the budget interview with mayor ronney oueik · 2011. 9. 23. · auburn city council 1 susan...

AUBURN CITY COUNCIL1 Susan Street, Auburn NSW 2144MAIL TO: PO Box 118, Auburn NSW 1835PHONE: 9735 1222 FAX: 9643 1120

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THE BUDGET INTERVIEW with Mayor Ronney Oueikfrom residential rates is one of the lowest in Sydney, our rate income is no longer sufficient to fund everyday services that are vital for our community. Through the Community Strategic Planning process our community has identified a number of additional services and facilities with a total cost estimated at $116 million. Therefore we need bring our rate income up to a reasonable level to safeguard the services people expect their local council to deliver and to meet the needs of our growing population.

How does Council undertake the financial planning process?

Each council’s financial plan is different to reflect local community needs and priorities. However, there is a common legislated framework for setting a budget that each council must follow.

Our financial planning process involves Council setting priorities, identifying measures and allocating funds that will show how the key strategic objectives outlined in Council’s Strategic Plan are to be achieved in the coming years. Through this process we are able to specify the annual maintenance, upgrade and renewal needs of assets and any new or replacement infrastructure; as well as the cost of community services and facilities. The financial forecasts also estimates the revenue collected from other sources such as State and Federal Government funding and from loans. By using these estimates we are able to determine the amount we need to collect in rates to meet our financial responsibilities for the coming years. We have estimated that we need to increase the current rates by 8.5% each year, for the next 5 years, to be able to meet the community priorities and needs identified through Council’s strategic planning process. This rate rise would start in 2011/2012 financial year.

How will Council maximise cost savings and resource effiencies?

Providing value for money is one of Council’s

Auburn City Council is in the final stages of preparing its long term financial plan. Council is planning to submit a proposal for a special rate variation to the Independent Pricing and Regulatory Tribunal (IPART) next month. Mayor Ronney Oueik explains why Council needs to apply for a special rate variation.

What financial challenges is Council facing right now?

Auburn is the fastest growing suburb in the Sydney metropolitan area. This huge growth is creating pressures on our services and our infrastructure network. The expected 22% increase in population during the next ten years will create significant pressure on Council’s finances and resources. Through our financial planning process we have also identified a current service level funding gap of $9 million over ten years and an annual shortfall in spending on renewing infrastructure of $4.7 million each year to stop the deterioration of our roads, footpaths, drainage and community facilities. In addition, there is a current infrastructure backlog of $34 million. This is an issue experienced by councils across New South Wales. Because our income

key priorities and as part of the budget process we have considered all possible cost savings and efficiencies. New systems and ways of working will be introduced to further automate our processes, eliminate duplication and drive down costs. Huge investments in important community projects such as the new Station Road Bridge and the North Auburn Centre for the Community have been realised through partnership programs and grant funding. These together with many other cost saving mechanisms - including seeking external funding - will continue, to ensure we provide services in the most efficient and effective way.

What will this rate rise mean for the typical residential rate payer?

It is not possible for council to raise enough money to address the challenges ahead by making efficiency savings and other initiatives alone. We believe that the special rate variation proposal will in reality mean a very small additional weekly increase. The typical residential rate payer will be paying little more than $3.84 extra a week after 5 years, compared to what they would pay without the special rate increase. In return residents will receive renewed and revitalised town centres, a well maintained network of roads, footpaths, stormwater works, parks and playgrounds, better libraries and more community centres.

How can residents get involved?

Our community needs to show us that they support this rate variation. It is your money and you need to be involved. We want to know whether you are willing to pay the extra amount as an investment in a better future for Auburn City and its community. You can get involved by:

answering the online questionnaire by •visiting www.auburn.nsw.gov.aucollecting a form from your local library •or Council’s customer service centre visiting an information stall or forum •happening soon near you.

CONTENTS OF THIS NEWSLETTER

PAGE 1: The Budget Interview with Mayor Ronney Oueik

PAGE 2: What you need to know about Council’sspecial rate variation application

PAGE 3: Community Priorities

PAGE 4: How to ‘Have Your Say’

PAGE 5: Translations

PAGE 6: Translations

Have your say on funding Auburn City ’s future

TURKISH VIETNAMESE CHINESE ARABIC

Translations

2 3 4

What you need to know about Counci l's special RATE VARIATION APPLICATIONCouncil collects rates from residents and businesses to help fund and provide services and facilities for the community. Council is applying to the Independent Pricing and Regulatory Tribunal (IPART) to raise the rates to generate more income to help fund these essential services and facilities for our community.

Current 2011/12 2012/13 2013/14 2014/15 2015/16

Including 8.5% SV $520.63 $564.88 $612.89 $664.99 $721.51 $782.84

Increase per annum $44.25 $48.01 $52.10 $56.52 $61.33

Increase per week $0.85 $0.92 $1.00 $1.09 $1.18

Without SV (estimate) $520.63 $519.12* $534.69 $550.73 $566.70 $583.13

TYPICAL (MEDIAN) RESIDENTIAL RATES

Current 2011/12 2012/13 2013/14 2014/15 2015/16

Including 8.5% SV $2107.59 $2286.74 $2481.11 $2692.00 $2920.82 $3169.09

Increase per annum $179.15 $194.37 $210.89 $228.82 $248.27

Increase per week $3.45 $3.74 $4.06 $4.40 $4.77

Without SV (estimate) $2107.59 $2101.48* $2164.52 $2229.46 $2294.11 $2360.64

TYPICAL (MEDIAN) BUSINESS RATES

Community PRIORITIES

Auburn City Counci l has worked together with the community to set goals for i ts key service areas, including waste, roads, parks, recreation faci l i t ies and l ibrary services. These outcomes and actions are set out in Auburn's Community Strategic Plan. This is a ten year plan that wi l l help and guide Counci l to deliver the services and programs the Auburn community deserves.

