• community

    Your Voice Our Coast

Securing your future with a rate rise

Securing your future with a rate rise

Securing your future with a rate rise

New information as at 22 January 2021

Council is extending the survey options for the community to have their say on a rate rise for the Central Coast.  A second survey with an additional question about the option of ‘no rate rise – rate peg only’ is now open for you to complete.  The updated questions are in question 7 and 8.   The survey closes at 5pm on Monday 1 February 2021. 

This second survey is in response to community feedback that many residents and ratepayers felt restricted in their opportunity to express their views about the option of ‘no rate rise – rate peg only.’

The first survey closed at 9am on 22 January 2021 and over 3,300 surveys were completed.   A report on the first and second survey results will be made publicly available and the feedback will be reported to Council and IPART, including feedback that states a lack of support for a special variation. 

Anyone can complete the second survey, including those who responded to the first survey.

Thank you for your feedback and commentary about this important matter. 

Take the survey


Council has resolved to consider applying to the Independent Pricing and Regulatory Tribunal (IPART) for a rate rise to help with Council’s financial recovery.  This process is called a Special Variation (SV) application.

Council has resolved to consider 2 SV options:

  • Option 1 Temporary Fix Option – 10%

    On 26 November 2020, Council considered applying for a 10% one-off increase to its rate income, remaining in the rate base for 7 years. In 2021-22 this increase would consist of the annual 2% rate peg and a further 8% SV that would be applied once in 2021-22 and will remain in the rate base for seven years. This option forecasts substantial reductions in the levels of service provided to the community and some elimination of services.


    With a 10% increase the average residential increase will be $2.13 a week and the average business increase will be $6.11 a week.
     
  • Option 2 Securing Your Future Option – 15%

    On 14 December 2020, Council considered applying for 15% one-off increase to its rate income, remaining in the rate base permanently. In 2021-22 this increase would consist of the annual 2% rate and a further 13% SV that would be applied once in 2021-22 and will remain permanently in the rate base. This option forecasts the maintenance of the current levels of service.


    With a 15% increase the average residential increase will be $3.20 a week and the average business increase will be $9.30* a week.

For detail on what you will pay under each option, please view the Fact sheet: Impacts on rates and Council services.

How much additional income will each option generate for Council?

The estimated additional ordinary rates income across the proposed options for the next 2 financial years is as follows:

Table showing estimated additional ordinary table rates income for Council across the proposed options for the next 2 financial years

Our rates compared to neighbouring councils

In considering a possible rate variation, Council looked at the rate levels of our neighbouring Councils. Even with a 15% rate increase, Central Coast ratepayers will still be paying less than our neighbours.  

A table of Council’s rates compared to neighbouring councils

Find out what other areas pay in IPART’s Residential Rates Heat Map.

Why we need a rate rise

Council’s current financial situation is due to spending more money than we had coming in, both before and after amalgamation. The money came from restricted funds. The money was not lost rather, it was spent on infrastructure and services that directly benefited the community. In 2019-20 $242M was spent on a capital works, delivering 1,383 projects including a new pipeline between Mardi and Warnervale, resurfacing of 107km of roads, drainage infrastructure and upgrade to wharves, parks, playgrounds and sporting fields.

18 January update

While we understand many in our community do not want a rate rise, this is not a viable option. Council needs a rate rise to repay the restricted funds spent on community infrastructure and services and to deliver a level of service to the community that ensures our assets and essential services are maintained. Council resolved to consider two options - a ten percent rate rise and a fifteen percent rate rise (both including the rate peg of 2%).

How can I have my say?

Online survey

The best way to have your say is via our online survey. The survey closes 5pm on Monday 1 February 2021.

Your responses will be collated and will help inform Council’s final decision in relation to an application to IPART as well as part of a community consultation report provided to IPART. 

If you have difficulty understanding or completing this survey, please call 1300 463 954 for assistance and one of our staff will guide you through the process.

Make a submission to IPART

You can provide your feedback directly to IPART via their website. IPART is accepting submissions until Monday 1 March 2021.

What happens next?

Council will consider the results of both surveys before deciding to proceed with an application to IPART at the 8 February Ordinary Council meeting.

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

Council is proceeding with rate harmonisation as a new rating structure needs to apply for all Central Coast ratepayers from 1 July 2021. This is separate to the IPART SV process. 

Consultation on the new rating structure as well as the Draft Operational Plan and Budget will be publicly exhibited in May 2021 for community feedback.

 

*Council's letter to ratepayers dated 7 January 2021 incorrectly stated that the average business increase was $8.30 a week under Option 2.

Frequently asked questions

What is a Special Variation (SV)?

