Proposed 38.88 per cent rate rise for Gunnedah shire

Ratepayers would be expected to pay thousands of dollars more under a proposal by Gunnedah Shire Council to meet its sky-rocketing operating expenses.

In an announcement at the council chambers last week, less than two months out from the 2024 Local Government Elections, staff and elected members explained that council is currently operating $3.1 million in deficit annually. This means, excluding domestic waste charges, it is spending at least $3m less each year than it should to maintain its assets and services in the community such as roads and bridges, building infrastructure, as well as parks and gardens.

To help stem the worsening predicament, council has proposed a 38.8 per cent rate increase. This special rate variation would be delivered over two years – 24 per cent in the first year and an additional 12 per cent in the second. This includes allowance for compounding and the rate increase would be permanent in years thereafter.

Gunnedah shire acting mayor Rob Hooke, who led the SRV announcement last Friday as mayor Jamie Chaffey was on leave, described council’s tough financial position as a “perfect storm” caused by three major factors.

Firstly, ineffective rate increases set by the Independent Pricing and Regulatory Tribunal (IPART) which have not kept in line with inflation. Secondly, a halving of federal assistance grants to councils and thirdly, increasing cost shifting of financial responsibility to local councils by other levels of government.

Essentially, council said it is expected to deliver the same or additional level of services but for less. Cr Hooke said this “slow burn” of cost increases had forced council to propose lifting its income stream.

This would enable council to provide the same level of services and infrastructure maintenance and enhance existing services to meet the needs of a growing community.

Long-term, the SRV also aims to tackle budget shortfalls and preserve the long-term financial health of the council.

Council’s general manager Eric Groth said the decision to go public with the SRV now was made to ensure ratepayers had maximum detail at their disposal.

“We want to make sure we have all the right information there for the community,” Mr Groth said.

“There is a lot of work that has gone into that by staff and briefing of councillors to say this is the problem we have.

“Some of the issues we’re facing at the moment are very recent issues – construction costs the last couple of years have increased exponentially.”

He highlighted the Gunnedah Hospital redevelopment which was budgeted at $53 million a few years ago but those same plans now cost almost double that figure.

“We have that same issue at council,” Mr Groth said.

“We have been trying to put this information together and have it as complete as possible before we have that dialogue.

“It would have been great to do that 12 months ago … but the last thing we want to do is flag an issue with the community before having the information to have an appropriate discussion around that.

“Now we have that information we don’t believe we can delay [the SRV discussion] any further.”

This initial consultation phase by Gunnedah Shire Council is the first stage of the SRV process. Community meetings are scheduled throughout the shire in the coming months before a decision is made whether to proceed with the SRV. There are also opportunities to provide feedback online, via phone surveys and traditional post mail.

Further approvals are required after the local government elections in September when Gunnedah’s new and/or returned elected representatives will decide whether to proceed with and SRV application to IPART.

IPART will then make its own determination on Gunnedah’s SRV with consideration to factors such as a demonstrated need for higher increases to charges, community awareness of their plans and a reasonable impact on ratepayers.

Gunnedah is not alone in its SRV application with many other councils across the state and the North West region also applying for rates increases including Tamworth (36.3 per cent over two years) and Armidale (58.8 per cent over three years).

“The difficulty council faces around financially sustaining existing services and maintaining infrastructure within the existing income levels is not unique to our region and is one that many councils across NSW are facing at this time,” Gunnedah shire acting mayor Rob Hooke said.

Importantly, the proposed SRV would only apply to the rates portion of the bill (usually listed as the first item on the bill e.g., “Residential Gunnedah”) and not the separately listed essential charges such as waste and water.

Mr Groth empahised the special rate variation proposal was not the fault of elected members or staff but an “externally forced necessary action” caused the some of issues already identified such as cost-shifting, falling government contributions and ineffective rate increases by IPART.

He said his own analysis of the IPART records indicated some councils in NSW had applied for an SRV two or three times in the last 10 years.

“That tells me the system is broken, the funding of local government needs to be fixed,” Mr Groth said.