To make sure that our services and programs meet the needs of the community, Council undertook a community priorities survey to find out what services and programs are important to local residents and businesses. The results of this survey, forms a key element in Council’s Community Strategic Plan. This plan has been developed to enable us to deliver a better quality of life for people in Auburn.

The survey asked community members which service areas they considered most important to them. The top 10 service areas in order of importance were:

Provision of information to residents1.

Local footpaths and roads2.

Suitability of local shops and town centres3.

Council policies and plans4.

Community education and safety programs5.

Town centre cleaning6.

Long term planning for the Auburn City Council area7.

Attractiveness of town centres8.

Road safety9.

Festivals and arts facilities10.

When preparing the Community Strategic Plan, Council held community forums throughout the area to identify the communities’ priorities. The following top 5 issues emerged from these forums:

1. Improve public transport

2. Eliminate or reduce high rise and poor developments

3. Improve roads and footpaths, particularly for people with a disability

4. Increase affordable and appropriate housing

5. Promote employment opportunities/develop employment projects

Council information to residents

Maintaining local roads

Suitability of local shops

Council policies and plans

Education and safety

Town centre cleaning

Long term planning

Attractiveness of town centres

Road safety

Festivals, events, arts

Parking in town centres

Participate in decision making

0.0 2.0 4.0 6.0 8.0 10.0 12.0

3.1

3.2

3.7

3.8

4.0

4.4

4.5

5.1

5.6

5.7

7.1

10.2

WHAT HAVE WE FOUND OUT SO FAR? Contribution to overall satisfaction with Council

HOW TO Have Your SayAuburn City Council wants to make sure that all members of the community and ratepayers can have their say on Council’s proposal to increase rates. We will be doing this by setting up council stalls throughout the area, through an online forum and via feedback boxes available at customer services and libraries. Council will also be undertaking a short telephone survey targeting 400 residents and ratepayers to measure community support for the special rate variation.

‘Have your say’ confidentially at a Council feedback boxFind out more information about the proposed rates variation at a range of customer service points throughout the Auburn City area. Council’s Feedback boxes will be located in Council’s Libraries in Auburn, Lidcombe, Regents Park and at the Newington Community Centre and Council’s Customer Service Centre located at Civic Place, 1 Susan St, Auburn.Feedback boxes will be made available until Thursday 31 March 2011.

YOU CAN HAVE YOUR SAY BY:

Visiting an Interactive Information StallA series of information stalls will be set up throughout the area in March to provide residents and businesses with information on Council’s proposal to increase rates and to answer questions. Bilingual Council staff and volunteers will be made available where possible.

You will also be able to view the supporting documents: the Draft Community Strategic Plan, Draft Workforce Management Strategy, Draft Asset Management Plan and Draft Long Term Financial Plan at our information stalls, plus provide an on-the-spot feedback via a survey.

Times, dates and locations of information stalls are as follows:

DATE & TIME LOCATION

Monday 7 March 2011, 6pm-7.30pm Berala Public School (Main Hall), Corner of Harrow Road & Clarke Street, Berala

Tuesday 8 March 2011, 5pm-6.30pm Pulse Function Centre, The Waterfront, Wentworth Point

Wednesday 9 March 2011, 10am-11.30am Lidcombe Community Centre, 3 Bridge St, Lidcombe (underneath the Library)

Wednesday 9 March 2011, 6pm-7.30pm Exhibition Gallery, Auburn Library, 1 Susan St, Auburn

Thursday 10 March 2011, 6pm-7.30pm Newington Community Centre, Corner of Avenues of Europe and Asia, Newington

Friday 11 March 2011, 10am-11.30am Regents Park Community Centre, Amy Street, Regents Park (behind the Library)

‘Have your say’ online via our interactive online discussion forumOur online forum provides you with details on the special variation proposal. It gives you the opportunity to express your views on the proposal and see what other members of the community are saying. You will also be able to access a range of other resources including background information and the Draft Community Strategic Plan. Please join our specially designed online forum accessed either from Council’s website or directly at: www.iloveauburncity.com.au/fundingourfuture The online forum will close on Thursday 31 March 2011.

‘Have your say’ by writing to usSend your comments in writing to the General Manager by Thursday 31 March 2011.By mail: Auburn City Council, PO Box 118, Auburn 1835.By email: [email protected] written submissions must contain your name and address and are subject to a request for access to information under the Government Information (Public Access) Act 2009. If such a request is received, your submission, including your name and address, may be made available for inspection. You may request for your personal information to be suppressed by Council under Section 58 of the Privacy and Personal Information Protection Act 1998 (“PPIP Act”). Council will consider your request in accordance with the PPIP Act.

