FAQs

A drop-in session is a chance for you to meet informally with Councillors and senior staff members for a short period of time to discuss documents currently on public exhibition or other matters of interest and importance to you. The sessions are limited to 15 minutes and do not require a booking. 

Water, sewer and waste collection have separate income charging and the cost of those services are paid from those people using those services. The general purpose rates do not fund any of those services. As a result changes to the level of general rates will not change those services.

Two main reasons. In the past council were not required to fully recognise the long term cost of all the infrastructure it managed and money was raised only to deal with short term needs. Recognition of the full cost of this infrastructure identified that councils were not fully funding these items. Since that time the level of income raised has not kept pace with the costs of providing the services.

There has been a need for a rate increase for a long time. In 2016 it was recorded that Bombala Council intended to increase rates by 23%, Cooma-Monaro by 40.1% and Snowy River by 67.8% as their plans to remain separate sustainable councils. In 2018 the Long Term Financial Plan of the Snowy Monaro Regional Council showed ongoing deficits under three different scenarios. None of the scenarios provided for sustainable outcome, each included deficits ranging from $6.5million to $1.3million. To achieve the $1.3million deficit required a rate increase of 49%. Dealing with the remaining deficit would have required a further 6.5% increase, bringing the increase up to 55.5%

Due to external factors none of these increase have been put in place, leading to the financial situation continuing to deteriorate.

The current Councillors are looking to find a solution to this problem that has not been addressed for a long time.

When the new council was formed the NSW Government put into place requirements that limited rates to the rate peg for three year. This meant the option of reviewing the level of funds invested by the administrator and first elected council was very limited. The previous Council did consider implementing a rate increase, but this would have started just after the Black Summer bushfires and while COVID was starting to impact the economy. Due to this the Council decided to defer any rate increase at that time for consideration.

Work has been ongoing for a number of years to look at the cost of services, which is discussed in “Why are our costs so high?”. As above, Council was limited after the merger in the number of staff it had to retain and in making staff redundant. That also limited the changes that could be made to employment costs.

Several factors are impacting here. When you start with your costs exceeding your revenue, each year the expenses (being the larger amount) increases by more than the revenue. So if you don’t address the shortfall it grows each year.

The second factor is that costs of providing services is increasing at a greater pace than the rate peg allows, so each year the gap between revenue and the cost of providing services and infrastructure grows. For example, each year the amount that is allowed for increase in employee costs in less than the minimum award increases that the Council is required to pay.

In determining the financially sustainable positon the Council has looked at what levels of spending are optimal for maintenance of the assets. Within the asset management industry there are benchmarks for different asset types. We have compared what we spend to those benchmarks to see if we are over or under spending. Overspending is wastage. Underspending means the roads, buildings, etc wear out and break down quicker than they should. Costing more money long term. In most instances the level of maintenance currently spent is well below optimal. We see the outcomes of this underspending in the current state of building and other facilities. This hidden cost has not been considered in the past.

Over time the cost of replacing infrastructure has also been growing. This has also contributed to the increase in investment needed to replace the assets.

Council has also seen costs growing in a number of areas. Insurance premiums have increased by over $600,000. Our contribution to emergency services has increased by $500,000, including costs to fund the NSW Government’s decision to cover volunteers of the Rural Fire Service for certain types of cancer under a workers compensation scheme. Electricity costs will be rising by 10%.

For scenario 2, fully funding the services, first we looked at all of the infrastructure that we currently provide. Each item, be it a road, building or anything else needs to be replaced over time. We divide our replacement value by the number of years the item will last to get an annual amount that needs to be invested. We then used benchmark percentages to identify the annual amount of maintenance required to be spent. Added to this are then the costs of providing services.

Once we know how much is needed each year it is a matter of comparing that figure to what is currently raised.

For scenario 3 it is assumed that Council will receive $5 million per year in capital grants to replace existing infrastructure. It is also assumed that the Commonwealth Government will double the funding it provides to local government to fund the disadvantages of living in a remote location with spread out population. It should be noted that local government has been lobbying for this increase for over 20 years. If these sources of revenue do not eventuate rate increases would be required to cover the lack of funds. Meantime, services and infrastructure would need to be reduced to the available funds.

How much different services and infrastructure cost to landowners is driven by different factors. One of the largest costs for the Council is roads. How much landowners need to contribute is driven by what length of road there is per property. In our area there are 184.8 metres of road for each property serviced. This is a lot compared to other Council’s in our area in the same local government classification. In Bega Valley each property only has to fund 74 metres of road, Eurobodalla only has to fund 40 metres and Queanbeyan-Palarang only 28. So every landowner has to fund much more road than our comparable Councils, making it appear expensive. So, while we spend nearly double per person than the average in our group we invest about half the average amount per kilometre.

