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Special Variation Application Form – Part BFor applications for 2014/15

Issued October 2013

Liverpool Plains Shire CouncilDate Submitted to IPART: 23rd February 2014Council Contact Person: Mike UrquhartCouncil Contact Phone: 02 6746 4503Council Contact Email: [email protected]

mailto:[email protected]

© Independent Pricing and Regulatory Tribunal of New South Wales 2013This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism and review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgement of the source is included.

The Tribunal members for this special variation assessment are:Dr Peter J Boxall AO, ChairmanMr Simon Draper, Part Time Member

Inquiries regarding this document should be directed to a staff member:Dennis Mahoney (02) 9290 8494Heather Dear (02) 9290 8481

ii IPART Special Variation Application Form – Part B

Independent Pricing and Regulatory Tribunal of New South WalesPO Box Q290, QVB Post Office NSW 1230Level 8, 1 Market Street, Sydney NSW 2000T (02) 9290 8400 F (02) 9290 2061www.ipart.nsw.gov.au

Contents

1 Introduction 21.1 Submitting your application 3

2 Focus on Integrated Planning and Reporting 4

3 Assessment criterion 1: Need for the variation 53.1 Community needs 73.2 Alternative funding options 93.3 State of financial sustainability 103.4 Capital expenditure review 12

4 Assessment criterion 2: Community awareness and engagement 124.1 The consultation strategy 144.2 Alternatives to the special variation 154.3 Feedback from the community consultations 154.4 Considering the impact on ratepayers 164.5 Considering the community’s capacity and willingness to pay 16

5 Assessment criterion 3: Impact on ratepayers 175.1 Impact on rates 175.2 Affordability and community capacity to pay 185.3 Other factors in considering reasonable impact 19

6 Assessment criterion 4: Assumptions in Delivery Program and LTFP 19

7 Assessment criterion 5: Productivity improvements and cost containment strategies 21

8 Other information 228.1 Previous Instruments of Approval 228.2 Reporting to your community 238.3 Council resolution to apply to IPART 23

9 Checklist of contents 24

10 Certification 25

Special Variation Application Form – Part B IPART 1

1 IntroductionEach council must complete this application form (Part B) in order to apply for a special variation to general income. The same Part B form is to be used for applications made either under section 508Aor under section 508(2) of the Local Government Act 1993.

IPART assesses each application against the criteria set out in the Division of Local Government (DLG) Guidelines for the preparation of an application for a special variation to general income for 2014/2015(the Guidelines). Councils should refer to these guidelines before completing this application form. They are available at www.dlg.nsw.gov.au.

We also publish Fact Sheets on our role in local government rate setting and special variations and on the nature of community engagement for special variation applications. The latest Fact Sheets on these topics are dated September 2013. They are available on our website at www.ipart.nsw.gov.au.

Councils must complete this Part B form with a relevant Part A form, also posted on our website. The relevant Part A form is either: Section 508(2) Special Variation Application Form 2014/15 – Part A for a

single percentage variation under section 508(2) or Section 508A Special Variation Application Form 2014/15 – Part A for

more than one percentage variation under section 508A.

The amount of information to be provided is a matter for judgement, but it should be sufficient for us to make an evidence-based assessment of the council’s application against each criterion. This form includes some questions that the application should address, and guidance on the information that we require. As a general rule, the higher the cumulative percentage increase requested, and the greater its complexity, the more detailed and extensive will be the information required.

1.1 Completing the application form

To complete this Part B form, insert the council’s response in the boxes and the area which is highlighted, following each section or sub-section.

Councils may submit additional supporting documents as attachments to the application. The attachments should be clearly identified in Part B and cross-referenced. We prefer to receive relevant extracts rather than complete publications, unless the complete publication is relevant to the criteria. Please provide details of how we can access the complete publication should this be necessary.

2 IPART Special Variation Application Form – Part B

http://www.ipart.nsw.gov.au/

http://www.dlg.nsw.gov.au/

We may ask for additional information to assist us in making our assessment. If this is necessary, we will contact the nominated council officer.

This application form consists of: Section 2 - Focus on Integrated Planning and Reporting Section 3 – Assessment criterion 1 Section 4– Assessment criterion 2 Section 5– Assessment criterion 3 Section 6 – Assessment criterion 4 Section 7– Assessment criterion 5 Section 8 - Other information Section 9 – Checklist of contents Section 10– Certification.

1.2 Submitting the application

IPART asks that all councils intending to apply for a special variation use the Council Portal on our website to register as an applicant council and to submit their application.

The Portal is at http://www.ipart.nsw.gov.au/Home/Industries/Local_Govt. A User Guide for the Portal will assist you with the registration and online submission process.

Councils intending to submit an application should notify us of their intention to apply by cob Friday 13 December 2013.

Councils should also submit their applications, both Part A and Part B and supporting documents, via the Portal. File size limits apply to each part of the application. For Part B the limit is 10MB. The limit for the supporting documents is 120MB in total, or 70MB for public documents and 50MB for confidential documents. These file limits should be sufficient for your application. Please contact us if they are not.

