section 508a special variation application form part b...these guidelines are available on the...

Section 508A Special Variation Application Form – Part B

Great Lakes Council Date Submitted to IPART: 25 March 2011 Council Contact Person: Phil Brennan Council Contact Phone: (02) 6591 7268 Council Contact Email: [email protected]

© Independent Pricing and Regulatory Tribunal of New South Wales 2010

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism and review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgement of the source is included.

The Tribunal members for this special variation assessment are:

Mr Rod Sims, Chairman

Mr James Cox, Chief Executive Officer and Full Time Member

Ms Sibylle Krieger, Part Time Member

Inquiries regarding this document should be directed to a staff member:

Ken Maxwell (02) 9113 7712

Nicole Haddock (02) 9290 8426

Independent Pricing and Regulatory Tribunal of New South Wales PO Box Q290, QVB Post Office NSW 1230 Level 8, 1 Market Street, Sydney NSW 2000

T (02) 9290 8400 F (02) 9290 2061

www.ipart.nsw.gov.au

ii IPART Section 508A Special Variation Application Form – Part B

http://www.ipart.nsw.gov.au/

Contents

1 Introduction 1

2 Special variation application overview 2

3 Need for the variation 6 3.1 Strategic planning information 6 3.2 Financial planning information 9 3.3 Efficient and feasible program of expenditure 13 3.4 Impact on financial sustainability 17

4 Community consultation 29 4.1 The consultation strategy 29 4.2 Outcomes from community consultations 39

5 Rating structure and the impact on ratepayers 54 5.1 Proposed rating structure for the revenue path 54 5.2 Impact on rates 57 5.3 Addressing hardship 60

6 Financing strategy 61 6.1 New capital financing strategy 61 6.2 Sustainability of debt 63

7 Productivity improvements 67

8 Implementation of Integrated Planning and Reporting framework (IPRF) 76

9 Other information 78 9.1 Special variation history 78 9.2 Reporting 91 9.3 Council resolution 93

10 Checklist of application contents 94

11 Certification by the General Manager and the Responsible Accounting Officer 95

Section 508A Special Variation Application Form – Part B IPART iii

iv IPART Section 508A Special Variation Application Form – Part B

1 Introduction

This form is to be completed by councils when applying for a special variation to general income under section 508A of the Local Government Act 1993.

Councils must refer to the Division of Local Government (DLG), Department of Premier and Cabinet Guidelines for the preparation of an application for a special variation to general income in 2011/12 in completing this application form. These Guidelines are available on the Division’s website at www.dlg.nsw.gov.au.

Note that this part of the application (Part B) must be completed in conjunction with Part A (Special Variation s508A Application Form 2011/12 – Part A).

This part of the application consists of the following sections:

Section 2 - Special variation application overview

Section 3 - Need for the variation

Section 4 - Community engagement/consultation

Section 5 - Rating structure and impact on ratepayers

Section 6 - Financing strategy

Section 7 - Productivity improvements

Section 8 - Other information (special variation history, reporting arrangements and Council resolutions)

Section 9 – Checklist of application contents

Section 10 - Certification by the General Manager and the Responsible Accounting Officer.

Both Part A and Part B of the application should be completed and submitted electronically to [email protected]. A signed copy of the certification should be scanned and attached to the same email. All attachments should be emailed if possible.

The spaces provided in each section of this application form may be extended as necessary to fit information. Councils are not limited in the amount of information they provide. Each section must be completed before IPART can assess the application. If necessary, IPART may seek further information from the council.

IPART will post all applications on its website. Councils should also make their application available to their community through their website.

Councils are required to submit their application by cob Friday, 25 March 2011. IPART encourages councils to submit their applications as early as possible.

Councils are also required to notify IPART of their intention to apply for a special variation under section 508A by cob Friday, 28 January 2011.

Section 508A Special Variation Application Form – Part B IPART 1

2 Special variation application overview

This section should provide IPART with sufficient information to form a general understanding of the purpose and reasons behind the application.

Include a brief commentary on:

The reasons for the application.

Period covered by the application.

Financial impact of the proposed increases, including the total cumulative percentage increase (refer to Part A of the application).

How the community will benefit.

How the application reflects the Community Strategic Plan or Management Plan if applicable.

