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Rates and our future

Posted Thursday 28 May 2015

Last week the Independent Pricing and Regulatory Tribunal (IPART) accepted Council’s request for a rate variation above the 2.4% rate peg allowed for price changes. With the rate variation, rates will increase by 8% next year.

While it is never a pleasure to announce a rate increase, this was supported with good reason by all councillors and in the community consultation.

There are three reasons for the increase. First, we have turned our budget around from an operating deficit of $3.0 million in 2011–12 to a modest underlying structural deficit. But there are no ready further economies without cutting services that by and large the community does not support.

Secondly we have an ‘infrastructure backlog’ in the order of $8.6 million. These are assets that are deemed to be in an inadequate condition and which need to be rectified.

Thirdly, to meet the Government’s financial requirements to be ‘Fit for the Future’, we have to show that we can meet seven financial ratios, including running a balanced budget and eliminating our infrastructure backlog. We can now do so. Thus we can show formally that we are financially sustainable.

We will also have to show that we have strategic capacity as defined by 10 ill-defined and amorphous sub-criteria. However I believe that we will be able to demonstrate strategic capacity.

Finally, following the views of the Office of Local Government, IPART also expect councils to demonstrate ‘scale’ (some population size not yet determined).

Mosman council is requesting IPART to formally explain why Councils that have financial and strategic capacity must also have scale. Our submission to IPART can be found here.