We also ask that councils also submit their application to us in hard copy (with a table of contents and appropriate cross referencing of attachments). Our address is:

Local Government TeamIndependent Pricing and Regulatory TribunalPO Box Q290QVB Post Office NSW 1230


http://www.ipart.nsw.gov.au/files/948b8fb1-2e6e-4647-b9d3-a10000a2552a/Local_Government_-_Council_Portal_User_Guide_-_November_2012.pdf

http://www.ipart.nsw.gov.au/Home/Industries/Local_Govt

Level 17, 1 Market Street, Sydney NSW 2000.

We must receive your application via the Council Portal and in hard copy no later than cob Monday 24 February 2014.

We will post all applications (excluding confidential documents) on our website. Councils should also post their application on their own website for the community to read.

2 Focus on Integrated Planning and Reporting

How a council considers and consults and engages on a special variation as part of its Integrated Planning and Reporting (IP&R) processes is fundamental to our assessment of the application for a special rate variation. Such a focus is clear from DLG’s September 2013 Guidelines.

The key relevant IP&R documents are the Community Strategic Plan, Delivery Program, Long Term Financial Plan and, where applicable, Asset Management Plan.

A council’s suite of IP&R documents may also include supplementary and/or background publications used within its IP&R processes. As appropriate, you should refer to these documents to support your application for a special variation.

Briefly outline how the council has incorporated the special variation into its IP&R processes. Include details of and dates for community consultation, key document revisions, exhibition period(s) and the date(s) that the council adopted the relevant IP&R documents.

Council held a strategic planning workshop in February 2013 where a budget presentation by management was held along with discussion of the Draft Tcorp financial sustainability and benchmarking report on Council [Attachment 4 (a) to (c)]. It was decided then that Council should apply for a permanent Special Rate Variation from the 2014/15 financial year to ensure its longer term financial sustainability.

Council held further budget meetings in November 2013 where it was decided to apply for a 19% SRV and to engage the community through a variety of measures. Community meetings were held in Werris Creek and Quirindi on the 2nd and 3rd of December 2013 [Attachment 5 (b)]. An independent community survey of 200 residents was conducted by Micromex Pty Ltd during December [Attachment 6]. Media releases [Attachment 5 (b)], a newsletter to all residents [Attachment 5 (d)], use of Facebook and Twitter and Council’s website were


other means used to engage the community. On December 18th following feedback from the community engagement Council adopted its IP&R documents with a reduction of the SRV to 12.5% along with a corresponding reduction in capital works.

The IP&R Documents were then placed on public exhibition from the 21st December 2013 until 4th February 2014 and with only one submission received and that by the General Manager, Council formally adopted the IP&R documents on the 5 th February 2014, inclusive of the changes recommended in the General Manager’s submission.

3 Assessment criterion 1: Need for the variation

In the DLG Guidelines, criterion 1 is:

The need for and purpose of a different revenue path (as requested through the special variation) is clearly articulated and identified through the council’s IP&R documents, including its Delivery Program and Long Term Financial Plan. Evidence for this criterion could include evidence of community need/desire for service levels/project and limited council resourcing alternatives and the Council’s financial sustainability conducted by the NSW Treasury Corporation. In demonstrating this need councils must indicate the financial impact in their Long Term Financial Plan applying the following two scenarios:

Baseline scenario – revenue and expenditure forecasts which reflects the business as usual model, and exclude the special variation, and

Special variation scenario – the result of approving the special variation in full is shown and reflected in the revenue forecast with the additional expenditure levels intended to be funded by the special variation.

The response in this section should summarise the council’s case for the proposed special variation. It is necessary to show how the council has identified and considered its community’s needs, alternative funding options and the state of its financial sustainability.

The criterion states that all these aspects must be identified and articulated in the council’s IP&R documents.

At the highest level, please indicate the key purpose(s) of the special variation by marking one or more of the boxes below with an “x”.

Maintain existing services

Enhance financial sustainability x


Environmental works

Infrastructure maintenance / renewal x

Reduce infrastructure backlogs x

New infrastructure investment

Other (specify)

Summarise below the council’s need for the special variation. Comment on how the need is captured in the IP&R documents, especially the Long Term Financial Plan (LTFP) and the Delivery Program, and, where appropriate, the Asset Management Plan (AMP). Note that the LTFP is to include both a ‘baseline scenario’ and an ‘SV scenario’ as defined in the Guidelines.

There have been a number of reviews of Local Government in recent years highlighting the financial problems of Local Government and the backlog of infrastructure works. The Independent Local Government Review Panel Report also highlights the need for Council’s to maximise their own source income and taxation revenue to be financially sustainable as there are no “pots of gold’ from other tiers of Government.

At the same time the NSW Treasury Corp (Tcorp) reviewed the last three years’ financial statements of all councils and determined that this Council was financially weak with a negative outlook [Attachment 4 (a) to (c)]. Independent community surveys over the last ten years all show that the number one priority of residents by far, is for improved roads throughout the shire.

Comparisons of average residential rates with neighbouring Councils showed LPSC to be below the average with room to seek a 12.5% SRV and still be below the average of the majority of neighbouring Councils [Attachment 5 (a)].

The 2012/13 Profit and Loss statement showed a $2.929m deficit before capital grants and contributions and all else being equal Council is proposing to reach the Tcorp operating ratio of -4% for the 2014/15 year onwards through this SRV, cost containment measures and other fee increases. Council will then continue to work towards at least a break-even P&L in future years.

