Common Questions

Councils can only increase their rates each year up to a limit determined by the Independent Pricing and Regulatory Tribunal (IPART). This is known as Rate Pegging and is one of the contributing factors preventing Council’s from being able to raise sufficient income to provide the services the community expects. 

If Councils want to apply for an increase larger than the rate peg amount they need to make an application to IPART for a Special Rate Variation.

The criteria for assessing an SRV application include undertaking long term financial planning, ensuring community awareness of the need and extent of the proposed increase in rates, and consideration of the impact on ratepayers and community's capacity to pay any proposed increase. 

More information about the SRV process is available at https://www.ipart.nsw.gov.au/Home/Industries/Local-Government/For-Ratepayers/Special-Variations 

Over the last four-years Council has been implementing a Financial Sustainability Strategy and Roadmap to address the financial issues. 

In 2018 we halved the number of Director positions and cut four Senior Manager roles. (A third Director role has been reintroduced and predominantly funded from Water, Sewer and Waste operations). 

 Other operational changes include:

• Increasing income from Holiday Parks and commercial leases.
• Improved training and staff efficiency via a range of IT systems improvements.
• Saving money previously spent on contractors.
• Improved procurement practices.
• Reducing frequency and cost of hiring specialist machinery. 
• Investing in apprenticeships, traineeships and cadetships to secure government rebates supporting staff costs. 

Council understands there are many financial pressures at the current time. 

Council offers a Pensioner Rebate Scheme, with an annual rebate of $250 set by the NSW Government and available to eligible ratepayers. This fixed rebate amount has not kept pace with inflation and Council continues to lobby for a review of the Pensioner Rebate. 

The Hardship Relief to Ratepayers Policy sets out what Council can do to support the needs of people unable to pay their rates in full on time. This Policy is available on Council’s website.  

The Pensioner Rebate levels and Hardship Relief to Ratepayers Policy will be reviewed and updated to make them as effective as possible before any Special Rate Variation is applied.

Property rating income (excluding water, sewer and waste charges) for the current financial year will bring in just over $23 million, which accounts for only 21% of Council’s General Fund income. 

More than $50 million is forecast to come to the General Fund from capital grants and contributions. 

The income from rates must be directed at meeting community expectations for programs and services that won’t attract grants or other sources of income. In 2023-24 this will include:

• Roads, bridges and stormwater drains, excluding grant funded work ($9.8m) 
• Council vehicles and heavy fleet ($1.3m) 
• Parks and Gardens ($2.7M) 
• Sporting Grounds ($3m) 
• Regulatory Enforcement ($0.7m) 
• Library Services ($1m) 
• Airport ($2m) 
• Governance, Insurances and IT Services ($4.8m) 
• Swimming pools ($1m) 
• Community Development, Customer Service and Communications ($2m) 
• Strategic and Asset Planning ($3.8m) 
• Other public infrastructure and services ($3m).

The total allocation for road infrastructure in 2023-24 is $51.7 million, with around 84% of that coming from grant funding. 

With the millions of dollars received in grant funding Council has been able to replace old infrastructure and deliver new projects like Verge Eden St sports precinct, replacement of timber bridges, upgraded roads and the Mid North Coast High Performance Centre at South West Rocks. 

The annual budgets have been adjusted to reflect depreciation, ensuring Council is putting away enough money each year to maintain and renew those facilities as they reach the end of their lifespan. That allocation for depreciation from the General Fund is $15 million this financial year, more than half the amount collected in rates before a single project is delivered or road replaced. 

An SRV won’t mean we can afford fancy new facilities or mass upgrades to roads. It means we can continue to maintain service levels as close to current levels and fund the ongoing operations of Council. 

We will be able to reduce the reliance on external grant funding and have a planned approach to putting money away for asset renewal, which spreads the burden across multiple generations. 

Pending the level of the SRV that is applied for we may be able to increase how often we maintain existing roads, bridges and community buildings and may be able to maintain them to a higher standard, making them last longer which is an important part of financial sustainability. 

The long-term financial planning and organisational review identified several years ago that Council was forecasting unsustainable operating deficits.  The income available through rates, taking into account the restrictions on how Council can set rates, is not enough to cover the cost of the services the community expect and ensure the existing assets are maintained and replaced once worn out.

