IPART has approved the Narrandera Shire Council’s request for approval of a permanent special variation of 48.1 per cent over two years from 2024-25 to 2025-26.

This includes an increase of 25.5 per cent in 2024-25 and 18 per cent in 2025-26. It is intended to apply this increase across all rating categories.

IPART said the Council had demonstrated a financial need for the SV to address its financial sustainability (including addressing its operating deficit and achieving sufficient cash reserves), continue providing services at current levels, reduce its infrastructure backlog, upgrade its IT system, have a current industry aligned salary system and construct new stormwater infrastructure.

IPART said while the Council had noted that the minimum rate for Business Narrandera would be $844, its November 21 2023 resolution proposed $845. IPART confirmed with the council that it was its intention to propose the minimum rate be $845.

For residential, business and farmland ordinary rating categories, the minimum rates will increase from $510 to $755 by the end of the two-year period and for the ‘Business Narrandera’ category, the minimum rate will rise from $570 to $845 by the end of that period.

IPART concluded that while the rate increase with the SV would be large, the council on balance demonstrated the impact on ratepayers was reasonable, considering its current rates and the community’s capacity to pay.

There was also a hardship policy in place to assist vulnerable ratepayers and provide rebates to eligible pensioners.

“With the approved SV, its average residential and business rates for the next two years are expected to be broadly in line with the average of neighbouring and comparable councils, but its average farmland rates are expected to be higher than comparable councils. In response to the SV’s impact on farmland ratepayers, the council resolved to review its current rates structure by June 2025,” IPART concluded.

The application was assessed against the Office of Local Government criteria in its guidelines for special variations and minimum rate increases.

Case won for rate rise

“Narrandera Council has demonstrated it has delivered productivity improvements and put in place cost containment strategies. It also laid out a future plan to achieve further savings that were proportionate to its size and resources.

“While the SV may be one component of addressing financial sustainability, the council will still need to deliver on its proposed productivity improvements, as rate increases alone are insufficient to achieve long-term financial stability.

“We expect the council to fully comply. IPART will consider whether a council has complied with its SV conditions in assessing future SV applications. The OLG is the body responsible for enforcing compliance with the conditions attached to SVs.”

Narrandera Council sought the SV to:

• cover increasing costs which are outpacing revenue growth
• continue providing services at current levels
• commence a major capital works project, the Narrandera CBD stormwater infrastructure duplication project, to address flooding.

It also applied to increase its minimum rates by approximately the same percentage increases as the special variation.

The Minister for Local Government delegated the power to grant SVs to IPART. However, the approval was subject to certain conditions, including that the council:

• use the additional income for the purpose outlined in its application
• report in its annual report from 2024-25 until 2030-31 the actual program of expenditure funded by the additional income and the outcomes achieved.

“We made this decision after balancing the council’s financial need to deliver its core services against the impact on its ratepayers. Currently, the council’s operating expenses exceed its revenue and without the SV this gap would continue to worsen over the next 10 years. This is unsustainable if the council is to continue delivering the services and infrastructure the community needs,” the IPART statement read.

“We also acknowledge that many stakeholders have told us that the SV is likely to create affordability challenges, particularly with the current cost-of-living pressures.”

IPART also concluded that the Council had satisfactorily engaged with and consulted its community and provided sufficient information about the need for and extent of the proposed SV. “It used an appropriate variety of engagement methods and considered the community’s feedback.

“With the SV, its average residential rates would be similar to the average of neighbouring councils and other OLG Group 10 councils. Its average business rates would be lower than the average of neighbouring, comparable to other OLG Group 10 councils, but its average farmland rates would be higher.

“The Council assessed the community’s capacity to pay and concluded it had the capacity to pay its proposed rates increases (including farmland rates increases). It intends to review the appropriateness of the current balance of rates income. However it was also noted that the median household income in the council’s area is lower than in comparable council areas, and a higher proportion of residents are in receipt of Government pensions.  

Mayor applauds IPART decision

Narrandera mayor Neville Kschenka said the IPART decision to allow the Narrandera Shire Council’s Special Rate Variation would be a financial boost for the council. He said the extra income would allow the Council to maintain services provided in the past.

Funds would also help the council maintain their roads and secure a loan to upgrade the storm water system.

“The approved rate rise will hold the council in good stead for the future,” he said.

There would be an incoming new council after the September [elections] and it would make it easier for the new council to continue services that ratepayers and residents were accustomed to.  

This article appeared in the  Narrandera Argus, 16 May 2024.