Council has an expiring 6.5% SRV [Attachment 8] which has been utilised on improving the road network as identified in community surveys over the last ten years. It is proposed to continue this 6.5% permanently with funds raised to be spent on capital works on roads and associated infrastructure. In addition a further 3.7% above rate pegging is being requested to further upgrade infrastructure and reduce the backlog of works.

The need for the SRV is outlined in the Mayor’s message in the Community Strategic Plan [Attachment 1] and detailed in Part 4 - The Need for a New


Revenue Path of the Delivery Program [Attachment 2, pages 6 to 11] and also in the Long Term Financial Plan {Attachment 3, pages 4, 5, 11, 12 and 17 to 21} which contains the baseline scenario impacts with no SRV increase and a second scenario with the 12.5% SRV increase. The LTFP also contains detailed ten year budgets for each scenario.

Please also refer to Attachment 12 (d): “Tables SRV Inc & Exp Change”.

This details the SRV additional income and its allocation.

If the special variation seeks funding for contributions plan costs above the development contributions cap, refer to Box 3.1.1

033Error! No text of specified style in document.031Special variations for development contributions plan costs above the developer cap

For costs above the cap in contributions plans, a council must provide: a copy of the council’s section 94 contributions plan a copy of the Minister for Planning and Infrastructure’s response to IPART’s

review and details of how the council has subsequently amended the contributions plan

details of any other funding sources that the council is proposing to seek to use

any reference to the proposed contributions (which were previously to be funded by developers) in the council’s planning documents (eg, LTFP and Asset Management Plans (AMP)

any necessary revisions to financial projections contained in the LTFP and AMP to reflect the special variation.

If the special variation seeks funding for contributions plan costs above the development contributions cap, set out below: details explaining how the council has established the need for a

special variation to meet the shortfall in development contributions, and

how this is reflected in the council’s IP&R documents.

NOT APPLICABLE

1 See Planning Circular 10-025 dated 24 November 2010 at www.planning.nsw.gov.auand for the most recent Direction issued under section 94E of the Environmental Planning and Assessment Act 1979. See also Planning Circular PS 10-022 dated 16 September 2010.


http://www.planning.nsw.gov.au/

3.1 Community needs

Indicate how the council has identified and considered the community’s needs and desires in relation to matters such as levels of service delivery and asset maintenance and provision in deciding to apply for a special variation. The application should include extracts from, or references to, the IP&R document(s) that demonstrate how the council meets this criterion.

Section 9 of the Community Strategic Plan provides a statement of levels of service [Attachment 1, page 15]. At this time, despite the redundancies and cost savings it is not anticipated that the community will notice any reduction in service levels. It is expected that they will notice an increase in service levels on roads and associated infrastructure as the proposed SRV funds will be spent entirely on this purpose (excluding the rate peg component).

Pages 32 – 36 of the Community Strategic Plan [Attachment 1] detail the outcomes of community surveys and community meetings where the levels of services and infrastructure requirements were discussed. When asked what infrastructure and services Council should focus on over the next 10 years (page 33) 45% of responses wanted improvement of roads with the next highest response at 12% for creation of local employment opportunities. It is very clear to Council what the community wants and that is road improvements.

The independent community survey results are an attachment to this application. The results are summarised on Page 31 of the Community Strategic Plan [Attachment 1] and below:

“The Community Survey of 200 residents conducted independently by Micromex Research Pty Ltd in December 2013 revealed the following results:

That 74% were at least somewhat supportive or supportive of continuing the 6.5% expiring special rate variation

39% were somewhat supportive or supportive of the full 19% rate increase while 61% were not supportive of the increase.

The lead in questions revealed that 77% were at least somewhat satisfied with the quality of local infrastructure.

76% were at least somewhat satisfied with the quality of long term planning for local infrastructure.

The survey showed that 94% indicated it was important for Council to implement plans and programs that will maintain or renew community infrastructure.


The feedback from those who were not supportive of the 19% rate increase is that the rate is too high or they haven’t noticed any improvements from the 6.5% already in place.

As a result of this community consultation Council, at its Ordinary Meeting held 18th December, 2013 resolved to reduce the rate increase from 19% to 12.5% and thus lessen the rate burden on the community. Further cost savings and fee increases of around $471,000 were foreshadowed and subsequently adopted at the Special Meeting of Council held 5th February 2014.”

Based on the representative independent survey 74% of respondents were supportive of continuing the expiring 6.5% SRV. If this is acceptable then the additional increase above the rate peg and expiring SRV is now only 3.7% compared to 10.2% in the survey. It is considered that this increase would also be acceptable and much more affordable for the community.

3.2 Alternative funding options

Explain how the decision to seek higher revenues was made after other options such as changing expenditure priorities or using alternative modes of service delivery were examined. Also explain the range of alternative revenue/financing options you considered and why the special variation is the most appropriate option. For example, typically these options would include introducing new or higher user charges and increase council borrowing, but may include private public partnerships or joint ventures.

Provide extracts from, or references to, the IP&R document(s) which show how the council considered the alternatives.

Section 4 on Page 10 of the Delivery Program [Attachment 2] has a subsection titled past Improvements and Cost Containment Measures and is reproduced below:

“Council has made a number of expenditure reductions in its 2013/14 Budget including making two full time positions redundant, not replacing council vehicles and reducing costs throughout departments to the tune of $325,000 which is equivalent to a 5 % rate increase. In addition, in October 2013, Council engaged the YMCA to operate the Quirindi Recreation Centre and two swimming pool complexes with the hope that it will in the future reduce running costs to be paid by Council.