For more information on funding Auburn City’s futureFor more information, please phone 9735 1222 or email [email protected] request an interpreter, please contact the Telephone Interpreter Service on 131 450 and ask them to ring Auburn City Council on 9735 1222. Further community engagement opportunities will be outlined on Council’s website and on the interactive online discussion forum at: www.iloveauburncity.com.au

How do Auburn rates compare to the rest of Sydney?Auburn’s residential rates are the third lowest rates within the Sydney Metropolitan Area. The average residential rates for 15 other similar type councils in the Sydney Metropolitan Area was 47% higher than Auburn’s residential rates in 2008/2009. At the end of the rate increase period, Auburn’s average residential rate will still be at least 9% lower than the average of similar type councils in the Sydney Metropolitan Area.

How much of Council’s income is collected from rates?Income generated by rates makes up less than 50% of Council’s total yearly income. Other sources of income include state and federal government funding, returns on council investments, council fees and charges, and developer contributions.

What does Council spend its money on?Council spends its income on delivering services to the community. This includes things like waste collections and building and maintaining facilities such as parks and playgrounds, community buildings, libraries, roads, footpaths and storm water infrastructure. Costs associated with this service provision include:

Upgrading and improving roads, footpaths and buildings •Maintenance on buildings, parks and street lighting•Operations costs for community centres•Materials for services such as bins, books, building materials•Employment of staff•Repayment of loans•

What is rate pegging?Rate pegging is the percentage limit by which Council may increase the total income it will receive from ordinary rates. The rate pegging percentage is set by the Independent Pricing and Regulatory Tribunal (IPART).

Why is Council applying for a rate increase? Because the Council’s rates are set at a limit by IPART, Council can only raise its income by submitting a special application to the Independent Pricing and Regulatory Tribunal to get permission to raise more income through increasing the residential and business rates. Because our residential rate income is one of the lowest in Sydney, this income can no longer completely fund everyday services. Auburn City Council will be applying to increase the current rates by 8.5% each year, for the next 5 years. This will help fund projects and programs that have been prioritised by the local community through the community consultation process and telephone survey carried out in 2010. The extra money will also address the current service level funding gap and the annual shortfall of $4.7M to renew essential infrastructure.

What happens after 5 years?After 5 years the total rate base will have been raised to a sustainable level.

If the rate increase is approved, how much will the typical ratepayer pay extra every week? The tables below show the impact of the proposed rate increase on the typical rate payer.

*The decrease in 2011/2012 rates without the special rate variation is due to the Public Domain Upgrade Program special variation expiring in 2010/2011.

Flood prevention works throughout the Auburn LGA

$2.5 million

Regents Park Community Centre and Library upgrade work to provide improved library and

community services to Regents Park residents

$3.4 million

Building replacement works at the Council Depot to

ensure compliance with OHS

$8 million

Improvements to Berala Town Centre including landscaping,

new street furniture and tree planting

$1.2 million

The extra money will help fund the following Community Priority Projects:

New paths, building structures, seating and planting at the Auburn Botanic Gardens

$1 million

All dollars quoted are in today’s dollars and don’t take into account inflation

Traffic works such as roundabouts and traffic calming

to improve safety and traffic flow throughout the Auburn LGA

$1 million

New pool and facilities at the Ruth Everuss Aquatic Centre

$9.5 million

Multipurpose sports complex including indoor

courts and outdoor synthetic playing field at

Wyatt Park

$8.1 million

Replacement of Regents Park railway bridges to improve access into the town centre

$12.4 million

ROADS AND TRAFFIC:

238 kilometres of local

roads, 315 kilometres

of footpaths,

220 kilometres of

verges, 185 kilometres

of stormwater

drainage pipes and

4,076 drainage pits,

bridges, public street

lighting, litter bins,

school crossings,

10 bus shelters,

parking spaces,

2 public car parks

COMMUNITY SERVICES:Removal of

dumped rubbish,

street cleaning, youth

and family, multicultural

and aboriginal services,

childcare programs,

long day care centre,

school holiday

programs, information

program on head lice

and immunisations,

food safety, crime

prevention programs,

inspections, and use

planning advice and

approvals

ENVIRONMENT: Bush care, tree

management, water

and energy saving

programs, 700

hectares of

open space

PLANNING: controlling urban

development

through development

assessment and

zoning, building

control

Counci l provides essential services and

infrastructure for the community

Councils are responsible for essential infrastructure including roads, bridges, community centres, swimming pools, recreation and leisure facilities, drains, libraries and parks. They provide approximately 100 services for local communities including waste and recycling collections, homework help and educational opportunities, street lighting and child care services. Every time a person leaves their house they are using services provided by your local council.

COMMUNITY ASSETS: 4 libraries with internet

services, 15 sports grounds,

community halls, 90 parks,

Auburn Botanic Gardens,

Auburn Golf Course,

1 swimming pool, 41

playgrounds, public toilets,

public art

IN-HOME SERVICES: Family day care,

parenting advice,

multilingual telephone

services, recycling and

waste collections, aged

care units

YOU’VE TOLD US that roads and footpaths need to be renewed, city parks require improvements and town centres need revitalising. You want Council to deliver everyday services in one of the fastest growing population areas of Sydney. You have told us during the development of our ten year plan where we can make improvements, and what facilities and services are important to you.

Auburn City Council is committed to providing these services and facilities in the best possible way. To deliver what you said you want, Council is asking you to pay a little more in your rates.

