What is the proposal for the community
Council is proposing to maintain its current rate income beyond 2023-24 for a further 7 years to ensure financial and service sustainability. Securing the current rate income for a further 7 years will ensure that we can maintain the current service levels, continue to find more service efficiencies and pay back loans.
We will be exploring this option with you through our community awareness and engagement program from October 2021 through to January 2022. This program will allow us to:
- Better understand the community view on what services are important
- Define community expectations around the service levels
- Respond to this in a future rate proposal
Have your say
The community are invited to view the Maintaining Services and Rates Brochure. Between 20 December 2021 and 21 January 2022 feedback on the following documents was accepted :
Find out more
What has happened so far
In May 2021 the Independent Pricing and Regulatory Tribunal (IPART) approved a temporary rate increase of 13% (plus the 2% rate peg) which is retained in the rate base for three years and removed from the rate base at the end of the 2023-24 rating year for the Central Coast Local Government Area.
This temporary one-off increase will provide $22.9M in additional income for the 2021-22 financial year and is one of a number of measures being implemented to ensure Council remains financially sustainable.
In their final report issued in May 2021 IPART stated, “During this 3-year period, the council will be able to implement its proposed business recovery plan, consult with its ratepayers regarding appropriate service levels, and if required, apply for a permanent Special Variation.”
On 29 September 2021, Council resolved to notify the Independent Pricing and Regulatory Tribunal (IPART) of its intention to apply to maintain the temporary Special Variation (SV) implemented in the 2021/22 financial year beyond its expiry in June 2024 for a further seven years. Community feedback will help inform whether or not Council decides to formally apply to IPART for a Special Variation in February 2022.
At this stage, Council is not proposing to seek a permanent variation.
What did Council do
In December 2020 and January /February 2021, Council consulted extensively with the community on options for new residential and business rates to begin in the 2021/22 financial year. The proposals addressed long term financial sustainability. This included the legal obligation for Council to reimburse the restricted funds that had been spent without the correct authorisation on projects that the community had benefited from.
At the same time, Council informed the community about the impacts of rate harmonisation to address the inequity between the rates of the two former local Councils in response to the State Government requirement of amalgamated Councils. Rate harmonisation was implemented from 1 July 2021 ensuring there is now equity in how rates are charged across the whole of the Central Coast region.
What did we hear from the community
Over 10,000 community responses to an online survey, telephone survey and direct submissions were received in response to Council’s proposal about a new rating structure. The levels of community support and reasons for and against a rate rise were established through this consultation. The majority of respondents did not support the proposal.
More broadly, the engagement process affirmed that the community wanted Council to ‘fix the problem’, maintain services and create a sustainable pathway forward for Council. The community was supportive of change to see better financial management and accountability put in place. They also wanted to see that they were not shouldering the burden of fixing the problem and that other things were being done as alternatives to a rate increase such as seeking NSW government funds, selling assets, reducing staff, reduction in capital works and scaling back services and expenditure in general.
How have we responded to community feedback
We have moved quickly to show that we are serious about helping to fix the problem. Here is what we have done so far.
- Better financial management and accountability
- Chief Financial Officer appointment
- Audit and Risk Committee meet every two months
- Monthly financial reporting publicly available
- Tighter budget management controls
- Reduced spending
- Capital works program reduction to $175M in 2020-21 compared to $242M in 2019-20
- Materials and contracts savings estimate of $20M
- Reduced employee costs by $30M
- Management salaries with reduction of nine Directors to five and senior managers from 38 to 25
- Other financial recovery actions
- Over $60M of property assets sold
- Improved productivity with minimum service level reduction despite staff cuts
- Bank loans secured and payments on track
- Finding other revenue sources.
What happens if the proposal is not approved
Council provides over 250 services that you value and these services contribute to the quality of life that is desired on the Central Coast.
If the Council’s current rate income is not maintained beyond June 2024, we will be forced to reduce or cease many services.
This means that we will be unable to maintain some assets at current levels resulting in poorer condition; facilities and amenities will deteriorate more quickly such as public toilets, sporting grounds and surf clubs; and some facilities may even need to close such as childcare centres and libraries. There will be strained service quality in other areas and Council will not have discretionary funds to support some community and environmental initiatives. Reducing or ceasing services will also impact staffing and likely mean further staff cuts resulting in up to 250 local jobs lost on the Central Coast.
It is important to note that returning to a pre-2021 rate base, does not mean that former Gosford ratepayers will pay less rates again. The impacts of the State Government mandated rates harmonisation which was undertaken in 2020-21 will not be wound back.