Council's Response Great Lakes Council is a large area with a population of 34,695 comprising many small towns and villages. The main population centre is Forster Tuncurry with a population of 19,000. Hawks Nest / Tea Garden is the next largest urban centre with a population of 3,300. In addition there are four smaller urban centres of Stroud, Bulahdelah, Nabiac and Pacific Palms as well as many villages spread across the Council area with very small populations. The impact of this is that Council is faced with significant duplication of facilities such as recreational facilities, halls, pools etc. Annexure 'A' reveals the degree of duplication of facilities and services that Council is required to manage. The combination of a large Council area with a low population density, large areas of National Parks, and environmentally significant coastal areas, waterways and lakes places unique pressures on Council’s finances. Other specific issues such as the impact of over 55’s community title developments which restrict growth in Council rates from growth in population are also a factor. These developments are popular in coastal retirement areas. Since 2008 Council has been engaging with the local community in relation to satisfaction with Council service levels and the future aspirations of the community for the Great Lakes area. The process that followed included a broad community survey which led into a consultative process to develop the Great Lakes 2030 – Community Strategic Plan. In addition to the Community Strategic Plan engagement held in November 2009, Council held detailed consultation in October/November 2010 in relation to broad resourcing strategy options to address community priorities and in February/March 2011 on the specific rate variation proposal for which Council is now applying. Great Lakes Council is a Group 2 Council under the Local Government Integrated Planning and Reporting Framework. All documentation

2 IPART Section 508A Special Variation Application Form – Part B

under the Integrated Planning and Reporting Framework has been on public exhibition as part of this latest round of consultation. In recent years Council has also undertaken a critical review of the condition of infrastructure assets across the Council’s 3,373 square kilometre area. This has included an independent analysis by Professor Percy Allan with the asset review being carried out by GHD and financial analysis by Access Economics. Following this report in 2008 Council further developed its asset management capability in line with recommendations from GHD and trained key engineering staff in the NAMS.PLUS asset management program. As a result of this Council has a clear and substantiated position in relation to its infrastructure assets across all Council asset categories. The analysis shows an infrastructure backlog of $36 million and a gap in infrastructure maintenance funding of $6.4 million annually. In addition Council has prepared a 10 year financial plan which shows increasing deficits if rates are increased at 3% per annum (the projected local government cost index). The level of deficit projected is unsustainable. Without a major increase Council will be forced to significantly cut services and reduce infrastructure maintenance budget allocations even further to achieve a balanced budget position. The proposed special rate variation package covers a 6 year period and consists of a 20% increase for the first year, an 8% increase for three years, and a 6% increase for the subsequent two years. The special rate variation package also incorporates the renewal on a permanent basis of a 6% (5% for environmental programs, 1% for dredging works) Section 508(2) variation approved in 2009/10 for 5 years. This Section 508(2) variation was a renewal of an Environmental Levy first approved in 2001/02 and renewed again in 2004/05. The financial impact including total cumulative increase is:

Year Annual % Cumulative % Increase

Annual $ Increase

Cumulative $ Increase

Permissible Income

Decrease from

expiry of a prior

special variation

Y 1 2011/12 19.30% 19.30% 4,640,629 4,640,629 28,664,981

Y 2 2012/13 7.88% 28.70% 2,258,801 6,899,430 30,923,782

Y 3 2013/14 7.83% 38.78% 2,421,332 9,320,762 33,345,114

Y 4 2014/15 14.06% 58.29% 4,433,012 13,753,773 35,962,255 -1,815,871

Y 5 2015/16 5.91% 67.65% 2,125,369 15,879,143 38,087,624

Y 6 2016/17 5.91% 77.55% 2,250,979 18,130,121 40,338,603


The funds raised through the special rate variation package would enable Council to achieve a balance in the following priority areas:

1. Maintaining funding for current levels of service including services which address Great Lakes 2030 priorities.

2. Increasing funding for infrastructure maintenance in particular for roads and bridges.

3. Increasing funding for infrastructure asset renewal programs on a priority basis to arrest the decline in the condition of Council's infrastructure.

4. Improving financial sustainability by:

Reducing reliance on loans for urban road rehabilitation maintenance and renewal works by 20% in 2011/12 and then 10% each year until no borrowings are utilised for these works by 2019/20.

Partially funding Council's Section 94 liability of $12 million by building up a reserve fund of $3 million. The strategy to achieve this will be to conservatively build up this reserve by allocating $375,000 per annum from 2013/14 for eight years to ensure Council's component of Section 94 projects can be funded.

5. Providing funding for community capital works projects identified in the Great Lakes 2030 Plan on a priority basis.

6. Permanent recognition of the highly successful funding model facilitated by the Environmental Levy, allowing Council to continue leverage of these funds to secure significant external funding. The funding is utilised to implement catchment, estuary and natural resource plans and to deliver on the strong expectations of the community for a clean and healthy environment as expressed in Great Lakes 2030.