A Special Variation allows councils to increase rates above the rate peg increase which is set by the Independent Pricing and Regulatory Tribunal (IPART). There are two types of special variations that a council may apply for: 

  • A single year variation
  • A multi-year variation 

Local councils wanting to increase the minimum rate levels - above the rate peg - need to submit an application to the Independent Pricing and Regulatory Tribunal (IPART).  Applications to IPART close on 8 February 2021.

Who is IPART and why do they decide?

IPART is the Independent Pricing and Regulatory Tribunal, a State Government Agency responsible for determining the maximum price increase for a number of utilities and services including local government rates. For more information on IPART visit www.ipart.nsw.gov.au

Why has Council applied for a Special Variation (SV)?

An SV is needed to help address Council’s current financial situation. Council received the Q1 Business Report on progress against Council's 2020-21 Operational Plan at an Extraordinary Meeting held on Wednesday 2 December 2020. The report indicates that Council's projected financial result for the year ending 30 June 2021 will be a loss of $115.1M. At the end of this financial year, accumulated losses over the past four years will be more than $200M. Accumulated debt (including the owed restricted reserves) will be in the order of $565M. 
Council is taking a number of measures to address the financial situation including:  

  • Reducing headcount back to pre-amalgamation numbers from over 2,500 to under 2000 – cost savings of $30M
  • Reducing materials and contracts by $20M
  • Maintaining infrastructure spending at $170M
  • Obtaining $150M in bank loans 
  • Selling $40-$60M in underperforming assets
  • Generating additional revenue

These measures will not be enough to help with financial recovery and an SV is required for the long-term sustainability of Council finances, to repay borrowed restricted funds and for Council to be able to deliver the services the community need and want.

Council is in the current financial situation as it spent more money on capital projects and expenses than it had money coming in. The money was not lost, rather it was spent on infrastructure and services, in fact 1,383 capital projects were delivered. This money came from restricted funds. The community has received significant benefits from this new infrastructure and services.

There have been other significant factors that have impacted Council’s budget including increased in staffing costs resulting from the merger of the two Councils. Both Councils had less staff than they needed, to look ‘fit for the future.’ Wages were also harmonised at amalgamation so that people doing the same job, got the same wages and conditions. A great deal of staff time and energy was needed to harmonise policies and procedures yet only $10M was provided by the State Government for amalgamation costs. Cost shifting by the State Government to Councils impacted Central Coast Council by $45M in the 2017-18 financial year. 2020 was also a year of emergencies – bushfires, storms/flooding, coastal erosion and COVID that has also impacted the budget.

All of these impacts combined is how Council has found itself in its current financial situation. Council is doing everything we can to find savings without impacting service delivery but it will not be possible to continue service delivery without a significant increase in our rates income.  
 

What options are Council looking at for an SV?

The two options are:  

  • Option 1 Temporary Fix Option – 10% - On 26 November 2020, Council considered applying for a 10% one-off increase to its rate income, remaining in the rate base for 7 years. In 2021-22 this increase would consist of the annual 2% rate peg and a further 8% SV that would be applied once in 2021-22 and will remain in the rate base for seven years. This option forecasts substantial reductions in the levels of service provided to the community and some elimination of services.
  • Option 2 Securing Your Future Option – 15% – On 14 December 2020, Council considered applying for 15% one-off increase to its rate income, remaining in the rate base permanently. In 2021-22 this increase would consist of the annual 2% rate and a further 13% SV that would be applied once in 2021-22 and will remain permanently in the rate base. This option forecasts the maintenance of the current levels of service.

For detail on what you will pay under each option, please view the Fact sheet: Impacts on rates and Council services.

How much are rates now?

At the time of amalgamation, the NSW Government introduced a ‘rate freeze’ policy. This meant that Council could not adjust rates beyond the rate peg in the first four years after amalgamation. Under current legislation, Council must maintain one consistent rating structure to ensure a fairer and more equitable system across all rating categories within the Central Coast Local Government Area. That is why the average rates for each area are currently different.   Our community have raised their concerns in the past on this inequity.

The rating structure will be harmonised for the 2021-22 financial year and is a separate process to the SV, but it will also take effect from 1 July 2021 and will only affect general rates.  To help you understand the change the image below shows the difference of the current average and minimal annual rates across the four categories.

So how much more will I pay under the two options SV being considered?

This will vary depending on where you live or the location of your business and the value of your land as determined by the NSW Valuer General. 

We have calculated that the with a 10% increase the average residential increase will be $2.13 a week and the average business increase will be $6.11 and for a 15% increase the average residential ratepayer would pay $3.20 a week and the average business increase will be $9.30* a week (*Correction: Council's letter to ratepayers dated 7 January 2020 incorrectly stated that the average business increase was $8.30 a week under Option 2).