Community Reference Group
A representative sample, of randomly selected ratepayers will form a Community Reference Group. The purpose of the Community Reference Group is to provide guidance to Council about the key messages, the community engagement activities and to explore options in relation to Council service reductions should any application to maintain rates at their current levels not be successful. An independent third party will recruit the members for the Community Reference Group which will commence late October 2021.
Have Council rates recently increased?
Yes, the rate increase, approved by the Independent Pricing and Regulatory Tribunal (IPART) in May 2021, includes the 2% standard increase (called a rate peg) that applies to all councils and a temporary rate increase of 13%. This temporary increase totalling 15% is retained in the rate base for three years and removed from the rate base at the end of the 2023-24 rating year.
Who is IPART and what do they do?
The Independent Pricing and Regulatory Tribunal (IPART) is an independent NSW Government authority that determines how much Council can charge for rates. When a Council applies for a rates determination, IPART looks at the reasonableness of the pricing for the service delivery amongst other factors. Aside from local councils, IPART also regulates the energy, water and transport industries. For more information about IPART, go to www.ipart.nsw.gov.au.
What action has Council taken to remedy its financial situation?
An Administrator was appointed by the NSW Government in October 2020 to oversee Council’s financial recovery following the suspension of the Central Coast councillors. The outcomes of a Public Inquiry held in October 2021 are pending about Council’s financial situation.
Council has taken decisive actions in a short space of time since uncovering its financial problems. We have had a financial recovery plan in place since November 2020 and have delivered on it. We have implemented measures to manage costs including significant staff reductions, restrictions of spending and reducing capital works programs (such as infrastructure and IT systems); selling property assets and obtained emergency bank loans to reimburse the restricted funds that had been spent unlawfully on projects that the community had benefited from. Productivity improvements are also a continual process. We have done everything we can behind the scenes to reduce costs without largely impacting on the services we deliver for the community.
Did Council have to secure commercial bank loans?
Yes. Commercial bank loans are the backbone of the financial recovery and we have to repay these loans within 10 years. These loans are helping us to continue to deliver services at their current levels and this is why we are proposing to apply to maintain the current ordinary rate for an additional seven years, or ten years in total. This means we can demonstrate to the commercial lenders that we are able to pay back the loans and maintain the current service levels for the Central Coast community.
If the current rates are not maintained beyond June 2024, Council will have an average annual income loss of $25.8 million. This means we will need to reduce or cease many services.
What is the annual budget for Central Coast Council?
Central Coast Council 2021-22 budget is $667 million.
What is the difference between restricted and unrestricted funds?
Restricted funds cannot be used for general purposes because they have some form of legislative or contractual obligation to only be spent on a specific purpose. In a household sense, restricted funds are similar to your superannuation fund. Unrestricted funds can be used for general purposes and are the household equivalent of your savings account.
The merger was supposed to improve things, but this does not seem to have happened. What’s going on?
Some of the benefits from the productivity improvements of the 2016 merger of Gosford and Wyong Councils have taken longer to be realised and some actions have taken longer to be implemented.
Council has put renewed focus on achieving these improvements through better management of staff time; purposeful equipment to help staff do their job efficiently; and our technological progression coming to fruition with our staff benefiting from using upgraded technology systems and transitioning manual processes into digital ones. This means we have stopped some clunky and inefficient processes.
These productivity improvements have ensured the necessary cost-cutting measures have meant minimal service reductions for the community. Some of these productivity gains will continue to have an ongoing positive impact on improved service delivery and the community will see the benefits year on year. In a nutshell, we continually strive to be more productive, so we can use those ‘saved hours of staff time’ to deliver an improved service level for our community, or reduce our costs where needed.
More information is available in the document Fact Sheet – Productivity Improvements.
There are limited Council services in my area, why should I be part of this?
Council strives to deliver services across the Central Coast. Each year we update our Operational Plan detailing how we plan to deliver services to the community for the next financial year and beyond and then put it out on public exhibition for comment from the community.
How are you ensuring that the financial situation doesn’t happen in the future?
Council has put in place a number of financial management measures and improved its checks and balances to ensure that Council finances are managed well. Currently Council has an Administrator in place overseeing Council’s financial recovery following the suspension of the Central Coast councillors. The NSW Government has also held a Public Inquiry in October 2021 and the outcomes are pending about Council’s financial situation. Administrator Rik Hart has made a submission-in-reply to the Commissioner leading the Public Inquiry and this submission outlines eight recommendations for the Commissioner’s consideration and provides a detailed timeline of matters related to the financial situation. You can view this submission on Council’s website. Go to the Administrator page at www.centralcoast.nsw.gov.au Find the document at this link.