We also have a high quantity of infrastructure provided in a range of areas. We have more halls and Libraries per person than any other regional town/city Council in NSW. We have the second highest number of pools per capita.

High levels of infrastructure require high levels of investment to keep that infrastructure at a reasonable level.

While we can control the level of services provided, such as the number of halls, pools, parks, etc, we need a reasonable level of services to cover our large number of towns/villages and vast rural area. The underlying problem is that Council has limited options for raising funds. The Commonwealth Government has the greatest capacity to raise revenue for issues such as the large areas needing servicing, not the Council.  There is a funding mechanism to fix this, called the Financial Assistance Grant.

Over time the funding provided to offset the disadvantage has reduced in real terms, shifting the burden onto the local rates instead of the federal budget. If the Commonwealth Government was funding the relative disadvantages of this area we would be receiving more than $5million in additional funding each year, removing a large part of the increase needed.

As the Commonwealth Government does not provide sufficient funds to offset the relative disadvantages landowners in this area face, compared to other areas, landowners need to fund these costs or have a lower service level.

We are not, but most other changes we have just been getting on and doing.

Three years ago management was restructured, nearly halving the number of management positions and removing a layer from the organisation, saving $700,000. Other staffing positions have also been reduced by $2million, reducing staff levels by over 5%. Staff levels have been reduced in the areas of:

• Asset Management
• Governance
• Strategic Planning
• Information, Communications and Technology
• Infrastructure

When you compare the staff numbers from 2015 to last year our equivalent full time employees has shrunk from 347 to 339.

Combining budgets led to a $140,000 budget reduction in allocations for legal costs. Reviewing photocopiers has saved $207,000.

Unfortunately, what is being invested is not how much is required to maintain and replace our infrastructure. This can only be fixed by either investing more or providing less. Based on the feedback from the community the councillors will have to look at what direction to take on determining what levels of service the community is willing to fund.

Council is also undertaking service reviews. A review of the Governance service saw a 20% reduction (1 person) in the team. A review into the roads services was seen to identify a number of issues that potentially would apply across a range of services and as result the number of reviews to be undertake way expanded. Reviews are in the final stages for Roads, Fleet, Water and Wastewater, and Civic Maintenance services. Reviews are also underway for Information Communications and Technology and the Built and Natural Environment services.

How much it costs depends on what level and type of services the Councillors and community end up accepting. This is why there are a range of scenarios, varying from living within our means to fully funding the current services. Cost is only one part of the discussion, but normally the one that has the greatest focus. As with all purchases you make there is a need to consider the value you get for the money you invest.

Remember that the amount the community is willing to invest sets the services and amount of infrastructure that can be provided, so it is important to consider both sides of the equation. The costs underpinning the numbers are mainly based on calculations of the replacement costs of infrastructure, the value of which are audited, and the maintenance required under asset management calculations based on third party research.

The impact also varies depending on your land values. You can calculate your individual impact by taking the general rates on your rate assessment (Not including water, sewer or waste charges) and increasing it by the percentage shown below:

Residential (10,553 landowners)

Not everyone budgets on an annual basis. Here is the breakdown on average to allow you to see the impact compared to the way you budget your money.

Farmland (2,889 landowners)

Not everyone budgets on an annual basis. Here is the breakdown on average to allow you to see the impact compared to the way you budget your money.

Business (1,062 landowners)

The Councillors have to move the Council to a financially sustainable position, whatever that may be. They cannot make those decisions without knowing what is involved. Scenario 2 is what it would cost to keep all of the services and keep and maintain all of the infrastructure.

After consulting with the community on what value the community places on the current services and infrastructure a decision needs to be made on the level of investment the community is willing to make and how those funds will be allocated.

General rates are a tax, not a fee for service. So your rates go towards providing services to the community. A summary of some of the main infrastructure we provide is:

• 932km of sealed roads with 170km of kerb & gutter
• 1,715km of unsealed roads
• 127 vehicle bridges and 127 culverts
• 18 pedestrian bridges and 63km of footpath
• 76km of storm water pipes, 18km of storm water channels and 33 culverts
• 261 community buildings
• 47 toilets
• 9,433 hectare of land
• 5 swimming pools
• 69 operational buildings

We have 1000km of sealed roads. They have a sealed surface that needs replacing or renewing every 15 years. This means that we need to reseal 62km of road each year. Resealing currently costs $56,000 per kilometre. Assuming the seal is in good condition this requires $3.5million each year.