Our community needs to show us that they support a rate rise. It is your money and you need to be involved. We want to know whether you are willing to pay the extra amount as an investment in a better future for Auburn City and our community.

Why is Auburn City Council applying for a rate rise?Auburn City Council needs to increase its income by raising ordinary rates to:

Fund services and facilities such as playgrounds, 1. road safety works, parks, sporting fields, libraries and making improvements to our town centres that are important to you.

Meet the needs of a growing population.2. Because our rate income is one of the lowest (third 3. lowest other than City of Sydney and North Sydney) in Sydney, our rate income is no longer sufficient to deliver the services you currently enjoy.

How much more will I pay?The typical residential rate will increase by $262.21 a year or $5.04 a week after 5 years and the typical business rate will increase by $1061.50 a year or $20.41 a week after 5 years.

Have your say on Auburn City’s Future

What will I get in return?The extra money will help fund facilities and services that our community deserves.

Without the extra money there will have to be cuts to services and possible closure of facilities that you and your family currently enjoy.

Safer roads and improved traffic conditions

Improved flood and drainage works

All weather playing fields and new play equipment

Community centres in Berala, Regents Park and

Wentworth Point

Cleaner neighbourhoods

New pool and associated facilities at

Auburn Swim Centre

Town centre improvements

Better libraries and learning programs

Regents Park railway bridge replacement to relieve congestion and improve access to the Regents Park Town Centre

You can have your say on Council’s special rate variation proposal until the 31st of March 2011. Log on to www.iloveauburncity.com.au/fundingourfuture to fill in an online survey or visit your local library to have your say confidentially at a feedback box.

ANNUAL STATEMENT OF REVENUE POLICY

PAGE l1

PRICING POLICY

Prior to a fee or charge being adopted by Council several principles are considered whendetermining the level of revenue to be raised from a particular revenue source.

The principles are not mutually exclusive and several may be used in determining an appropriateamount for each fee or charge. The general principles used by Auburn City Council in determiningfees and charges are:

1. Statutory Amount (S)

This is the amount required to be charged by statute. Where this principle applies, Council has nodiscretionary power to alter the amount.

2. User Pays (UP)

Under this principle, prices are set to recover the full cost of providing the goodsiservices actuallyconsumed or used.

ln deciding whether this principle is appropriate for a particular good/service Council considerswhether there are Community Service Obligations or equity issues that would merit the application ofan alternative pricing principle.

3. Gross Subsidisation/ Gommunity Services (CS)

Fees may be discounted to a level below the cost of a service if full cost recovery would prevent ordiscourage its consumption and the service is regarded as having particular merit to the welfare andwell-being of the community (hence, creating a Community Service Obligation); provided the cost ofthe discount does not exceed the estimated benefit.

Council accepts the responsibility for these services, funding them from other sources of revenue orcharging a nominal fee to help offset the cost of providing the goods/services.

4. Resource Use (RU)

Prices are determined in order to help ensure that scarce resources are not wasted and can promotemore efficient investment in infrastructure, services and personnel.

5. Commercial (C)

Where Council produces a good or services as a commercial pursuit, prices are set at a level to fullyrecover costs and risk.

6. Reference to Suppliers of Similar Services (RS)

Council may have a discretionary right to charge but makes reference to other councils that aresupplying a similar service, for instance, charges for statutory certificates or services, to establish acharge that is consistent to customers dealing with numerous councils.

DRAFT COPY REVEN UE STATEM ENT 2OTL/20T2

PAGE l2

GST DISCLAIMER

Auburn City Council reserves the right to amend any fees and charges without readvertising with

regard to ány changes in the GST Legislation. All efforts have been made to adhere to GST

leõislation; hówever,'in the event that GST has been applied incorrectly the relevant fee or charge

will be changed by the appropriate amount'

'GST" entries in the following tables reflect whether or not the applicable fee is subject to GST or

not. ltems may be taxable a-nd subject to GST. ltems with status other than taxable are exempt

under various Divisions of the ést nct 1999, for example Division 81 (D81) and other

determinations issued by the Treasurer.

RATING STATEMENT

On June 4,2010 the NSW Government announced a number of new functions for the lndependent

Pricing and Regulatory Tribunal (IPART) relating to Local Government'

The new functions include IPART determining the peg for councils' general (rate) income, and

reviewing councils' applications for special variations and minimum rate increases under the Local

Government Act, 1993.

Under the Division of Local Government - Premier and Cabinet guidelines, applications for a special

variation to general income are to be submitted to the lndependent Pricing and Regulatory Tribunal

(rÞnnr) by-25 March, 2e11 and include a copy of the Council resolution to apply for a special

variation.

IPART have indicated that they will determine applications by 10 June 2011'

Council at its Ordinary Meeting Febrr¡ary 16,2011 resolved to apply for a special variation to general

(rate) income under Section SOan of the Local Government Act 1993. Details of the proposed

special variation are provided below'

Background

Auburn City Council's Community gtrategi-c Plan (CSP) provides a vehicle for expressing long term

community'aspirations. Howeverihese aõpirations can only be achieved if sufficient resources (time,

money, assets and people) are allocated'

As part of Council's lntegrated Planning and Reporting Framework (|P&RF) a Resourcing Strategy

has been prepared to ach-ieve the objectives established by the Community Strategic Plan (CSP) and

focuses on long term strategies in three key areas being :

o long term financial Planning. workforce management Planningo asset management Planning

The Long-Term Financial plan (LTFP) is an important component of the Resourcing Strategy and

hence Council's lntegrated panning and Reporting Framework. lt is used to inform decision making

during the finalisation of the CSP and the development of the Delivery Program.

