Updated November 2024
Overview
Council has identified that a Special Rate Variation is needed to address Council’s financial sustainability and maintain essential community infrastructure and service levels.
In June 2024, Gunnedah Shire Council included an action to start a conversation with the community about a potential Special Rate Variation in the 2024/25 Operational Plan.
Council subsequently undertook an extensive community engagement process to gauge the community’s feedback about a Special Rate Variation proposal from Friday, 2 August to Friday, 6 September 2024.
At an Extraordinary Meeting held on Wednesday, 6 November 2024, Council committed to proceeding with a section 508(A) (permanent) Special Rate Variation, which has been varied in response to the feedback received by the community.
What is an SRV?
A Special Rate Variation (SRV) allows a council to increase its general rates income above the rate peg to provide the services and infrastructure desired by their communities. SRVs can be either for a single year or over multiple years and can be permanent or temporary.
What is the Rate Peg?
Rates increase every year in line with an amount set by the NSW State Government. This amount is calculated every year and is called the ‘rate peg’. It is decided by the Independent Pricing and Regulatory Tribunal (IPART). The rate peg for Gunnedah Shire Council in the 2024/25 financial year is 5.6%. This figure varies year to year and has been as low as 0.7% in the past five years.
Why is an SRV needed?
Like many councils across NSW, Gunnedah Shire Council is facing the difficulty of maintaining its infrastructure and services within our existing income levels.
The cost to deliver services and maintain community assets to current service levels increases above the rate peg amount each year. Combined with reduced financial assistance and ongoing cost shifting to Local Government by other levels of government, councils are under constant financial pressure to deliver the same services for less, which is not a sustainable model.
Without addressing this gap, the residents and visitors of the Shire will see a deterioration in service levels. Each year we fall behind, the cost of renewing infrastructure will rise and we will eventually have to catch up.
Council also has an expanding infrastructure base as our community is growing. We view the fact that our population is increasing as very positive but we need to be able to maintain the associated infrastructure to support this.
Council has very limited opportunity to increase other sources of revenue and, as a result, an increase in rates is the most viable solution for a financially sustainable council.
Council’s long-term financial plan shows that we are currently operating with an approximately $3.1m operating deficit in the General Fund (excluding domestic waste services). This essentially means that we are spending $3.1m less than we should be to maintain our assets and services to our current targeted service levels.
The SRV is also needed to address Council’s current and forecast cash position. Our 2024/25 budget forecast shows that our projected cash reserves will be in decline and the unrestricted cash position will potentially move into a negative balance within the General Fund within two years without intervention. A negative unrestricted cash balance cannot be allowed to occur.
Further information on Council’s financial position can be found in our 2024/25 Operational Plan, which is available here: 2024/25 Operational Plan.
What would happen if the SRV is not implemented?
Council would need to defer necessary capital works and revise the basic range and levels of services provided to the community to avoid a deteriorating cash position, which is not sustainable in the long term. Service levels would need to reduce in the absence of additional funding being available.
What SRV did Council consult on?
Council consulted on a permanent SRV of 38.88% over two years. The 38.88% is comprised of a 24% increase in the first year (2025/26) and a 12% increase in year two (2026/27). This included an assumed rate peg of 5% in both years.
| 2025/26 | 2026/27 | Cumulative | |
| Permanent increase above rate peg | 19% | 7% | |
| Rate Peg (forecast) | 5% | 5% | |
| Total Increase | 24% | 12% | 38.88% |
The rationale behind these two values is as follows:
- The 24% increase in Year One will allow Council to address the current operating deficit and the current forecast unrestricted cash challenges,
- The 12% increase in Year Two will allow Council to commence addressing the backlog of works to bring our assets to the current targeted service levels.
The distribution of the rate increase was proposed to be equally applied across all rate categories.
What did the Community tell us in the first round of the SRV consultation?
A large range of feedback was provided and key feedback received was:
- The Community does not want to see an increase in rates,
- The Community want to see better services for their rates, in particular the community wants to see improved roads,
- If an SRV is required, the first-year increase is too high and it should be for a smaller amount and implemented over a longer period of time,
- Council needs to tighten it belt and make sure it is operating as efficiency as possible, and
- Council needs to look at how rates are distributed and ensure that each rating category is paying an appropriate proportion of Council’s income.
What SRV is now proposed?
Council has committed to an application for a permanent cumulative SRV of 37.67% over two years.