Multiple years of natural disasters and Covid19 meant that significant grant funding was available to deliver a range of services, effectively delaying the opportunity to consider a rate rise.

The rising cost of materials, labour and contractors; increases in interest repayments and significant increases in maintenance and renewal costs of the many grant funded projects we’ve been able to complete in the last three years, have all contributed negatively to the historical financial issues originally identified.  

Each year Council is required to engage with the community on the draft Operating Plan and budget and then publish the final version. This Plan outlines where Council’s income comes from, including the percentage that is from rates compared to grants and other sources, and what the money will be spent on.

The engagement before the Plan is adopted and the quarterly reporting during the financial year along with the Annual Report are all part of Council's commitment to be transparent with the community.

Council staff are paid according to the Local Government Award and in line with rates of pay in the sector across regional and rural NSW. 

Our goal within our budget constraints is to attract and retain the best possible employees, who contribute to the local community.

Council understands there are many financial pressures at the current time. Unfortunately, these pressures impact Council’s budget as well and have contributed to the financial issues.

Council offers a Pensioner Rebate Scheme and has a Hardship Policy that sets out the process for applying to accommodate the needs of those unable to pay their rates in full on time. 

The Pensioner Rebate levels and Hardship Policy will be reviewed and updated to make them as effective as possible before a Special Rate Variation is applied.

Councils in NSW are grouped by the Office of Local Government to try and create some ways to make comparisons.

Kempsey Shire Council is part of Group 4, classed as a regional town / city and is the 14^th largest in Shire area (based on geographical area) of the Group 4 Councils. Of the 13 Council areas larger than ours, 10 applied for and were successful in having a special rate variation approved for 2023/24. 

• In Group 4 Kempsey has the sixth highest average residential rate charge (data prior to the 2023-24 rate increases).
• From the 2021-22 data of 128 NSW Council’s Kempsey is the 32^nd highest average residential rate. 
• Unlike many regional Council’s Kempsey Shire Council does not have a rating category or income stream from mining businesses.
• Of the 26 Group 4 Councils Kempsey has the 10^th lowest total income generated from rates, due to our relatively small population, which is also 10^th lowest in Group 4. 
• Many metro Councils don’t operate water services and those charges don’t appear on rates notices, making it difficult to quickly compare general fund rates from other areas. 

Comparing Council’s doesn’t easily reflect the differences in services or facilities each Council runs. 

For example, operating Kempsey Airport including depreciation cost $700,000 from last financial year’s budget. While an important facility for emergencies, our Airport is not suitable for passenger flights and therefore can’t generate income like other airports might. Alternatively, the Holiday Parks, which other Councill’s don’t run, do generate income that can be reinvested into the crown reserves. 

This dedicated Our Financial Future engagement site is the central point for information and having a say. 

Make a submission, answer the survey, ask a question through this site. 

Speak to Council staff at pop-up information displays at markets and community facilities through September and October. Check the key dates section of this site for locations. 

Request a Community Briefing so that staff can attend your regular meeting in September or October and make a presentation to your community group or club.

Send an email to ksc@kempsey.nsw.gov.au with your feedback.

Community feedback will be included in the investigation report presented to Councillors at the November 2023 meeting. A decision will be made then on whether to apply for a Special Rate Variation and which option to apply for.

Community will be advised of that decision and feedback will still be taken through to the end of the year.

An application to the Independent Pricing and Regulatory Tribunal (IPART) must be submitted in February 2024. IPART accept community submissions between March and May and a determination is expected in May 2024. Council will then have to adopt the Operating Plan, budget and the rates by the end of June 2024.  

In short being financially sustainable means:

• Being able to cover our existing expenses and the amount those expenses are likely to increase (this includes factoring in things like interest rate fluctuations and changes to the Local Government Award affecting salaries, or further cost shifting from other levels of government onto Councils). 
• Cover new expenses that we know will be required into the future, such as new capital investments. 
• Put enough income away each year to be able to renew existing assets like roads, bridges, playgrounds and community buildings when they become old or worn out (for 2023-24 $15 million from the General Fund has been allocated to depreciation).
• Balance the amount being put away with having enough income left available to deliver the services the community expects at an acceptable level of service. 

The modelling on current income levels shows that Council will have a $103 million deficit over the next 10 years, which is not financially sustainable.