The LTFp enables Council to model the financial impacts of various activities, initiatives, service

levels and programs as well as perform risk analysis in terms of measuring the impacts of changing

assumptions such as growth, inflation, rate pegging etc'

DRAFT COPY REVEN UE STATEM ENT 2OtT/2OT2

PAcE l3

It also facilitates modelling of various scenarios that respond to the priorities identified by thecommunity during the development of the CSP. The LTFP will identify whether or not those prioritiesare sustainable given current resourcing, and identify any gap between projected expenditures andprojected income under each of the scenarios.

The LTFP covers the 10 year planning horizon from 20111121o 2020121.

Thefinancial modelling included in the LTFP identified a significantfunding gap of $128 million ($95million in today's constant dollars) over ten years under the'preferred scenario' included in the LTFP.

What this means is that without additional funding Council will not be able to:

o Continue to provide the current levels of serviceo Provide all the facilities and services identified as being much needed by the community

during the development of the CSP, and. Stop the continued deterioration of Council's roads, fooþath and stormwator networkso Ensure that community facilities and amenities will not have to be closed

The financial challenges faced by Auburn City Council have been highlighted and reported over anumber of years. The financial modelling underpinning the LTFP is based on a robust planningframework and confirms that these challenges remain.

There are 3 contributing factors that combine to result in the considerable financial challengesidentified. These are:

1. A current service level funding gap of approximately $1.9 million per annum (i.e. Council

needs to find an additional $1.9 million p.a. just to maintain current services and service

levels) resulting from the a number of factors including:

i. the impact on operating expenditures of significant population growth resulting inincreased demand for services over many years which has not been offset by a

corresponding increase in rate revenue resulting from that growth.

ii. input cost increases well in excess of inflation over the past 4 years for a number of cost

elements including utilities, insurance, workers compensation and superannuation costs. ltis estimated that these increases have added an additional $2 million per annum tocouncil's oprrating cost¡ when compared to what they would have been had they only

increased by inflation. lncreases in rate revenue resulting from rate pegging increases inexcess of inflation, over the same period, are estimated to be only $0.8 million per annum

resulting in a reduction in Council's operating result of $1.2 million per annum.

iii. an identified reduction in budgeted user charges and fees of $0.6 million per annum.

It should be noted that the current service level funding gap of $1.9 million per annum hasbeen reduced to $0.9 million resulting from expenditure budget reductions and savingstotalling $1 million per annum being implemented.

2. Additional facilities and associated services identified in the development of the CSP totalling

$116 million over 10 years (in today's dollars) of which only$86 million has identified funding

sources which results in an additional $30 million funding shortfall.

DRAFT COPY REVEN UE STATEM ENT 2!LT/2OT2

PAGE l4

3. A shortfall in infrastructure renewals expenditure of $4.7 million per annum, as identified in

Council's asset management plans, required to maintaining Council's infrastructure (including

roads, footpaths, playground, community facilities and amenities) in a satisfactory condition'

The above issues are explained in much more detail in Council's LTFP document, which can be

downloaded from Council's website'

Proposed Solution to Financial Challenges

To enable Council to continue to deliver the levels of service currently provided, address the

continued deterioration of its infrastructure assets and satisfy the demand for additional facilities and

services identified through the development of the cSP an innovative and multi-faceted financial

strategy has been develoPed.

The proposed financial strategy developed to address the above financial challenges consists of a

number of comPonents including:

o A review and utilisation of Council's reserygs.

o The development of an asset rationalisation program and the identification of underutilised

assets to be divested and proceeds of which utilised to fund facilities with an identified

communitY need.

. A review of underutilised facilities to identify facilities that can be co verted to facilities with an

identified communitY need.

. lncreased utilisation of loan funds.

o A review and update of Council's developer contribution plans to ensure the level of

contributions generated from new developments satisfy the additional demand for new

facilities resulting from those developments'

o Where opportunities exist, developer partnerships to deliver facilities required by the

communitY will be Pursued.o Expenditure budget reductions and savings.

o Continuous improvement and pursuit of productivity improvements to deliver savings to offset

the impact of the considerable forecast population growth over the next 10 years.

o An increase in Council's revenue base via a special variation in general (rate) income'

Detailed below is a summary of the contribution (over 10 years in today's constant $) each of the

individual components of the'financial strategy makes to addressing the current financial challenges,

under the preferred scenario.

$10M$33M$7M$13M$26M$33M$10M$7eM

$211M

It can be seen that a proposed special variation represents only one component of-the^overall

financial strategy developed'to address the significant fínancial challenges facing Auburn city council.

Further details on the above components of the financial strategy are provided in Council's LTFP

document.

. Budget Savings

. Productivity Savings

. Reserves

. AssetRationalisation. Partnerships

. Loans

. S94 Contributions (additional)

. Special Variation in Rates Proposal

DRAFT COPY REVE N U E STATE M ENT 2OtTl 2OT2

PAGE l5

The Special Variation Proposal and lmpact on Rates

The special variation in rates proposal is for a 11.74o/o increase in rates in the first year being 2011112and then a 8.5% increase in rates each year for the next 4 years commencing 2012113 through to andincluding 2015116 and then rate pegging thereafter. The percentage increases includes the actual ratepeg for 2011112 and forecast rate peg for the subsequent years.