Administrator Rik Hart has also recommended to the Minister for Local Government that the next general election for the Central Coast be conducted in September/October 2022 and be held in conjunction with the Constitutional Referendum, with the results of the Referendum to apply in the 2024 local government elections. The Referendum will ask Central Coast voters to determine the following question: ‘Do you favour a reduction in the number of Central Coast Councillors from fifteen to nine?This will result in three Wards with each Ward electing three Councillors’.
Is Council still spending money on building new things?
No, we will not be undertaking any new construction projects in the near future unless the funding is already in place. An exception is the new Gosford Regional Library which is due to commence construction in May 2022. In fact we have capped our capital expenditure to $175M and our program is focused on delivery of renewals and upgrades to our asset base.
Can’t you get more funding from the government to help pay for things?
The NSW and Australian Governments provide funding to help build essential infrastructure. Sometimes this is partial funding which means Council has to find the rest of the funds and then has to also find the funds to keep maintaining and repairing infrastructure every year.
How long will it take to get Council finances back in order?
Council is tracking well on its financial recovery and is currently forecasting a small operating surplus for the 2021/22 financial year needed for the principal loan repayments. Council is required to repay the commercial loans within 10 years. It is expected that it will take at least ten years for Council finances to be back in order.
Why are there only two options being considered – maintain rates or reduce or cease services?
We have done everything we can behind the scenes to reduce costs without largely impacting on the services we deliver for the community. These cost management measures made up 70% of what we needed to do to satisfy the external lenders that we were getting Council finances back on track. The other 30% came from the temporary 13% (plus 2% rate peg) rate increase approved by the Independent Pricing and Regulatory Tribunal (IPART) in May 2021. If the current rates are not maintained beyond June 2024, Council will have an average annual income loss of $25.8 million. This means we will need to reduce or cease many services.
What are alternative income options to rates?
We are already working on sourcing more income for Council through the financial recovery action of selling underutilised property assets. Even if the community agreed to sell more properties such as community land, this is one-off income only that may help reduce the commercial loans but is not a recurring income stream every year to continue repaying the loans. Council has very limited other options to increase its income such as reviewing fees and charges or finding other revenue sources, such as paid car parking at beaches. We are continuing to investigate other options.
What will happen if the proposal to maintain rates at the current level isn’t supported?
If the current rates are not maintained beyond June 2024, Council will have an average annual income loss of $25.8 million. This means we will need to reduce or cease many services.
You have a lot of staff. Have you looked at reducing staffing levels?
Yes, we reduced staff by about 25% in 2020/21 so that staff numbers are now less than pre-merger levels.
Can staff be more efficient to help keep delivering services at the same level?
Council has been ‘getting its house in order” with implemented measures to manage costs by improving internal systems, processes and managing staff time better to ensure that cost-cutting measures have meant minimal service reductions for the community. Some of these productivity gains will continue to have an ongoing positive impact on improved service delivery and the community will see the benefits year on year. Council also has a Corporate Plan to improve our services across many areas of the organisation.
Has the natural growth in the rate base been accounted for?
Along with all other Councils, Central Coast Council can increase rates each year, in line with inflation and other considerations and this is called rate peg. This means that Council’s total rate income is capped each year by the rate peg set by IPART.
Have actions been taken to ensure that assets providing community services, such as public pools, or childcare services are covering their own costs?
Council regularly reviews fees and charges for services and considers community affordability alongside what it may cost to run the services day to day. These costs don’t account for the maintenance and renewal of infrastructure so Council has to find the budget to do that.
How is this different to water, sewerage and stormwater drainage prices?
IPART also regulates the prices that we can charge for water, sewerage and stormwater drainage prices and this is a separate process. IPART has commenced its own community consultation about Council’s pricing proposal that was submitted to IPART in September 2021. For more information, including instructions on how to make a formal submission to IPART, visit yourvoiceourcoast.com
It is important to remember that every dollar that we receive from your water, sewerage and stormwater drainage rates can only be spent on water, sewerage and stormwater drainage services such as water mains renewals, the upgrade of water and sewer treatment plants and stormwater management to ensure the ongoing health of our waterways.
Initial investigation and research
Phase 1 community consultation
- Community awareness through direct mail and online information commences
Phase 2 – Engagement on service levels and options
- Face to Face Community groups 1:1 Meetings with Administrator
- Telephone Survey (randomly selected ratepayers)
- Online Survey (opt in)
- Community feedback on services and options – Community Reference Group
Phase 3 - Public exhibition of Long Term Financial Plan and Delivery Program (two options)
- Consultation on the Delivery Program and Long Term Financial Plan
Community feedback on two options reviewed (we are here)
Council decides whether to make a submission to IPART