Northern Beaches ratepayers will be asked to choose whether they want to pay a heck of a lot more money in rates or slash community services as Council warns it, like many across the state, is on an unsustainable financial path.
The proposal is for the community to decide between the status quo, which would require a cut in services, or accepting a cumulative rate increase over three years of between 31.1% to 46% to maintain, improve or supercharge Council services.
Have you say: https://yoursay.northernbeaches.nsw.gov.au/funding-our-future
The proposed increases represent a permanent boost in rates income, building incrementally over three years. Rates would then remain higher, but only increase in line with the rate peg following the third year.
The community consultation will go ahead later this month, following a decision of the new council which met on Tuesday night, 12 November.
The details
A majority of councillors approved a community engagement plan on Tuesday’s meeting which will ask rate payers which Special Variation Rates (SVR) (rate increase above the baseline) they’d most prefer. An SVR an adjustment to rates which is above what has been allowed by the Independent Pricing and Regulatory Tribunal of NSW (IPART). Community engagement is mandatory when seeking an SVR.
This comes as councils across the state struggle with financial pressures as increases in their income (mainly from rates) don’t reflect the rising cost of materials, contracts and construction. Northern Beaches Council isn’t on its own. Half of NSW Councils have sought a rate variation through IPART over the years.
The options to be presented to the community from 18 November range from an average $181 to $780 annual increase, though this is based on a land value of about $1.1 million. For the average house-owner on the Northern Beaches, the increase could be closer to $2,000. From next week residents will be able to use a rate calculator to better understand how the different options would affect them. We will put that link in here one available.
But the request agitates some observers, and a minority of councillors, who claim bureaucratic inefficiency has not been adequately addressed before asking more from the community.
When flagging the potential increases on our social media channels, some critics pointed to recent inefficiencies involving traffic decisions, such as the road dividers that had to be removed soon after being installed along the Steyne, parking signs re-instated, and the rewinding of works along Oliver Street in Freshwater that caused traffic disfunction.
But Council says the rate peg allowed under Ipart is now half the inflation rate.
“This means rates income is now $24 million lower each year than it would have been if it had been keeping up with inflation. Additionally, ageing assets and the heavy cost of natural disasters, the COVID-19 pandemic, and ongoing cost shifting to Council from other tiers of Government is impacting Council’s long term financial sustainability,” Council said in a statement today.
“A Special Variation to rates will be required if Council intends to continue to meet community expectations and deliver existing services and service levels as well as ensure availability of funding for new and upgraded assets, environmental outcomes, loans and unforeseen events such as storm events, to be financially sustainable in the long-term,” the Special Variation to Rates – Community Engagement report details (Item 9.3 on Council’s Agenda).
The vote
The debate on the proposed rate increase was divided between:
- Ensuring councillors had done everything possible to determine where costs could be cut before asking rate payers to bear the burden of a SVR, and
- Allowing Northern Beaches residents the right to determine the best course of action – increase rates or lose Council services.
Cr Vincent De Luca put forward an amended motion to include a detailed report on areas within the Council budget that could be cut – these included Events, Arts and Culture, Community Grants, Marketing and Communication, Employee Salary and Benefits, and expenditure on services providing little income (for example, it costs $13.2 million to maintain sport fields which only draw in $1.1 million in income). This comes off the back of community consultation on the last budget’s 4.9 per cent rate increase which received opposition from residents (we covered the rate rise in the budget in more detail here.) The report, according to Cr De Luca’s motion, would also include reviewing alternatives for Council’s vehicle pool and a review of Council’s assets and land which is unused (like the Manly Council Chambers) that could be repurposed, leased or sold for public benefit.
While these costs are outlined in the Preliminary Productivity Journey and Improvement Plan 2024 (a requirement for the SVR submission to IPART), Cr De Luca stated that councillors would need the detailed information he’s requested in order to decide what Council services or costs could be cut. To his understanding, should option 1, 2 or 3 be chosen, not only would there be a rate increase but a need to cut services to balance the books .
Cr De Luca’s main argument was that he wanted to assure residents that councillors had looked at every possible alternative cost-saving solution before putting forward a rate rise submission.
While his amended motion was supported by Crs Hrnjak, Glanville, Cr Korzy, Cr Harvey, and Cr Giltinan and Cr De Luca, it was lost.
The motion to approve the community engagement plan to ask rate payers path they preferred was then voted for by Deputy Mayor Robins, Cr Williams, Cr Hackman, Cr Beaugeard, Cr Grattan, Cr Bingham, Cr Dillion, Cr Korzy and Mayor Heins.
While most councillors acknowledged that this rate increase submission had come at a time when rate payers were struggling with the cost-of-living crisis, many outlined that it is up to residents to decide what services and facilities they want from the Northern Beaches Council.
Mayor Sue Heins said this was one of the most important conversations the Council could have with the community.
“We wouldn’t be considering these options if we didn’t think it was critically important to the future of the Northern Beaches.”
“Talking with our community about rate increases is challenging, especially when we know the cost of living is hitting hard. We wouldn’t be considering these options if we didn’t think it was critically important to the future of the Northern Beaches.
“The investment needed to maintain, renew, and improve our ageing roads, sportsfields, playgrounds, pools, libraries, and other community infrastructure is escalating. Without additional funding they will deteriorate and services will need to be cut back.