For detail on what you will pay under each option, please view the Fact sheet: Impacts on rates and Council services.

The proposed new rating system and SV is pending approval of Council and the State Government agency, Independent Pricing and Regulatory Tribunal (IPART).

The averages quoted on this page, survey and in the tables have been developed from financial modelling based on current property data and land values used as of 1 July 2020. A new set of land values will be supplied by the NSW Valuer General and applied from 1 July 2023. The final 2021-22 rates levied may vary due to Independent Pricing and Regulatory Tribunal (IPART) decisions, the specific category your property falls in and marginal movements due to model sensitivity.

With the above in mind, the impact of the proposed changes for the 2021-22 financial year, for the average ratepayer, are outlined below:

Table showing the impact of the proposed changes for the 2021-22 financial year, for the average ratepayer.

Note: The figures contained above are based on a harmonised rating system and the application of Special Variation (SV) to increase Council’s total rate income above the rate peg. The proposal includes a permanent one-off of 15% (inclusive of 2% rate peg and 13% SV). The temporary option was a temporary 10% increase (inclusive of 2% rate peg and 8% SV).

 

Graphic showing the impact of the proposed changes for the 2021-22 financial year, for the average ratepayer under Option 1 – 10%.
Graphic showing the impact of the proposed changes for the 2021-22 financial year, for the average ratepayer under Option 2 – 15%.

 

What are the impacts on services and Council finances of the SV options or no SV at all?

Council undertakes a Customer Satisfaction Survey through a representative sample of our community by telephone, this has occurred each year for the past three years. The latest results, from June 2020 revealed what the Central Coast community need, which is; 

  • Good governance
  • Connectivity, particularly roads, footpaths and parking
  • Focus on natural environment: particularly management of lakes and foreshores and the provision of parks, gardens and reserves.

From these results Council has a good understanding of the services and infrastructure that the community need and value. Without a rate rise many of these services will be significantly impacted and those impacts are detailed in the table below:

What will the Special Variation (SV) funds be used for?

If the 10% rate increased is accepted by IPART it will generate an extra $17.3M in income for Council, while 15% will deliver an extra $25.9M. The primary purpose of the Special Variation is to reimburse the overspent restricted funds that have been spent on the projects already delivered. The funds will also be used to ensure we have enough funds to provide an appropriate level of service to the community that we can afford. 

We have a legal obligation to reimburse the restricted funds that were unlawfully accessed to bring forward projects and infrastructure that has undoubtedly benefited the community. We have a Plan and we have taken swift action already. We are selling our underutilised assets; reducing our workforce and reducing spending on infrastructure, materials and contracts and securing bank loans. These decisions alone are not enough for us to be financially sustainable and reimburse the restricted funds. We need to apply for a rate rise as well.

If Council does not have a substantial increase in the total rate income, then we will need to reduce the standard and range of services we provide to you, our community. It could also see the condition of our assets deteriorate as there would be an ever-increasing gap in the funds required to maintain our existing infrastructure assets. Council’s fees and charges will need to increase, more staff will need to be let go and the support Council provides to many organisations would decline. Many services may even cease altogether. Our priority has to be the repayment of restricted funds so that does not become a burden for future generations. 
 

Where does Council currently get its income, are there other ways to increase income other than by rates?

Rates are an important source of Council and represent 29% of Council’s income. Council also receive grant funding from State and Federal Governments and from fees and charges. The graph below demonstrates where our income comes from.

Council is already working on sourcing more income for Council, through our Business Recovery Plan, which includes the sale of underutilised assets, reducing staff numbers and our capital works program, looking closely at our fees and charges and securing more bank loans. 

Below is a pie chart highlight where Council’s income was sourced in the current financial year – 2020-21:

What are my rates spent on?

Your rates enable Council to deliver essential services, ensure ongoing maintenance of facilities and infrastructure, manage growth and encourage economic development. The pie chart below details how every $100 of your rates is being spent this financial year, 2020/21 This represents both operational and capital expenditure less other sources of revenue such as fees, user charges, operational and capital grants and contributions. Your annual and usage charges for water, sewer, drainage and domestic waste fund are not included in the totals.

Why should ratepayers pay for Council financial difficulties?

A rate rise is on the table to help secure Council’s long-term financial future. Our long-term financial plan sets out the funding needed to secure this future. The Plan includes selling assets, securing loans, reducing our workforce, materials and contracts and also a rate rise.