We need to rebuild the roads each 100 years at a cost of $850,000 per kilometre, meaning a further $7.9million. In addition we should be renewing our unsealed roads by carrying out gravel resheets, which adds back the gravel lost by vehicles travelling over the roads. We have 1,700km of unsealed roads to deal with, which should be refurbished by putting up to 150mm depth of gravel and compacting it, at a cost of $67,500 per km. The timeframe changes, depending on the amount of traffic which is calculated using industry data. This requires $5.5million per annum. The gravel roads also need regular grading. The cost of maintenance grading every road once a year is around $2.2million.

All up that is $19.1million, before you start doing thing like mowing roadsides, drainage clearing, replacing and maintaining bridges, etc. Currently about half this amount is invested annually. The cumulative impact over time means the assets are passing the end of life without being replaced. Just like any other asset, they start to fall apart. In addition not enough is being spent on ongoing maintenance which makes things worse.

There are three scenarios included, one shows the Council living within its means, with rates only increasing in line with the approved rate peg. Under this scenario services will be cut that cannot afford to be provided. The second scenario includes the increase needed to provide all the current services and infrastructure. Scenario 3 includes a once off increase that only goes part of the way to funding the shortfall, with some services to be cut.

At the end of ten years the rates will have changed as follows:

Council undertook a review of its management structure several years ago and this resulted in a reduction of the number of management positions, including removing one level from within the organisation. The level of management needed can be assessed by looking at what is known as the span of control. This is the number of people that a manager is managing. The restructure increased the span of control by 21%. This means only 10.6% of the workforce are in management and supervisory roles, with the 89.4% of roles in operating roles.

Council’s started its current round of service reviews looking at our Governance Team. It identified over 100 improvements and led to the reduction of the staffing levels by 20% (1 person). Limited funding is available to undertake the improvements, which are now being prioritised to develop a work program.

We are currently completing service reviews into:

• Roads
• Fleet
• Water and Wastewater
• Civic Maintenance
• Information Communications and Technology
• Built and Natural Environment services

Indications are that there is potential for improved efficiency, but this will require an investment into people and systems to achieve those savings.

There are a few sources you use to find information on how Council performs compared to other councils.

Office of Local Government comparative data: https://www.yourcouncil.nsw.gov.au/

NSW Water comparative utility data: https://www.industry.nsw.gov.au/water/water-utilities/lwu-performance-monitoring-data

This is not correct. People have been using the word debt to refer to the impact of the deficit. Debt is where you own money to a third party. A deficit is where you run down your assets (cash or other things) as the amount of money coming in is not enough to cover the cost of running the services and replacing the assets.

The deficit still creates a need in the future for someone to either pay for the things previously used up or decide to do without them.

At this stage the Council is developing its plans for the future. Council is required under legislation to provide for the resources to achieve what it has set out in the Delivery Plan. This means there needs to be a discussion now about the direction to be taken. Once the Council has consulted on it’s plans there is another process that needs to be followed if rates are to increase above the approved rate peg level.

The Council cannot increase rates without approval of the Independent Pricing and Regulatory tribunal (IPART). Following consultation with the community, if the Council proposed to increase rates, Council would then need to apply to IPART for a Special Rate Variation or SRV. IPART assess the case put forward by the Council and decide if there is sufficient merit to approve the increase. If they do not approve the proposed change Council cannot increase the rates. Following that the Council would then need to resolve to adopt any increased rates. The guidelines on what is required can be found here: Rate Variation Guidelines

A Special Rate Variation allows Councils to increase rates above the rate peg increase determined each year by the Independent Pricing and Regulatory Tribunal (IPART). Applications for Special Rate Variations must be submitted to the Independent Pricing and Regulatory Tribunal (IPART) for assessment.

Councils can apply for two types of Special Rate Variation: 

1. An increase in general income in a single year (i.e. a 'one-off' variation)
2. An increase in general income in more than one year (i.e. between 2 and 7 years)

What is the process?

• 9 May – 6 June - Consultation is undertaken with the community
• 23 June - All consultation and submissions are considered by Council and a decision is made. 

If Council decides not to go ahead the status quo remains. If Council resolves to apply for a SRV the following then occurs;

• November 2022 - A notice of intention is submitted to IPART
• February 2023 - Council applies to IPART for a special variation
• February 2023 - Further community consultation is undertaken
• May 2023 - A final decision is made by IPART and Council is notified
• June 2023 – Council needs to resolve to set the rates at an amount no higher than any approved increase

A number of people during the consultations have raised that our rates are high compared to other councils. Here is the comparison of our general rates to the other regional town category councils across NSW. The information is from the Office of Local Government’s comparative data. Other councils have been adjusted for general rate increases that are approved or being applied for. Comparative SMRC rates as proposed under each scenario is included in dark blue.

Note that this does not include water, sewer or waste, which all have separate charges to cover the costs from users of those services.

Average business rates shows the income from business and mining to show the equivalent amount of rates being raised if those Councils did not have mining to raise rates from;

*Mining is shown in orange