Council's current 201012011 rates includes a 3.09% special variation for Public Domain UpgradeProgram (PDUP) works that expires (ends) at the end of the current 2010111 rating year.

The net impact of the expiration of the PDUP special variation (a 2.9o/o reduction in ordinary rates)and the 11.74% proposed increase is an increase in 2011112 of 8.5o/o on the current 201012011ordinary rates. This means the special variation proposal will result in an increase on 2010111 currentrates of 8.5% each year for 5 years.

An indicative breakdown of this effective 8.5% increase each year is as follows:

. Average increase in rates without a Special Variation +2.3o/o

. Required increase to address the current service levels funding gap +0.7o/o

' Required increase to fund additional facilities & services identified in CSP +2.5o/o

. Required to address Infrastructure Renewals expenditure shortfall +3.0%

Total increase in Ordinary Rates p.a. each year for 5 years +8.5%

The 8.5olo increase represents an addition al 5.5% above estimated average inflation ol 3% each year,over the 5 year period.

The proposed increase does not apply to Domestic Waste Management Charge or the StormwaterManagement Service Charge. Therefore it is to be noted that the typical residential rates and annualcharges bill (including domestic waste management and stormwater charges) would increase by anaverage 6.1 % each year for 5 years, or an additional 3.1 o/o pêr annum above estimated inflation.

The impact on the typical (median) rate bill of an effective 8.5% increase on current rates each yearfor 5 years is detailed in the tables below.

a) Typical (median) Residential Rates

The total increase at the end of 5 years for the typical residential ratepayer is $262.21 or $5.04 perweek. This represents an additional $199.71 or $3.84 per week more compared to what the typicalrate would be without the special variation.

Auburn City Council's residential rates have historically been amongst the lowest in the state and inparticular, the Sydney Metropolitan area. ln 2008i09, of the 32 metropolitan councils, Auburn'sresidential rates were the third lowest after North Sydney and Sydney City councils.

Current 2011t12 2012113 2013114 2014t15 2015t16

lncludino SV $520.63 $564.88 $612.89 $664.99 $721.51 9782.84

lncrease per annum. $44.25 s48.01 $52.1 0 $56.52 $61.33

lncrease per week $0.85 s0.92 $1.00 $1.09 $1 ,18

Without SV $520.63 s51 9.1 2 $534.69 $550.73 $566.70 $583.1 3

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PAGE l6

Council's average residential rate is currently 30% less than the average for similar Councils (i.e.

Councils classified as Group 3 Councils) and would remain at least 9% less than the Group 3 council

average at the end of the 5 year phase in period.

b) Typical (median) Business Rates

Gurrent 2011112 2012113 2013114 2014115 2015116

lncludinq SV $2.107.59 $2,286.74 $2,481.11 $2.692.00 s2.920.82 s3.169.09

lncrease per annum. $1 79.1 5 $194.37 $210.89 s228.82 s248.27

lncrease per week $3.45 $3.74 $4.06 $4.40 s4.77

Without SV $2.107.59 $2,101.48 $2,164.52 $2.229.46 ß2.294.11 $2.360.64

The total increase at the end of 5 years for the typical business ratepayer is $1,061.50 per year or

$20.40 per week. This represents an additional $AOa.+S per yearor $15.55 per week more compared

to what the typical rate would be without the special variation.

The average business rate for Group 3 councils ¡ while Auburn's average

rate was $É,lg+.gz which indicates that Auburn's higher than the average

for similar type councils. However, as indicated by bov.e, the average rate is

far from oeiñg reflective of what the typical business'rate payer would be paying under the special

variation propãsal. ln fact 7go/o of busiñêsses would be paying less than the (arithmetic) average rate

at the end of 5 years.

It is also to be noted that council rates arc a tax deduction for businesses as well as for income

froducing residential rental properties and therefore the net impaet on those ratepayers would

generally be lower than those increases quoted above.

The percentage increases per year are detailed in the table below.

2011/,12 2012113 2013114 2014115 2015116

lncrease Year '11.74o/o 8.5qlo 8.5o/o 8.5o/o 8.5o/o

lncrease Cumulative 11.74o/o 21.24o/o 31.54o/o 42.72o/o 54.860/o

lnc. on 10/11 rates Year * 8.5o/o 8.5o/o 8.5% 8.5% 8.5o/o

lnc. on 10/11 rates cumulative *8.Se/o 17.7o/o 27.7o/o 38.6% 50.4o/o

"lncrease on current 2010111 tion that expires at the end of

2010111.

Outcomes of the Proposed Special Variation

The proposed special variation will generate an average additional $7.9 million (in today's constant $)

pe¡. ánnrr over the next 10 years and will provide sufficient funding that will:

o Enable all the additional facilities and services identified by the Community as being needed

(through the process of developing the CSP) to be delivered over the next 10 years

o Enable essential infrastructure assets such as roads, footpaths and stormwater networks to be

maintained in a satisfactory condition and ensure these assets do not deteriorate any further

and therefore ensure these assets do not fail due to inadequate funding.

o Ensure that community facilities such as community centres, amenities, playgrounds will not

fall into disrepair that may ultimately lead to the closing of many of these facilities.