Following a strategic examination of service levels over the next 18 months by management further cost savings of $471,000 were identified during the public exhibition period of this plan and subsequently adopted by Council at the Special Council Meeting held 5th February 2014. These savings included 3 redundancies and a further 4 positions lost through natural attrition among various other cost reductions and fee increases.


Other measures to reign in costs and generate further revenue include Council staff developing a suite of multi award winning Tr@ceR data management and property tracking programs which have been sold to numerous other Councils with the profits being utilised to upgrade the Administration Centre customer service areas, toilets and foyer thus saving ratepayers this cost.

Council is also looking at resource sharing with other organisations and councils to generate cost savings and has recently entered into a water and sewer alliance with other Namoi Councils. Council is a member of various organisation such as the Weight of Loads Roads Group, Northern Inland Weeds Advisory Council, Central Northern Libraries, North West Regional Community Care, Liverpool Ranges Rural Fire Service, New England North West Arts Group, Namoi Regional Waste Group, New England North West Tourism, Kamilaroi Highway Group, Local Government Procurement for the purchase of goods and services, etc, which all share costs and information and therefore reduce the cost burden on ratepayers .

Many volunteers are encouraged and assisted by Council to undertake parks and cemetery maintenance or work at the Royal Theatre, Australian Railway Museum, Visitor Information Centre, Libraries and Home and Community Care. This volunteer work saves ratepayers over $200,000 per annum.

Council’s Asset Management Plans are also being refined each year and it is anticipated further cost savings with regard to depreciation expense can be made along with the disposal of some unwanted land and building assets which will further reduce maintenance costs and depreciation expenses.”

The NSW Tcorp on Page 5 of its Final Report [Attachment 4 (c)] recommended against Council utilising loan borrowings due to the inability to have sufficient discretionary funds to repay loans. Council agrees with this recommendation and has not included any General Fund loans in the LTFP.

Council has increased fees in its 2014/15 Operational Plan including sporting ground and showground fees by 20% and cemetery fees by 30%.

3.3 State of financial sustainability

The special variation may be intended to improve the council’s underlying financial position, or to fund specific projects or programs of expenditure, or a combination of the two. We will consider evidence about the council’s current and future financial sustainability.

The application should set out the council’s understanding of its current state of financial sustainability, as well as long-term projections based on alternative scenarios and assumptions about revenue and expenditure.


Such evidence can be drawn from the LTFP and from any external assessment, eg by auditors or TCorp.

Explain the council’s view of its financial sustainability as it relates to the application for a special variation.

The Tcorp Report [Attachment 4 (c)] for LPSC rated Council as “weak” with a “negative outlook”. Council’s average residential rates are much lower than its neighbours and therefore Council has the opportunity to increase average rates up to a level to address its current “weak” rating.

Council has recently gone through a fair amount of pain internally in order to address a loss before capital grants and contributions of $4.908m in the year ended June 30th 2012 financial statements. The 2012/13 financial statements show a marked improvement by reducing the loss to $2.929m and it is expected that the 2013/14 statements will show a further reduction in the deficit. With the changes adopted for the 2014/15 Long Term Financial Plan [Attachment 3] including approval of the SRV it is expected that LPSC will fall within the Tcorp benchmark operating ratio of -4% [Attachment 4 (c), page 25].

Explain how TCorp’s recent Report on the council’s financial sustainability is relevant in supporting the decision to apply for a special variation.

As stated above the Tcorp Report [Attachment 4 (c)] for LPSC is very relevant in Council’s decision to seek a SRV and it would have done this earlier had it not been for the expiring SRV at June 30th 2014 [Attachment 8] and the need to submit another SRV. Council thought it more prudent to wait and do the SRV’s in one go effective July 2014.

The financial performance indicators used by Tcorp [Attachment 4 (c)] also required Council to undertake more capital infrastructure works, increase its own source income and vastly improve its profit and loss statement before capital grants and contributions – approval of the SRV will greatly assist council in this regard.

How will the special variation affect the council’s key financial indicators over the 10-year planning period? Key indicators may include: Operating balance ratio excluding capital items (ie, net operating result

before capital as percentage of operating revenue before capital grants and contributions)


Unrestricted current ratio (the unrestricted current assets divided by unrestricted current liabilities)

Rates and annual charges ratio (rates and annual charges divided by operating revenue)

Debt service ratio (net debt service cost divided by revenue from continuing operations)

Broad liabilities ratio (total debt plus cost to clear infrastructure backlogs (Special Schedule 7) divided by operating revenue)

Asset renewal ratio (asset renewals expenditure divided by depreciation, amortisation and impairment expenses).

Please refer to attachments:

1. Attachment 12 (c) -“SRV Part B answers on performance indicators” (Word .doc)

2. Attachment (12 (b) - “Fin Reports & Fin Performance Indicators with SRV” (excel.xls)

3.4 Capital expenditure review

Councils undertaking major capital projects are required to comply with the DLG’s Capital Expenditure Guidelines, as outlined in DLG Circular 10-34. A capital expenditure review is required for projects that are not exempt and cost in excess of 10% of council’s annual ordinary rates revenue or $1 million (GST exclusive), whichever is the greater. A capital expenditure review is a necessary part of a council’s capital budgeting process and as such should have been undertaken as part of the Integrated Planning and Reporting requirements in the preparation of the Community Strategic Plan and Resourcing Strategy.

