
Saving/Efficiency
Comment
Electricity and Heating Costs
$103,000 per year
Further savings forecast due to the installation of further solar panels to all large sights in 2017/18.
Organisational Reviews
$TBD
Further organisational reviews being undertaken to find further savings and efficiencies
Corporate IT Software
$TBD
New IT software to be introduced in 2018. It is envisaged that there will be a number of savings/efficiencies realised through this process (process automation etc.)


6.     Claim: High wages/too many staff – comparisons to other councils (Coffs City Council and Nambucca Shire Council)

Staff Costs Specific Comments
·       Staff costs equates to 34.84% of operating expenses
·       Group 11 council average is 35.44%
·       State average wage costs equate to 37.79%

Other Comments
·       Wages are directly linked to service provision. Council has a mix of services and/or number of services to meet community needs e.g. 3 libraries, 3 depots, 3 waste facilities, 2 pools. 


·       RMS contract works involve the employment of day labour staff etc. Coffs and Nambucca councils do not do RMS contract works.

·       It is important to compare like with like i.e. size of the council, category of council, services provided, infrastructure provision, rate base etc


·       Some council’s may choose to use contractor staff in lieu of permanent employees. These costs may not appear as employee costs on council’s financial statements.  For example, Coffs Council employ a significant number of their staff through Coastal Works – the business arm of Coffs Council. This should be considered in any comparison.


·       Comparatively Bellingen Shire Council manages almost 4 times the length of road per capita compared to Coffs City Council and is 20% higher than Nambucca Shire Council. Specifically, and by way of comparison Bellingen maintains 40m, Nambucca 33m, and Coffs 11m per person. This means more costs per person and therefore by rateable premises to maintain and renew Council’s infrastructure compared to its neighbours.

Rateable Land
·       57% of Bellingen Shire is non-rateable. This land is in the mainly comprised of State Forests/National Parks/Crown Land who use and rely on the provision of council infrastructure. 

·       If Council was able to rate across these government owned lands there would be improved opportunity to increase income while costs general stay the same. In turn this would lessen the rating burden for all. 

·       If Council was able to levy rates on even 50% of land that is government owned at the Farmland Rate (lowest rating category), it would raise approximately $500,000 and remove the need for a special variation.

Nambucca Council rateable parcels and land values versus Bellingen Council
·       NSC has 9,269 rateable land parcels generating $9.529M in rate revenue

·       NSC land values total $1.356B

·       BSC has 6,038 rateable land parcels generating $7.327M in rate revenue

·       BSC land values total $1.625B – on average Bellingen has a higher land value than Nambucca


7.    Average yearly land rates 2017/18 – comparisons across the Shire


Time of year regarding SRV engagement and public exhibition
The time frame has been established by the NSW Government not Council.

Applications for a Special Rate Variation close 12 February, 2018. In order for Council to consider feedback from the community as well as meet the IPART assessment criteria, consultation, feedback and engagement needs to occur during this period.


8.     What has Council done to improve its infrastructure?

·       All 85 timber bridges have undergone a full condition and structural assessment

·       Timber bridge replacement program has seen the following bridges upgraded:

o   New two land bridge over Reids Creek in Kalang - $528,600

o   McFadyens Bridge renewed - $1,100,000

o   Cooks Creek Bridge renewed - $1,063,750

·       Road renewals – 2.5kms of road rehabilitation and pavement renewal works - $1,137,562

·       Unsealed roads – gravel resheeting of 20 local roads (26kms) - $442,707

·       Grading of 31 local gravel roads (35kms) - $376,846

·       Resurfacing of 41km of condition 5 seals now complete

9.     Pensioner Consideration.

·       Normal pensioner rebates will apply a maximum $250 discount for general rates. Additional rebates may also apply for water and sewer up to $87.50 for each applicable service.

·       Pensioners that claim a concession makes up approx. 24% of the Shire


10.  7 Years of variations

Council outlined seven (7) years of rate increases in its Fit for the Future resubmission. 

Last year Council did a lot of work around cost reductions and efficiencies, as well as improved planning and assessments around its infrastructure. This resulted in Council being able refine its projections, particularly about its infrastructure requirements, reducing the 7 years of special variations originally proposed to 4 years. This includes the SV approved for 2017/18 and additional 3 years proposed from 2018/19 – 2020/21.

As part of its feedback after last year’s application, IPART also recommended that Council apply for a 3 year special variation. 


11.  Comparative to Coffs Harbour City Council

The following comparison with Coffs Harbour is provided by way of comparison. This indicates that even with the 3 year SV, the average general rate applied by Bellingen Shire Council would be lower than the current Coffs Harbour City Council projections.

Model 1: Current Services Maintained
 

12.  IPART previously approved SRV’s for local government across NSW.
·      129 Applications received by IPART over past 7 years.

·      98% of applications approved either in part (18%) or full (80%)

·      Only 6 applications have been rejected outright



13.  What SRV’s has Council applied for in the past?
Council has only applied for 4 SVs in 20 years.
·      1997/1998 - 5% SRV for roads
·      2004/2005 - 4% Environmental Levy
·      2014/2015 – 9.3% SRV for infrastructure
·      2017/18 – 4.5% for road renewals


14.  Where can residents get more information?
Go to Council’s Create website, email Council directly, contact your local councillor, or call into the Council offices in Bellingen.


15.  How can residents have their say?
·    Make a submission
·    ‘Have your Say’ via the Council’s Create website
·    Call into Council in Bellingen and speak to staff
·    Call Council on 6655 7300
·    Write a letter to Council and submit by mail or website

All submissions must be received by 26 January 2018.



"As you may have heard or read the Bellingen Shire Council has applied to IPART for a Rate Variation of 6% per year over the next three years. 
Whilst we would have preferred not to have to do this we understand the need to pay for the services such as the SES, Rural Fire Brigade, Life Guards, Libraries, The Youth Hub and the protection of the Environment  (to name a few) that the community expects and supports. Also Bellingen has lots of infrastructure to maintain and repair like 85 timber bridges and an extensive road network and our average Shire Rates are still in the lowest 25% of the State.   

We in addition receive no rates from the State Government for the land they own that makes up over 50% of all the land in the Shire.
We have attached a Fact Sheet for you to read. It would be appreciated if you could support this application by writing to IPART as there are lots of half-truths and lies being spread by people who would love to see us wind back our support for the environment and social justice which we see as very important in having a harmonious and fair society. Further we will continue to fight for more equitable funding for the Shire from State and Federal Government and join with other Mayors and Councillors to highlight the inadequacies of the current model.  


Council’s application was submitted to IPART on Monday 12 February. Residents wishing to make a submission to IPART regarding Council’s application can do so up until 12 March 2018. This can be done through the IPART website, using the following link: 

https://www.ipart.nsw.gov.au/Home/Industries/Local-Government/Reviews/Special- Variations-Minimum-Rates/Special-Variations-Minimum-Rates-2018- 19?qDh=2&cid=c809dca8-0aa3-42d2-b772-a4a4af93e323


Alternatively submissions may be mailed to the following address: Independent Pricing and Regulatory Tribunal
PO Box K35
Haymarket Post Shop

NSW 1240



Mayor Dominic King, Cr Jennie Fenton & Cr Toni Wright-Turner"

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