“I encourage everyone to review the 4 options proposed, use the rates calculator to understand the impacts on your individual rates, join an information session, be part of the conversation and have your say.”
The Options
Council’s management says it can barely keep doing what it’s currently doing, much less deliver new projects like the Warringah Aquatic Centre or Manly Life Saving Club, without a significant increase in income.
After Tuesday’s vote, the consultation process will kick off on Monday 18 November and close on Sunday 12 January 2025.
Council will seek community feedback on the following options to either increase income and secure financial sustainability, or to reduce services to meet the current income:
Option 1: No Special Variation while reducing Council services
An increase of 3.8 per cent for FY25/26, 3.4 per cent for FY 26/27 and 3.1 per cent for FY 27/28. As these increases do not significantly add to Council’s income, this option comes with Council needing to reduce some services it currently delivers to the community.
Option 2: A permanent Special Variation while maintaining Council services
An increase of 9.8 per cent for FY25/26, 9.4 per cent for FY 26/27 and 9.1 per cent for FY 27/28. This increase would raise an additional $40 million in rates income per year by year 3 for “Council to primarily address the asset renewal and maintenance gap and support environmental and natural risk reduction programs”.
Option 3: A permanent Special Variation while increasing Council services.
An increase of 12.1 percent for FY25/26, 11.7 per cent for FY 26/27 and 11.5 per cent for FY 27/28. This increase would raise an additional $57 million in rates income per year by year 3 and “Council would seek to continue all existing services, address the asset renewal and maintenance gap and support environmental and natural risk reduction programs, as well as provide the opportunity to deliver larger renewal projects in future years such as the renewal of the Warringah Aquatic Centre”.
Option 4: A permanent Special Variation while increasing Council services even more than in Option 3.
An increase of 13.8 per cent for FY25/26, 13.4 per cent for FY 26/27 and 13.1 per cent for FY 27/28. This increase would raise an additional $69 million in rates income per year by year 3 and “Council would seek to continue all existing services, address the asset renewal and maintenance gap and support environmental and natural risk reduction programs, build up a major renewal fund for future works, as well as provide the opportunity to accelerate the delivery of infrastructure and increase services in areas such as additional community grants, more footpaths, a fit for purpose lifeguard headquarters and improvements to sporting facilities and amenities buildings”.
What’s Council doing to reduce their operational costs?
In the document provided to councillors, Council states it has continuously undertaken cost-analysis reviews, and while they have reduced costs across a number of areas, a deficit remains forecast for FY 24/25 and it’s not enough of a saving to avoid increasing rates.
In the Preliminary Productivity Journey and Improvement Plan 2024, Council documents cost containment strategies and efficiency initiatives to be undertaken over the next three years and beyond. In regard to cost-saving, these include:
- For FY 24/25, Council will conduct a review of the following services: Traffic and Transport, Marketing and Communications, Open Space Maintenance and Community engagement. Further service reviews will be conducted year on year.
- Council commits to continue to focus on workforce efficiency. About 39 per cent of the FY 24/25 costs were on employee benefits and oncosts.
- As part of the Service and Associated Cost Rationalisation Plan, Council will adjust the level of some services to meet both the Community Strategic Plan priorities and financial sustainability with an estimated savings of $2.7 million.
- Council has estimated that a one-off $2.5 million could be gained over the next three years through the sale of Council property and land holdings.
- An estimated $250,000 per annum will contribute to Council’s income through a cost containment plan of its fleet vehicles.
- Council will continue to manage workers compensation under its own self-insurance license to maintain the estimated annual savings of $1.5 million dollars in premiums.
- Energy efficiency and solar opportunities will continue to be a priority with a total annual savings of $755,000 per annum.
The report states, “while Council will continue to promote effective budget principles and focus internally for productivity and cost containment initiatives it is recognised that these initiatives alone will not be enough to ensure financially sustainability of the Council now and into the future.”
While Council may consider increasing rates essential and unavoidable, they may have a hard time convincing the general populace if comments sections on our channels are anything to go by.
“Option 5: A 3% annual decrease while council stop wasting money and manage the purse strings better,” one commenter wrote, which had 70 odd likes.
“Since becoming part of NBC my rates have almost doubled,” wrote one Manly resident. “NB council rates are already extortionate in Manly. We were told that amalgamation will lead to lower rates – Option 5 – de amalgamate and manage Manly council like it was before. Ask the State Government to fund tourist infrastructure given how many we get wrote another.
Only one of about 150 commenters on our channels leapt to Council’s defence, citing that nearly all NSW councils were in financial trouble. “The NSW Government needs to re-examine the funding model for local councils,” he suggested.
Community engagement starts Monday 18 November and closes Sunday 12 January 2025. Council will host a range of consultation pop ups and online information sessions.
Community Pop-ups
22 Nov Warriewood (Rat Park) Markets
23 Nov Forestville Shopping Centre
24 Nov Manly Fresh Produce Markets,
27 Nov Balgowlah Shopping Centre (Stockland)
28 Nov Walter Gors Park, Dee Why
30 Nov Freshwater Village
30 Nov Mona Vale Memorial Hall
5 Dec Forest Way Shopping Centre
6 Dec Avalon Woolworths
15 Dec Berry Reserve Markets
Online information sessions
2 Dec
11 Dec
Have you say: https://yoursay.northernbeaches.nsw.gov.au/funding-our-future
Written by Avi Vince with Kim Smee