Does the proposed special variation require you to do a capital expenditure review in accordance with DLG Circular to Councils, Circular No10-34 dated 20 December 2010? Yes No X

If Yes, has a review been done and submitted to DLG? Yes No


4 Assessment criterion 2: Community awareness and engagement


Evidence that the community is aware of the need for and extent of a rate rise. This must be clearly spelt out in IP&R documentation and the council must demonstrate an appropriate variety of engagement methods to ensure opportunity for community awareness/input. The IP&R documentation should canvas alternatives to a rate rise, the impact of any rises upon the community and the council’s consideration of the community’s capacity and willingness to pay rates. The relevant IP&R documents must be approved and adopted by the council before the council seeks IPART’s approval for a special variation to its general revenue.

To meet this criterion, councils must provide evidence from the IP&R documents2 that the council has: Consulted and engaged the community about the special variation

using a variety of engagement methods and that the community is aware of the need for, and extent of, the requested rate increases

considered and canvassed alternatives to the special variation provided opportunities for input and gathered input/feedback from the

community about the proposal considered the impact of rate rises on the community considered the community’s capacity and willingness to pay.

In assessing the evidence, we will consider how transparent the engagement with the community has been, especially in relation to explaining: the proposed cumulative rate increases including the rate peg

(including in both percentage and dollar terms) the annual increase in rates that will result if the special variation is

approved in full (and not just the increase in daily or weekly terms) the size of any expiring special variation (see Box 4.1 below) alternative rate levels that would apply without the special variation proposed increases in any other council charges (eg, waste

management, water and sewer), especially if these are likely to exceed the increase in the CPI.

044Error! No text of specified style in document.042 Where a council is renewing or replacing an expiring special variation

2 The relevant documents are the Community Strategic Plan, Delivery Program, Long Term Financial Plan and, where applicable, Asset Management Plan


The council should have explained to its community: that there is a special variation due to expire at the end of this financial

year or during the period covered by the proposed special variation that, if the special variation were not approved so that only the rate peg

applied, the year-on-year change in rates would be lower, or that rates may fall

if applicable, that the expiring special variation is being continued (in full or in part), in the sense that it is being replaced with another that may be either temporary or permanent, or that the value is included in the percentage increase being requested in the following year.

More information about how community engagement might best be approached may be found in the DLG Guidelines, the IP&R manual, and our Fact Sheet Community Awareness and Engagement, September 2013.

4.1 The consultation strategy

Provide details of the consultation strategy undertaken, including the range of methods used to inform the community about the proposed special variation and to engage with the community and obtain community input and feedback on it. The range of engagement activities could include media releases, mail outs, focus groups, random or opt-in surveys, online discussions, public meetings, newspaper advertisements and public exhibition of documents.

Please provide relevant extracts of the IP&R documents that explain the council’s engagement strategy and attach relevant samples of the council’s consultation material.

Council’s engagement strategy is detailed on pages 27 and 28 of the Community Strategic Plan (CSP) [Attachment 1]. The SRV proposal is considered level 1- High Impact on the Shire and the matrix shows the various types of engagement required by Council.

Council’s community engagement strategy was to distribute a newsletter to residents [Attachment 5 (d)], hold public meetings and a business community meeting, seek views on our website, Facebook and Twitter and conduct an independent community survey of a sample of 200 persons in December 2013 [Attachment 6]. This was to ensure the principles of social justice comprising equity, participation, access and rights were adhered to.

Pages 29, 30 & 31 of the CSP [Attachment 1] provide examples of comments from the community meetings, Facebook, and the independent community survey.


Copies of newspaper reports, letters to the editor, the mail out newsletter to all residents, the handout at community meetings along with the PowerPoint presentation and the results of the community survey are attached to this application [Attachments 5 (a) to (e) and 6]. There were also numerous television and radio interviews undertaken by Council representatives which were not recorded.

4.2 Alternatives to the special variation

Indicate the range of alternatives to the requested special variation that the council considered and how you engaged your community about the various options.

The only alternative offered was no Special Rate Variation so as to avoid any confusion and give the community a clear choice. The community survey outlined the differences between the two alternatives as does the Delivery Program on Page 7 [Attachment 2]. Council advised that if it didn’t get the SRV then service levels would drop and expenditure on roads would be reduced by the amount of lost rate revenue. Alternatively the SRV if approved would be allocated to continuing the current level of road works plus an additional $228,000 from the 3.7% increase above rate pegging.

4.3 Feedback from the community consultations

Summarise the outcomes of, and feedback from, your community engagement activities. Such outcomes could include the number of attendees at events and participants in online forums, as well as evidence of media reports and other indicators of public awareness of the council’s intentions. Where applicable, provide evidence of responses to surveys, particularly the level of support for specific programs or projects, levels and types of services, investment in assets, as well as the options proposed for funding them by rate increases.

Where the council has received submissions from the community relevant to the special variation during the engagement process, the application should set out the views expressed in those submissions. It should also


identify and document any action the council has taken, or will take, to address issues of common concern.

Feedback from community consultation is detailed on Pages 29-31 of the CSP [Attachment 1]. Comments have also been quoted in the Community Survey results document attached [Attachment 6].