The SRV is to be applied based on:
- a 32.25% cumulative increase (21.80% above rate peg) applied to the Residential, Business, Farmland rating categories, and
- an 85.13% cumulative increase (64.33% above rate peg) applied to the Mining rating category.
| 2025/26 | 2026/27 | Cumulative | |
| Permanent increase above rate peg | 13.30% | 13.17% | |
| Rate Peg (forecast) | 4.70% | 3.50% | |
| Total Increase | 18.00% | 16.67% | 37.67% |
The yearly increases would be applied as follows:
| Category | Year 1 | Year 2 | Compounded Increase % Change |
| Residential | 15.00% | 15.00% | 32.25% |
| Business | 15.00% | 15.00% | 32.25% |
| Farmland | 15.00% | 15.00% | 32.25% |
| Mining | 43.66% | 28.87% | 85.13% |
These values include a rate peg of 4.7% in Year 1 and 3.5% in Year 2. The SRV is 26.47% above the rate peg limit.
This SRV is lower for Residential, Business, Farmland rating categories than what was originally proposed. In the original SRV proposal, these rating categories would have experienced an increase of 38.88% over two years. Under the revised SRV proposal the increase is capped to 32.25% over two years.
The SRV proposal will also necessitate that Council make an application to IPART under section 548 of the Local Government Act 1993 for the Maximum value of the Minimum ordinary rate for Residential, Business and Farmland categories to be set as follows to match the section 508(A) permanent SRV application value:
| Category | 2025-2026 | 2026-2027 |
| Residential - Ordinary Residential - Rural Residential - Gunnedah |
$638.00 | $733.00 |
| Business - Gunnedah | $625.00 | $718.00 |
| Farmland | $638.00 | $733.00 |
What does the SRV apply to?
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.
What the SRV funds would be used for
The proposed SRV would be used to fund maintenance and renewal of Council assets, specifically:
- Council's Transport network (roads, bridges and associated services),
- Council's Building infrastructure, and
- Council's Parks, Gardens and Open Space.
How would the increase impact me?
The below tables show the impact of the increase based on averages for rates categories.
Use the below rates calculator to estimate the impact on your property.
NB: This rates calculator is an estimate only of how the special rate variation could affect your property – it does not include any change in property valuations or charges related to water, wastewater/sewerage or waste.
What happens now?
Council is providing community members with an opportunity to have their say about the revised SRV proposal.
At the conclusion of the current period of community engagement, Council will finalise an application to IPART to apply for a Special Rate Variation application in February 2025.
IPART
IPART will then assess Council’s SRV application and conduct their own period of consultation. Further information on the SRV process, including the timeline, fact sheets and information papers are available on the IPART website that can be accessed via the following link: www.ipart.nsw.gov.au/Home/Industries/Local-Government/For-Councils/Apply-for-a-special-variation-or-minimum-rate-increase
How can people have their say?
Residents and ratepayers are invited to read about the proposed SRV and have their say in a number of ways.
You can provide a submission in writing by 5pm Thursday, 19 December 2024 in the following ways:
Mail:
The General Manager,
Gunnedah Shire Council,
PO Box 63,
Gunnedah NSW 2380
Email: council@gunnedah.nsw.gov.au
Web Form: Click here to access form
Learn more
If you would like to learn more about the ways in which local government differs from a business, click here to view a presentation by Professor Joesph Drew.
Additional FAQs
How does the Revised SRV address the Community feedback?
1. The Community does not want to see an increase in Rates.
Response
Council understands this and does want to increase rates more than required to maintained assets.
The revised SRV proposal is for a lower increase that what was originally proposed for Residential, Business, Farmland rating categories. It is also higher than what was originally proposed for the Mining rating category.
The option of a lower SRV offset by savings was considered by Council. However, it was also acknowledged that Council operates in a highly legislatively constrained environment and there are minimum levels of service that Council is required to support. In this environment, it is difficult to nominate guaranteed savings that could assist with reducing the impact of an SRV. The decision that Council has made is responsible but allows for flexibility in that we will continue to strive for efficiency in the way we can deliver services.
2. The Community want to see better services for their rates, in particular the community wants to see improved roads.
Response
While there was strong support for no SRV indicated in the community feedback, there was equally strong support for levels of service to at least be maintained or even improved, which is not possible without an SRV.
Without additional funds, Council will not be able to provide the levels of service the community is seeking. The core reason behind this proposal is to allow Council to maintain its assets, with a key focus on roads, closer to the level the community expects.
3. If an SRV is required, the first year’s increase is too high and it should be for a smaller amount and implemented over a longer period of time.
Response
For the Residential, Business and Farmland rating categories, the revised proposal is for a smaller increase in the first year. The original proposal was for a 24% increase in Year 1 and this has been reduced to a 15% increase in Year 1. The second year is slightly higher than what was originally proposed but the overall cumulative increase under the revised proposal is 6.63% lower than the original proposal for these rating categories.
The revised proposal does mean a larger increase for the Mining category than the original proposal.