Council’s current financial situation is due to spending more money than we had coming in, both before and after amalgamation. Money was not lost, rather, it was spent on infrastructure and services that directly benefited the community. This money came from restricted funds. For example, in 2019-20 $242M was spent on infrastructure and services, delivering 1,383 projects including a new pipeline between Mardi and Warnervale, resurfacing of 107km of roads, drainage infrastructure and upgrade to wharves, parks, playgrounds and sporting fields.

To deliver this infrastructure, along with maintaining high-quality services to the community such as libraries, cultural events, aquatic centres and outdoor recreation spaces, more people have been employed at Central Coast Council than at the time of amalgamation. While this practice impacted Council’s finances negatively, these staff were active and productive members of the organisation delivering services to the Central Coast.

Our community deserves a high level of service and our goal is to continue to provide these services for the benefit of the entire community and to the standard that they expect.

If Council does not receive an SV, we will have to close or reduce the standard and range of services provided. It would also see the condition of the Central Coast’s assets deteriorate as there would be an ever-increasing gap in the funds required to maintain our existing infrastructure assets. Council’s fees and charges would increase significantly, and the level of subsidies and support Council provides to many organisations would decline.

The full detail of Council’s current financial situation and the reasons for it are outlined in the Administrator’s 30 Day Interim Report.
 

What will I get for these extra rates, particularly now you are asking for 15%? 

Council at first considered applying for a 10% one-off increase to its rate income, in November 2020, that would stop after seven years. Since that initial resolution, further work has been done forecasting the reductions in the levels of service to achieve sustainable long-term financial plans and to repay the restricted reserves. As a result, it is now apparent that a larger and permanent increase needs to be considered in order to maintain a level of service our community expect and repay restricted funds sooner. A 15% one-off permanent increase will get us there and that is what we are asking you to consider.

With the one-off 10% increase that would remain in the rate base for seven years we would be able to reduce some of the debt but only if services are significantly reduced or eliminated and no new services or infrastructure could be funded.
 
With 15% one-off SV increase that remains permanently in the rate base we will be able to pay off our debt, maintain services and then start to upgrade and create new assets to meet the needs of the growing community. But this will take some time. 

Has Council considered the capacity of the community to pay?

Council understands that a rate rise will hit sections of the community harder than others. Council provides rebates and hardship assistance for those having trouble paying their rates – please refer to the Debt Recovery and Hardship Policy. This includes pensioner rebates as well as personalised payment plans.  

If we do not get a Special Variation (SV) what will happen?

If Council does not receive an SV, Council will have to close or reduce the standard and range of services it provides. This will also see the condition of the Central Coast’s assets deteriorate as there would be an ever-increasing gap in the funds required to maintain our existing infrastructure assets. Council’s fees and charges would increase and the level of subsidies and support Council provides to many organisations would decline. 

Council’s rates haven’t been harmonised since amalgamation, with the north paying more than the south. Does this mean the north will pay even more now?

Since the merger Council has been required to maintain two rating systems. This was due to a four-year rate freeze imposed by the NSW Government. This meant that Council could not adjust rates beyond the rate peg in the first four years after amalgamation. Under current legislation Council must maintain one consistent rating structure to ensure a fairer and more equitable system across all rating categories within the Central Coast Local Government Area. This will be a separate process to the SV and will also take effect from 1 July 2021 and will only affect general rates. 
 

Rates will continue to go up every year, even with harmonisation, what is the long term view of what I would pay under each scenario? 

For detail on what you will pay under each option, please view the Fact sheet: Impacts on rates and Council services.

The proposed new rating structure and SV is pending approval of Council and the Independent Pricing and Regulatory Tribunal (IPART).

The averages quoted within this document have been developed from financial modelling based on current property data and land values used as of 1 July 2020. Updated land values are provided to Council regularly (due to changes in development, to correct errors or as a result of objections) which Council must use until the new set of land values are issued.  The NSW Valuer General issues Councils with new land values every 3 years. A new set of land values will be supplied by the NSW Valuer General and applied from 1 July 2023. 

The final 2021-22 rates levied may vary due to Independent Pricing and Regulatory Tribunal (IPART) decisions, the specific category your property falls in and marginal movements due to model sensitivity.
If you are unsure of the current value of your property, you can use the land value search tool available on the NSW Valuer General website

How can I have a say?

We are asking ratepayers to have their say on the service levels you would like to see Council deliver so please take the time to complete our survey.

If you don’t have internet access you can visit one of our Libraries or Administration Buildings or call us during business hours on 1300 463 954 and we will assist you to complete the survey online.

You can also make your views known directly to IPART and make an online submission at www.ipart.nsw.gov.au

How are rates calculated?

Find out more and how rates are calculated using land values in our Rates FAQs.

Get the latest news