Generally and as expected there was opposition to the 19% increase with 61% of respondents in the community survey opposed to the rate increase. Some 70 persons attended each of the two public meetings and generally there was opposition to the rate increase. The business community meeting was attended by some 60 persons and there was not the opposition expected after it was explained that they are already paying 6.5% of the 19% and that a further 2.5% rate pegging was also included.

There were not many letters to the editor regarding the SRV (copies attached with media reports) [Attachment 5 (c)] with some being rather positive and understanding of Council’s financial dilemma. Facebook comments were generally opposed to the increase.

Following Council’s decision to reduce the proposed SRV increase to 12.5% due to the opposition to the 19% SRV there have been very few if any comments on Facebook or in the media. There were no submissions to the IP&R documents following advertising for 28 days except one from the General Manager of LPSC. The community appears to have accepted the proposed 12.5% especially after Council’s slashing of the budget to make up for the lost 6.5% SRV (19%-12.5%)

4.4 Considering the impact on ratepayers

Indicate how the council assessed the impact of the special variation on ratepayers, and where this was addressed within the community awareness and engagement processes. Where the impact will vary across different categories and/or sub-categories of ratepayers, the council should consider the circumstances of the various different groups.

Page 7 of the Delivery Program [Attachment 2] details the impacts of Scenario 2 – 12.5% SRV on the various categories of rates. As can be seen from the table in Scenario 2 the increases per week equate in most cases to the cost of a cup of coffee or less. The business and farmland rates are also tax deductible so the impact is even less in those categories. These increases are considered to be reasonable when looking at a resident’s capacity to pay, the benefits to be received through increased roadwork upgrades and the higher level of average residential rates imposed by neighbouring Councils.

This scenario 2 was explained at the community meetings and in the community survey however Scenario 2 contained the proposed 19% SRV. There has been


no further survey or community meetings following the reduction of the SRV to 12.5% nor has there been any further comment from the community.

4.5 Considering the community’s capacity and willingness to pay

Indicate how the council has assessed the community’s capacity to pay for the rate increases being proposed, and also assessed its willingness to pay.

Evidence on capacity to pay could include a discussion of such indicators as SEIFA rankings, land values, average rates, disposable incomes, the outstanding rates ratio and rates as a proportion of household/business/farmland income and expenditure, and how these measures relate to those in comparable council areas. As many of these measures are highly aggregated, it may also be useful to discuss other factors that could better explain the impact on ratepayers affected by the proposed rate increases, particularly if the impact varies across different categories of ratepayers.

Council has assessed the community’s capacity to pay primarily from comparing its average residential rates to its neighbours such as Gunnedah, Moree and Narrabri where LPSC is considerably lower even though the demographics and facilities and services provided to its residents are very similar between the Shires – primarily rich agriculture and emerging mining shires. A comparison of the rates is shown in the attached handout document [Attachment 5 (a)] distributed at the Community Meetings and attached as a document (and this table compared rates with the 19% SRV included – not the 12.5%).

5 Assessment criterion 3: Impact on ratepayers


The impact on affected ratepayers must be reasonable, having regard to both the current rate levels, existing ratepayer base and the proposed purpose of the variation. Council’s IP&R process should also establish that the proposed rate increases are affordable having regard to the local community’s capacity to pay.

We are required to assess whether the impact on ratepayers of the council’s proposed special variation is reasonable. To do this, we are


required to take into account current rate levels, the existing ratepayer base and the purpose of the special variation. We must also assess whether the council’s IP&R process established that the community could afford the proposed rate rises.

5.1 Impact on rates

Much of the quantitative information we need on the impact of the special variation on rate levels will already be contained in Worksheet 5 of Part A of the application.

To assist us further, the application should set out the rating structure under the proposed special variation, and how this differs from the current rating structure, which would apply if the special variation is not approved.

We recognise that a council may choose to apply an increase differentially among categories of ratepayers. However, you should explain the rationale for applying the increase differentially among different categories and/or subcategories of ratepayers, particularly in light of the purpose of the special variation. This will be relevant to our assessment of the reasonableness of the impact on ratepayers.

The SRV has been applied evenly across all categories. Rating schedules for Scenario 1 and 2 are detailed in the Operational Plan on pages 9 and 9A.The average rates for each category can be compared by viewing the last column on each spreadsheet. The 2 tables are attached to this application [Attachment 11].

5.1.1 Minimum Rates

The special variation may affect ordinary rates, special rates and minimum rates.

Does the council have minimum rates? Yes No X

If Yes, explain how the proposed special variation will apply to the minimum rate of any ordinary and special rate, and any change to the proportion of ratepayers on the minimum rate for all relevant categories that will occur as a result.

So that we can assess the reasonableness of the impact on minimum ratepayers, briefly explain the types of ratepayers that are on minimum rates, and the rationale for the proposed impact of the special variation on minimum rate levels.


Not Applicable

5.2 Affordability and community capacity to pay

Show how your IP&R processes have established that the proposed rate rises are affordable for your community, and that affected ratepayers have the capacity to pay the higher rate levels. (Indicators considered in this context may be similar to those cited under criterion 2.)

Page 7 of the Delivery Program [Attachment 2] details the impacts of Scenario 2 – 12.5% SRV on the various categories of rates. As can be seen from the table in Scenario 2 the increases per week equate in most cases to the cost of a cup of coffee or less. The business and farmland rates are also tax deductible so the impact is even less in those categories. These increases are considered to be reasonable when looking at a resident’s capacity to pay, the benefits to be received through increased roadwork upgrades and the higher level of average residential rates imposed by neighbouring Councils.

