September 12th, 2024Council to call for 10 percent rate cap variation
As it grapples to gain financial sustainability, the Hepburn Shire Council has decided to apply to the Essential Services Commission for a 10 percent rate cap variation, including the applicable rate cap for the 2025/26 financial year.
Councillors endorsed the significant decision at their recent special financial vision meeting, just days before entering caretaker mode (September 17-October 26) ahead of next month’s council elections that will see a new council elected into the controversial new wardless council structure.
The newly adopted Financial Vision aspires to support the council’s obligations towards financial sustainability and outlines, for the next councillor group, the parameters for development of the Council Plan 2025-2029 and accompanying Financial Plan.
The council issued a statement confirming that it will begin the process of making an application to the Essential Services Commission, with the application required to be submitted between February 1 to March 31.
The ESC must then notify the council of their findings within two months of receipt of the application.
Mayor, Cr Brian Hood, said that for many years and especially throughout this term, the council has grappled with financial difficulties due to a sharp increase in costs of service delivery and construction, the small and dispersed population base, very limited range of additional revenue options, low-rate base and recovery from numerous costly natural disasters.
“Our Shire has been adversely impacted by rising inflation affecting the delivery of services and infrastructure, cost shifting from other levels of government, and extraordinary costs associated with the recovery from recent flooding and storm events,” Cr Hood said.
“As a rural council we have limited opportunities for alternate income streams, and the financial sustainability of all Councils is of concern to many.”
This year the council submitted to two major inquiries initiated by Federal and State governments to assess the financial sustainability and service delivery standards of local governments. These inquiries are expected to release findings in late 2024/early 2025.
In its 2024/25 budget, the council determined to implement reductions to operational budgets by $1.50 million, while seeking to minimise the impact on service delivery.
The budget also identified that an annual cash shortfall of approximately $4 million is projected from 2025/26 onward.
Councillors and officers have conducted a number of workshops over the last 12 months to review available means to improving the council’s beleaguered “financial sustainability”.
The council hosted an online survey inviting ratepayers, residents and visitors to provide feedback and share their priorities regarding service delivery, community infrastructure renewal or upgrades, and the potential for a rate increase – providing vital feedback to the input of the Financial Vision.
The community engagement identified that 61.6% of the community were open to a rate variation above the rate cap (at various percentages), and 38.44% of community were not open to a rate variation.
“The difficult task facing councillors and staff over the last few months was to find $4 million in savings for the 2025/26 financial year, and ensuring they were permanent savings or increased revenue,” Cr Hood said.
“We considered many options, avoiding the need for additional borrowings. We have determined to generate $1.56 million of additional revenue from rates and $2.44 million from operational and service delivery savings.
“To ensure our financial sustainability, we have made the difficult decision to make an application to the Essential Services Commission for a rate cap variation of 10% including the applicable rate cap for the 2025/26 financial year.”
“We appreciate that this will not be a popular decision with all, and there will be concerns from many in the community about their ability to pay.
“To support some of the most vulnerable in our community, we will increase Council’s rebate to assist pensioners from $21 to $42. Ratepayers continue to have the ability to apply for special payment arrangements based on financial hardship.”
“The detail of the operational and service delivery changes earmarked to generate $2.44 million in savings will be determined over the coming months, as Council creates a Council Plan 2025-29,” Cr Hood said.
“We will continue to advocate to the State Government for a review of its funding of Local Government, along with the rating and revenue system in Victoria that leaves rural councils at a significant disadvantage,” said Cr Hood.
The full resolution adopted by the council can be found on its website.