4. Councils needs to tighten its belt and make sure it is operating as efficiency as possible.
Response
Council operates an Audit, Risk and Improvement Committee who oversee a service review program to deliver ongoing efficiencies and improvements to Council’s operations.
Council has documented efficiencies and improvements already achieved as part of the SRV process and is required to demonstrate its progress in this area in the SRV application to IPART.
Additionally, in approving the revised SRV proposal, Council included an action to strive for improvement through efficiency gains and operational savings and report on progress in May each year.
5. Council needs to look at how rates are distributed and ensure that each rating category is paying an appropriate proportion of Council’s income.
Response
Council has reviewed the proposed contributions by rating category and the revised proposal seeks to re-balance the contributions by category to ensure a fair and equitable distribution of rates across all ratepayers.
If the revised proposal was implemented, the contribution to Council’s total rate income would change as per the below table.
| Category | Current | Proposed | Movement |
| Residential | 33.10% | 31.85% | -1.26% |
| Business | 18.89% | 18.17% | -0.72% |
| Farmland | 38.13% | 36.68% | -1.45% |
| Mining | 9.88% | 13.30% | 3.42% |
What is a Minimum Rate?
Gunnedah Shire Council applies an ad valorem amount that is subject to a minimum amount for properties classified as Residential, Business and Farmland and a base amount and an ad valorem amount for properties classified as Mining.
With base amounts, every assessment starts off with the same level of rate, to which an ad valorem component is added.
Under a structure with minimum rates, the ad valorem amount is calculated and then compared with the minimum amount, and the ratepayer is charged the greater amount.
Where a council adopts a minimum rate for a particular category or sub-category, all ratepayers within that category or sub-category will pay at least that minimum amount regardless of their land value. Therefore, in most cases the use of minimum rates will impact ratepayers with relatively lower land values.
What is Council doing to save money?
No matter what Council does, an SRV is required to restore the real cost of maintaining assets and providing services to grow and be sustainable. Council has a focus on continuous improvement and we work hard to keep costs under strict control. Council has introduced a program of service reviews to improve operations and maximise the use and efficiency of resources. These reviews are showing that a number of improvements have already been achieved and that, while further improvements are possible, any drop in funding will translate to a drop in service levels.
Recent improvement and savings include:
- Insurance savings
- Reduced electricity costs (street lighting and Sewer Treatment Plant)
- Service Review program commenced
- Changed unsealed roads techniques (compaction versus dry grading)
- Parks and Gardens (GPS line marking, irrigation systems)
- IT system improvements and Planning portal integration
- Library service improvements
Are other Councils in our area getting SRVs?
Yes. Across the North-West and New England, the following Councils have applied for and received SRVs.
- Tamworth Regional Council – 36.3% over two years (24/25)
- Armidale Regional Council – 58.8% over three years (23/24)
- Walcha Council – 57.74% across three years (23/24)
- Tenterfield Council – 43% in one year (23/24)
- Liverpool Plains Shire Council – 18.1% in one year (23/24)
What can ratepayers expect in cases of hardship?
Council recognises the community has been doing it tough and has held off as long as possible to request an increase (9 other NSW councils made applications in 24/25 and 17 in 23/24). Unfortunately, additional money is required to keep infrastructure adequately maintained so we can continue to deliver the same level of service the community expects.
For ratepayers experiencing financial hardship, Council has a “Hardship Policy” that has recently been updated to ensure we work with the most vulnerable in our community to support them as best we can during these challenging times.
How will the new land valuation from the Valuer General impact the proposed Special Rate Variation?
Residents across the Gunnedah Shire Council will be receiving new Notice of Valuation from the NSW Valuer General from January 2025. This is provided every 2 to 3 years and reflects the unimproved value of land of a property.
The new valuations will apply from 1 July 2025 for calculating general rates.
It’s important to note an increase in land value does not necessarily mean an increase in rates. Council does not receive any more money because land values increase – some people may pay more or less on their rates depending on the change in value of their land relative to changes in land values across the Shire.
Does an increase in land values mean Council can collect more general income?
Council will be receiving new land valuations from the Valuer General effective 1 July 2025.
An increase in land valuations does not result in any additional general income for councils.
The total income that Council can source from land rates is capped at the approved rate pegged amount or any approved special rate variation.
It simply means it changes the way rates are distributed within each rate category/subcategory. Some people will pay more rates, some less, some the same.
Will my rates increase if my land valuation does?
An increase in your land valuation does not necessarily mean your rates will increase. The difference is how the rates revenue is shared across ratepayers, based on the change in their property value. Some people may pay more or less on their rates depending on the change in value of their land relative to changes in land values across the Shire.
Generally, properties whose land valuation increase is lower than the average increase for that rates category (residential, business, farmland or mining) will see a reduction in rates. However, properties whose valuation increase is higher than the average for the rating category may see a rise in rates.