This scenario 2 was explained at the community meetings and in the community survey however Scenario 2 contained the proposed 19% SRV. There have been no further survey or community meetings following the reduction of the SRV to 12.5% nor has there been any further comment from the community.

There were no public submissions and no-one attended the Special Meeting on the 5th February to object to the adoption of the IP&R documents and the 12.5% rate increase and this indicates to Council that the SRV of 12.5% is acceptable, especially when it is considered that ratepayers are already paying the expiring SRV of 6.5% and will have to pay the rate peg amount of 2.3%. The real additional rates increase will only be 3.7%.

5.3 Other factors in considering reasonable impact

In assessing whether the overall impact of the rate increases is reasonable we may use some of the same indicators that you cite in section 5.2 above. In general, we will consider indicators such as the local government area’s SEIFA index rankings, average income, and current rate levels as they relate to those in comparable councils. We may also consider how the council’s hardship policy might reduce the impact on ratepayers.

5.3.1 Addressing hardship

In addition to the statutory requirement for pensioner rebates, most councils have a policy, formal or otherwise.


Doe the council have a Hardship Policy? Yes X No

If Yes, is it identified in the council’s IP&R documents? Yes X No

Please attach a copy of the Policy and explain who the potential beneficiaries are and how they are addressed. Policy attached

Does the council propose to introduce any measures to limit the impact of the proposed special variation on various groups? Yes X No

Provide details of the measures to be adopted, or alternatively, explain why no measures are proposed.

The potential beneficiaries of the Hardship policy [Attachment 7] are any residential or farmland ratepayers suffering hardship and who are unable to pay their rates and charges. Measures to limit the impact on rate payers include waiving of rates and charges and interest accrued and extended rate repayment plans to be negotiated with individual ratepayers.

6 Assessment criterion 4: Assumptions in Delivery Program and LTFP

The DLG Guidelines state this criterion as follows:

The proposed Delivery Program and Long Term Financial Plan must show evidence of realistic assumptions.

Summarise below the key assumptions adopted by the council and indicate where they are set out in your Delivery Plan and LTFP. We will need to assess whether the assumptions are realistic. For your information, we will consider such matters as: the proposed scope and level of service delivery given the council’s

financial outlook and the community’s priorities estimates of specific program or project costs projections of the various revenue and cost components.

To also assist us, identify any in-house feasibility work, industry benchmarks or independent reviews that have been used to develop assumptions in the Delivery Program and LTFP if these are not stated in those documents.

Key assumptions are as follows for Scenario 2 [see Attachment 2, page 9]:


Assumptions:

Operating Revenue• The current expiring Special Rate Variation of 6.5% is retained plus an additional 3.7% variation plus the 2.3% rate peg take effect from 2014/15. This allows additional revenue to be spent on roads to meet expected levels of service desired by the community as evidenced in Community Surveys and for Council to become more financially sustainable in the long term.• Other Rates, Reimbursements and Other Revenue have been increased by 3.0%.• User Charges and Commercial Activity Revenue have been increased by 3.0% • General Purpose Grants (mostly the Financial Assistance Grant) have been increased by 3.0% however these movements can be inconsistent.• Statutory Charges have been increased by 3.0% however these movements are also inconsistent.• Specific Grants and Investments Income have been increased by 3.0% and 4.0% respectively however these are subject to external influences that could cause them to move in either direction.

Operating Expenses• Salaries have been increased by 3.0% and allow for predicted Award and superannuation guarantee levy increases• Electricity, Insurance and Other Expenses have been increased by 3.0% • Materials have been increased by 3.0% and these are also subject to external factors• Loan interest expenses are reflective of the movement in Loan Borrowings

Capital Revenue• Roads Grants have been increased only marginally while other Grants and Contributions have been left static due to possible external influences that could cause them to move in either direction.

Capital Expenditure• Expenditure equivalent to the Special Rate Variation increase has been included in all years and is to be spent on road infrastructure.

The assumptions used are shown on Pages 8 & 9 of the Delivery Program [attachment 2] and on Pages 4 -20 of the LTFP [Attachment 3]. The assumptions are similar to those utilised for the Tcorp review of our forward estimates. On page 24 of the Tcorp Report [Attachment 4 (c)] last dot point it states:

“While taking the above comments into consideration, Tcorp believes Council’s key assumptions within the forecast are deemed to be reasonable”.


7 Assessment criterion 5: Productivity improvements and cost containment strategies

The DLG Guidelines state this criterion as follows:

An explanation of the productivity improvements and cost containment strategies the council has realised in past years, and plans to realise over the proposed special variation period.

In this section, provide details of any productivity improvements and cost containment strategies that you have implemented in the last 2 years (or longer) and any plans for productivity improvements and cost containment during the period of the special variation. These plans, capital or recurrent in nature, must be aimed at reducing costs. Please also indicate any initiatives to increase revenue eg, user charges. Identify how and where the proposed initiatives have been factored into the council’s resourcing strategy (eg, LTFP and AMP).

Where possible, quantify in dollar terms the past and future productivity improvements and savings.