DRAFT COPY REVEN UE STATEMENT 2OTII2OI2

PAGE l7

. Ensure that current service levels are maintained and delivered to the same standard.

A reconciliation of where the additional revenue generated will be utilised is provided below :

One of the key outputs of Council's atrct managam.nt planning is a capital expenditure program thatis based on the outcomes of the development of the CSP and asset lifecycle modelling.

The capital expenditure program totals $248 million (in today'¡ constant $) over the ten year period ofthe plan. Of this $113 million is for new facilities or infrastructure works, $88 million for currentlyscheduled renewal works and committed new works, an additional $47 million of renewals worksrequired to maintain Council'¡ infn¡tructurc arr.tr in a satisfactory condition. The identified additional$34 million to address Council's irtontilicd infn¡tructure works backlog has not been included in thecapital works program at this stage.

ln addition a further $3 million over ten years is required to support the additional operating costassociated with these facilities.

Major new capital expenditure (in today's constant dollars) included in the plan are:

o Lidcombe Centre for the Community and Library ($Z.SU¡

¡ Berala Centre for the Community ($2.t ttt¡o The potential redevelopment ( via a developer partnership) of the Lidcombe Community

Centre Precinct and Car Park ($20M)o Regents Park Community Centre Precinct Works ($3.+tttt¡

o Wentworth Point Centre for the Community ($s.Ottt¡

o Aquatic Centre Redevelopment Stage 1 ($9.5M)

o Aquatic Centre Redevelopment Stage2 - lndoor Sporting Complex ($8.1M). Wyatt Park Synthetic Playing Field ($1M)o Miscellaneous Parks works ($Z.eV¡¡ District and Town Centre open space acquisitions ($7M)

o Lidcombe Town Centre works ($4.0V¡

Where the Additional Revenue will be Spent2O11l12to 2020121

$'000lconstant)

To address the current service level deficit of $9 million at end of 10 years (perScenario 5.0 of LTFP) and qenerate a $1 million surplus

1 0,1 60

To facilitate provision of 'unfunded new facilities & infrastructure' identified in thedevelooment of the CSP and included in the 10 vear capital expenditure oroqram

27,018

To fund additional operating expenditures associated with 'new facilities' indentifiedin the develooment of the CSP

2,908

To facilitate the required additional infrastructure renewals expenditure as identifiedin Council's Asset Manaqement Plans

46,526

To provide for a infrastructure reserve at end of 10 years as part of a prudent longterm financial strateov

2,400

To fund other miscellaneous items such as working capital movements etc (e.9.increase in rates outstandinq resultinq from the special variation)

1,672

= Additional Expenditures resulting from the Special Variation & Loans 90,684

Less loan funds raised (31 ,170)

Plus additional loan principal and interest repayments on above over 10 years 19,759

= Total Additional Revenue Raised by SpecialVariation 79,273

DRAFT COPY REVEN UE STATEMENT 2OTI/2OL2

PAGE l8

. Berala Town Centre Works ($1.2M)

o Regents Park Railway Overbridge ($12.4M)

o New traffic works ($1Z.Sttl¡

o New Stormwater works ($5.SVt¡

Full details of the capital expenditure program forthe 10 year period are included in Council's Asset

Management Plans.

lf the special variation doesn't go ahead a number of the above capital projects (totalling $39 million)

would not be able to proceed. Of this amount $1: million funding is identified in the plan as either

developer contribution's or government grants, however without matching or contributing funds from

Councíl those projects would not be able to go ahead. The majorprojects that would most likely need

to be reviewed'and removed from the 10 year capital expenditure program include:

o Botanic Gardens works ($1 million)o Aquatic Centre Redevelopment stage 1 - would require a reduction in the scope of works

($9.5 million to $5 million)o Berala Town Centre Works ($1.2 million)o Aquatic Centre Redevelopment stage 2 ($8.1 million)o Council depot works including offices , training rooms and amenities ($8 million)

o Regents Park Railway Overbridge ($8.6 million net)

o Regents Park community centre Precinct works ($3.4 million)o Traffic Facilities works ($1 million over,10 years)o Stormwater works ($2.S m¡tlion over 10 years)

Additionally Council could review the allocation of the proceeds of the_as9et rationalisation program

previouslyieferred to, Currently $tO million is allocated to fund, gr part fund 3 projects during 2010111

and 2011/12. These Projects are:

o Lidcombe Centre for the Community ($5'5 million)o Aquatic Centre Redevelopment (part funding of $3 million)o Auburn Town Centre Upgrade (part funding of $1.5 million)

ln accordance with the above Council will levy an ordinary residential rate and an ordinary business

rate, the amount of which will be subject to the IPART's determination of Council's special variation

appíication. The proposed rating structure for 201112012 under the two scenarios is provided in the

following table.

Valuations with a base date of 1 July 2009 will be used for rating in 201012011. Subject to any

changes in valuation amendments and finalisation of rating calculations, it is anticipated that the

following rates in the dollar, minimum rates and yield will apply in 201112012'

With the Special Variation Without the Special Variation

Residential:

Ad valorem - 0.23056 cents in the dollar.

