Special Rate Variation

Upper Hunter Shire Council Public Consultation on Special Rate Variation (SRV)

 Council has submitted its Special Rate Variation through the IPART portal on Monday, 3 February 2025.
IPART will consider the application before issuing a determination in May 2025.
The application number for Council submission is CS0036036.

Community Consultation has now closed

Upper Hunter Shire Council is seeking community feedback on a proposed Special Rate Variation (SRV) to secure the necessary funding to maintain current service levels and address essential infrastructure needs. This consultation aims to provide clear and comprehensive information about the SRV options and their impacts.

What is a Special Rate Variation (SRV)?

In New South Wales, councils can apply for a Special Rate Variation (SRV) to increase rates beyond the standard rate peg set by the Independent Pricing and Regulatory Tribunal (IPART). This ensures councils can meet financial and service delivery obligations when costs exceed revenue generated under the rate peg.

There are two types of SRVs:

  • Temporary SRV: Applied for a fixed period only, after which the rates revert to previous levels with normal rate peg applied. Typically these SRVs are specific in nature for a set capital fund raising process to deliver one-off projects.
    Note: We are not considering this type for the current proposal
  • Permanent SRV: Applied for an indefinite period, remaining in the rate base permanently.
    Note: Both SRV options we are considering are of this type.

Why is Upper Hunter Shire Council Considering an SRV?

Upper Hunter Shire Council is committed to providing essential services and maintaining the infrastructure that our community relies on. However, rising costs and the need for sustainable financial management necessitate a thorough examination of our funding mechanisms. To continue delivering essential services and to maintain our infrastructure, Council is considering a Special Rate Variation (SRV). Here are the key reasons why this SRV is necessary:

SRV Options

Council is considering two SRV options:

  • Option 1: A cumulative permanent increase of 33.10% over three years.
  • Option 2:  A cumulative permanent increase of 33.55% over four years.

At the conclusion of both options, rates will continue to increase by the annual rate peg set by IPART. The tables below compare the two options over four years for clarity.

Option 1: SRV over three (3) years
   2025 - 26 2026 - 27 2027 - 28  Cumulative 
 Permanent increase above the rate peg  6.30% 6.60% 6.90%   21.13% 
 Forecasted rate peg 3.70%  3.40%  3.10%  10.55% 
 Total proposed increase  10.00% 10.00%  10.00%  33.10% 
Option 2: SRV over four (4) years
   2025 - 26 2026 - 27 2027 - 28  2028 - 29   Cumulative
 Permanent increase above the rate peg  3.80% 4.10%  4.40%  4.70%  18.11% 
 Forecasted rate peg  3.70% 3.40%  3.10%  2.80%  13.65% 
 Total proposed increase 7.50%  7.50%  7.50%  7.50%  33.55% 

*The fourth-year rate for Option 1 is the assumed increase in the fourth year.

What Do the Proposed SRV Options Mean for Council?

The proposed SRV options will:

  • Allow Council to maintain current service levels.
  • Fund essential infrastructure renewal and maintenance.
  • Address the core deficit in the General Fund.

Impact on Council's Financials:

  • Operating Result: Improved financial stability and ability to meet service delivery costs.
  • Cash Reserves: Maintain sufficient unrestricted cash reserves for financial sustainability.
  • Asset Renewals: Ensure ongoing renewal of Council's assets to keep them fit for purpose.
  • Asset Maintenance: Provide adequate funding for regular maintenance of infrastructure.
  • Backlog: Address and reduce the backlog of infrastructure projects.

Rate Comparison with Other Local Government Areas

To provide further context, we have compared the proposed rates with those of neighbouring Local Government Areas. The table below highlights how Upper Hunter Shire Council’s rates, under the proposed SRV, compare to those in similar regions.

   UHSC Singleton Muswellbrook  Dungog  Liverpool Plains  Warrumbungle  Mid Western 
               
 Option 1              
 Residential  $1,297.91  $1,443.00 $1,153.12  $1,778.75  $1,125.07  $767.18  $1,191.77
 Business $1,594.14  $2,978.50  $ 3,346.81  $1,843.89  $1,969.25  $2,107.91  $2,650.94
Farmland  $5,543.47 $2,961.52 $3,743.66 $4,548.26  $6,558.71  $3,912.32  $3,102.82
               
 Option 2              
 Residential $ 1,302.27  $1,483.67  $1,185.41 $1,828.55    $1,156.57  $788.66  $1,225.14
Business  $1,599.49  $3,061.90  $3,440.52  $1,895.51  $2,024.38 $2,166.93    $2,725.16
Farmland  $5,562.08  $3,044.44  $3,848.48  $4,675.61  $6,742.36  $4,021.87  $3,189.70
               

This comparison helps illustrate how Upper Hunter Shire Council’s rates align with those in other similar areas, ensuring that our rates remain competitive and fair.

Affordability

Understanding the community’s ability to afford the proposed Special Rate Variation (SRV) is crucial for assessing its impact. For 95% of families this increase will have less than a 3.33% impact on the family budget.

Census Data for 2021:

Average income levels for households in the Upper Hunter Shire area: $1,429 per week

Impact of SRV on Household Income:

For the average residential household, the proposed SRV will amount to approximately $4 extra per week, above normal rating increases, by the final year of the SRV.

The general rate increase on the average residential household general rate by the final year of the Option 1 SRV of 10% over 3 years will be $323 or $6.21 per week and for the Option 2 SRV of 7.5% over 4 years will be $327 or $6.29 which based on the median household income of $1,429 is approximately 0.43% and 0.44% respectfully.

Therefore, the likely additional average general rate increase by the final year of the SRV options, above normal rate peg recommended by IPART, for residential households as a result of the SRV, will be in the vicinity of $4 per week above the assumed rate peg which based on the median household income of $1,429 is approximately 0.28% of total household income.

Process for Applying for an SRV

Council must apply to IPART for approval to increase rates through an SRV. The process includes:

  1. Engaging the community about the SRV proposal and considering their views.
  2. Submitting an application to IPART with evidence of community consultation.
  3. IPART seeking further community feedback before making a decision.

More information

What’s Next?

Community Consultation

Community consultation has now closed and submissions are being reviewed. 

Timeline

  • Consultation Period: Closes 15 July
  • Review of Feedback: After the consultation period, Council will review all feedback received from the community.
  • Final Decision: Based on community feedback and financial analysis, Council will make a final decision on the SRV proposal.
  • Submission to IPART: If Council decides to proceed with the SRV, a formal application will be submitted to IPART for approval.

Upper Hunter Shire Council is committed to maintaining essential services and infrastructure for the community. The proposed SRV is a necessary step to ensure financial sustainability and continued service delivery. We value your feedback and look forward to your participation in this important consultation process.

Frequently asked questions