You may also use indicators of efficiency, either over time or in comparison to other relevant councils. We will make similar comparisons using various indicators and the DLG Group data provided to us.

Section 4 on Page 10 of the Delivery Program [Attachment 2] has a subsection titled past Improvements and Cost Containment Measures and is reproduced below:

“Council has made a number of expenditure reductions in its 2013/14 Budget including making two full time positions redundant, not replacing council vehicles and reducing costs throughout departments to the tune of $325,000 which is equivalent to a 5 % rate increase. In addition, in October 2013, Council engaged the YMCA to operate the Quirindi Recreation Centre and two swimming pool complexes with the hope that it will in the future reduce running costs to be paid by Council.

Following a strategic examination of service levels over the next 18 months by management further cost savings of $471,000 were identified during the public exhibition period of this plan and subsequently adopted by Council at the Special Council Meeting held 5th February 2014. These savings included 3 redundancies and a further 4 positions lost through natural attrition among various other cost reductions and fee increases.

Other measures to reign in costs and generate further revenue include Council staff developing a suite of multi award winning Tr@ceR data


management and property tracking programs which have been sold to numerous other Councils with the profits being utilised to upgrade the Administration Centre customer service areas, toilets and foyer thus saving ratepayers this cost.

Council is also looking at resource sharing with other organisations and councils to generate cost savings and has recently entered into a water and sewer alliance with other Namoi Councils. Council is a member of various organisation such as the Weight of Loads Roads Group, Northern Inland Weeds Advisory Council, Central Northern Libraries, North West Regional Community Care, Liverpool Ranges Rural Fire Service, New England North West Arts Group, Namoi Regional Waste Group, New England North West Tourism, Kamilaroi Highway Group, Local Government Procurement for the purchase of goods and services, etc, which all share costs and information and therefore reduce the cost burden on ratepayers .

Many volunteers are encouraged and assisted by Council to undertake parks and cemetery maintenance or work at the Royal Theatre, Australian Railway Museum, Visitor Information Centre, Libraries and Home and Community Care. This volunteer work saves ratepayers over $200,000 per annum.

Council’s Asset Management Plans are also being refined each year and it is anticipated further cost savings with regard to depreciation expense can be made along with the disposal of some unwanted land and building assets which will further reduce maintenance costs and depreciation expenses.”

In addition to the $471,000 savings identified for 2014/15 and onwards a one off amount of $133,500 for capital purchases was also cut from the 2014/15 Budget.

8 Other information

8.1 Previous Instruments of Approval

If you have a special variation which is due to expire at the end of this financial year or during the period of the proposed special variation, when was it approved and what was its purpose?

Please attach a copy of the Instrument of Approval that has been signed by the Minister or IPART Chairman.

LPSC has a 6.5% expiring SRV which was approved in 2009 for a period of 5 years only. Its purpose was to fund a number of identified road and drainage works. See attachment to this application – Expiring SRV Approval 2009 [Attachment 8]


8.2 Reporting to your community

The Guidelines set out reporting mechanisms that show your accountability to your community. Please tell us how you will go about transparently reporting to the community on the proposed special variation, should it be approved. Also indicate the performance measures you will use to demonstrate how you have used the additional funds (above the rate peg) generated by the special variation.Council will report to the community via various communication means should it be successful with its SRV. These include media releases to all forms of the media in the region, Council’s Facebook and Twitter sites and website, Quarterly newsletter to all residents and a pamphlet explaining the increase to be included with the first rates instalment.

The works to be undertaken utilising the SRV funds will be identified separately in the Long Term Strategic Plan so that residents know exactly where the funds are being spent. The performance measure is completion of the works identified within budget.

In addition the Annual Report will make specific comment on the completion of works funded by the SRV.

8.3 Council resolution to apply to IPART

The Guidelines require the council to have resolved to apply for a special variation. Please attach a copy of the council’s resolution to make a special variation application. Our assessment of the application cannot commence without it.

A copy of the Minutes of Council resolving to apply for the 12.5% SRV is attached as a document to this application [Attachment 9].


9 Checklist of contents

The following is a checklist of the supporting documents to include with your Part B application:

Item Included?Community Strategic Plan [Attachment 1] X

Delivery Program [Attachment 2] X

Long Term Financial Plan [Attachment 3] X

Relevant extracts from the Asset Management Plan N/A

TCorp report on financial sustainability [Attachment 4 (a) to (c)] X

Contributions Plan documents (if applicable) N/A

Media releases, public meeting notices, newspaper articles, fact sheets relating to the rate increase and special variation. [Attachment 5 (a) to (e)]

X

Community feedback (including surveys and results if applicable) [Attachment 6] X

Hardship Policy [Attachment 7] X

Past Instruments of Approval (if applicable) [Attachment 8] X

Resolution to apply for the special variation [Attachment 9] X

Resolution to adopt the Delivery Program [Attachment 10] X


10 Certification

APPLICATION FOR A SPECIAL RATE VARIATION

To be completed by General Manager and Responsible Accounting Officer

Name of council: Liverpool Plains Shire Council

We certify that to the best of our knowledge the information provided in this application is correct and complete.

General Manager (name): Robert HuntSignature and Date: 21st February 2014

Responsible Accounting Officer (name): Michael Urquhart

Signature and Date: 21st February 2014

Once completed, please scan the signed certification and attach it to the Part B form before submitting your application online via the Council Portal on our website.


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