Minimum - $506.70

Vielrl - S14 369 600

Residential:


Minimum - $467.00

Yield - $13,243,900

Buslness,'


Minimum - $506.70

Yield - $15,895,700

Busrness;


Minimum - $467.00

Yield - $14,650,400

DRAFT COPY REVEN U E STATE M ENT 2OIT/ 2Ot2

PAGE l9

Under the Division of Local Government - Premier and Cabinet guidelines, applications for a specialvariation to general income are to be submitted to the lndependent Pricing and Regulatory Tribunal(IPART) by 25 March, 2Q11 and include a copy of the Council resolution to apply for a specialvariation.

IPART have indicated that they will determine applications by 10 June 2011.

lnterest on Overdue Rates and Charges

ln accordance with Section 566 of the Local Government Act 1993 Council charges interest on allrates and charges which remain unpaid after the become due and payable. The due dates forpayment of rates and charges are as follows:

. lf payment is made in single instalment, the instalment is payable by 31 August 201 1.

o lf payment is made by quarterly instalments, the instalments are payable by 31 August 2011,30 November2011,29 February2Ol2and 31 May 2012.

lnterest will be calculated on a daily basis using the simple interest method. The rate of interest will bethe maximum rate as determined by the Minister for Local Government and published in theGovernment Gazette. ln accordance with section 566(3) of the Local Government Act 1993 theMinister will determine the maximum rate of interest in 2011 for 201112012 rating year (201012011:s%).

Domestic Waste Management Annual Charges

The Local Government Act 1993 requires that the Domestic Waste Management (DWM) charge mustreflect the actual cost of providing this service. Since 1999i00 the DWM service has included:

r Weekly collection of a 120 or 240litre bin;r Fortnightly collection of recyclable materials;r Fortnightly green-waste service; andr Bi-annual clean up collection.

DWM charges proposed for 2O1 I 12012 are:

lrem Un¡r 201112012

$

201012011

$

240lgarbage bin &2401green waste bin & 240Lrecvcle bin

Service 533.83 551.30

1201domestic & 240Lgreen waste bin & 240Lrecvcle bin

Service 371.45 383.60

120L garbage bin & 24OLrecvcle bin

Service 338.52 349.60

Availability charge (is not inaddition to above charges)

Where service is available but notused.

121.04 125.00

Where service is available but Councilhas aoreed not to orovide.

N¡I Nil

DRAFT COPY REVEN UE STATEM ENT 2oIL/2oT2

P A G E | 10

Stormwater Management Service Annual Charge

Council introduced a Stormwater Management Service Charge in 20071200.8' Funds generated from

this charge will continue to fund stormürater backlog works and improve the management of urban

stormwater in the Local Government Area.

The stormwater Management service charge is set by clause 125AA of the Local Government

(General) Regulation zõos. ln accordance wiín that Regúlation the charges for 201112012 will remain

ihe same as those charged in the previous rating years'

lncome generated by the Stormwater Management Service Charge will be utilised to fund the

following activities and projects:

Activity/Project $

GPT Construction 270 000.00

Marion Street drainage works 120 000.00

Stormwater pit & inlet drainage capacity upgrade 77 500.00

Annual GPT audit and maintenance 110 000.00

flooã-tt¡¡tigation Work - Drainage, Retaining wall 100 000.00

ffi funded from Stormwater Gharge 677,500.00

The annual charging structure has been developed in accordance with the Stormwater Management

service charge óuio"t¡n"s issued by the Direcior General of the Department of Local Government

and is as follows:

Residential ProPerties $25.00 per propertY

Residential StrataProperties

$12.50 per lot

Business ProPerties $25.00 per property with an afea less than 1,zuv square melres.

$100.00 per property with an area greater than or equal to 1,200 square

metres and less than 5,000 square metres.


metres and less than 10,000 square metres.

$725.00 per ProPertY withsquare metres.

an area greater than or equal to 10,000

ilzsbo perãrõpert¡es with an areaapportioned equally to each lot withinminimum charge of $5.00 Per lot.


metres and less thah S,0OO square metres apportioned equally to each

lot within the strata complex subject to a minimum charge of $5'00 per

lot.


metres and less.thañ 1O,OOO square metres apportioned equally to each

lot within the strata complex subject to a minimum charge of $5'00 per

lot.

$Z an area greater than or equal to 10,000

sq equally to each lot within the strata complex

su e of $5.00 Per lot'

less thanthe strata

1,200 square metrescomplex subject to aBusiness Strata

Properties

DRAFT COPY REVEN UE STATEMENT 2OL7I2072

The yield from these charges in 201112012 is estimated to be $677,500 (201012011: $657,700).

Section 611 Charges

Council is able to make an annual charge under Section 611 of the Local Government Act 1993 forstructures placed on, under or over a public place.

Rates Proposed to be charged for Carrying out by Gouncil of Work on Private Land

Where Council carries out work on private land the full cost to Council will be charged including appropriateoverheads and administrative on costs.

Proposed Borrowings

Council is proposing to borrow $7,685,900 to part fund the redevelopment of the Aquatic Centre($4,596,100) as well as part fund the additional infrastructure renewals works ($3,089,800) to be

undertaken if Council's Special Variation application is successful.

Fees and Gharges Schedule lor 201112012

The fees and charges proposed to be charged by Council are detailed in the - "Schedule of Fees and

Charges'and are provided in the following pagas.

DRAFT COPY REVEN UE STATEMENT 2OLT/2OT2

the budget interview with mayor ronney oueik · 2011. 9. 23. · auburn city council 1 susan...

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