The community will benefit from the special rate variation package primarily through having maintenance standards for Council infrastructure returned to a reasonable level and through Council’s budget position being returned to a financially sustainable position at the conclusion of the 6 year rate variation period. In addition some community priorities identified in the Great Lakes 2030 Plan will be able to be progressively achieved.

Council’s Community Strategic Plan, Great Lakes 2030, identifies four key directions. These are: Key Direction 1 - Embracing and protecting our natural environment

Objective - Protecting the natural environment while addressing the challenges of population growth.

Key Direction 2 - Planning for balance

Objective - Providing appropriate services and infrastructure, community facilities and opportunity for residents to continue to enjoy their existing lifestyle balanced with the impact of increases in population, additional development and influx of tourists.


Key Direction 3 - Unique locations with a common purpose

Objective - Ensuring the unique character of our towns and villages is maintained while developing a network of services and community linkages that will also strengthen each community.

Key Direction 4 - Leadership to challenge and inspire

Objective - Providing honest and accountable community leadership including the development and implementation of the community's strategic plan.

Council's Delivery Program and Operational Plan have been linked to the Community Strategic Plan. The special rate variation proposal is aligned to these strategic documents. In terms of the strong support of the community for protecting the natural environment, Council proposes, as part of this application, to continue the environmental levy which currently has a sunset provision and is due to expire in 2013/14. This will ensure that appropriate levels of funding are quarantined for environmental programs across the Great Lakes area. Council's Natural Systems section prepared a "Summary of Achievements & Justification for Increase & Permanent Establishment of the Environmental Special Rate" in April 2009 to support its renewal in 2009/10. This comprehensive document is attached as Annexure 'B' and its content, including achievements, project updates, budgets and future directions are still relevant and strongly supported by the elected Council and the community. If Council is to meet the ‘Planning for balance’ objective current infrastructure and services must be maintained to adequate levels. At the present time, with the funding available this is not achievable. Strengthening communities will ultimately require additional resourcing which Council currently does not have. Further advocacy and partnering with communities will be required to achieve this. Ongoing consultation and engagement with the community through the integrated planning and reporting process will assist in improving this area and building on current programs which are in place.

If the special rate variation application is successful a high level of accountability to the community in terms of reporting on the various program and project outcomes has been committed to by Council’s General Manager. This will include annual consultation and reporting forums in the local communities across the Council area and reporting through the Council Communicator quarterly publication distributed with Council rate notices.


3 Need for the variation

In this section, councils must present a persuasive case for the proposed revenue increases by showing why the special variation is needed.

Firstly, indicate the key purpose of the variation by marking the appropriate box with an “x”.

Infrastructure maintenance / renewal X

New infrastructure investment X

Environmental works X

Maintain existing services X

Other (specify) X

- Long Term Financial Sustainability

3.1 Strategic planning information

In the section below, provide commentary on how the special variation is reflected in Council’s strategic planning outcomes (Community Strategic Plan and Delivery Program).

Also attach a copy of Council’s draft or final Community Strategic Plan and Delivery Program.

Box 3.1 outlines the information required for special variations for ‘essential works’ costs above the developer contributions cap.

Box 3.1 Special variations for ‘essential works’ costs above the developer contributions cap

For essential works costs above the cap in contributions plans, Council must provide:

Any reference to the proposed contributions (which were previously to be funded by

developers) in earlier planning documents (e.g., Long Term Financial Plan (LTFP) and Asset

Management Plan (AMP));

Any necessary revisions to financial projections contained in the LTFP and AMP to reflect the

special variation.


Council's Response Council's special rate variation proposal has been developed around the outcomes of extensive engagement with the Great Lakes community on their long term vision for the area as articulated in Great Lakes 2030 (copy attached as Annexure 'C'), the community's long term strategic plan. Additional input to this proposal was gleaned through further consultation with the community on how to fund that Plan.

The package presented would provide the funding required to enable Council to work towards the expectations and aspirations expressed by the community for the future of the Great Lakes area. The community's desires are reflected in Great Lakes 2030 which now represents the primary forward planning document aligning our community's vision with a clear strategic direction for the Great Lakes' long term future.

The Key Directions, Strategies and Outcomes in the Plan have been utilised to determine the priorities for our area and the services and projects that Council will deliver as part of the 2011-2015 Delivery Program over the next four years, and over the term of the Special rate variation application.

Development of Great Lakes 2030 has been based on a number of guiding principles. The principles are interrelated and will continue to guide Council through the delivery and assessment of the effectiveness of our community strategic plan and delivery of appropriate services to our community as identified in the four-year Delivery Program (copy attached as Annexure 'D'). These include;

The Council Charter (Local Government Act 1993, section 8) comprises a set of principles that are to guide Council in carrying out its functions. Councils have a legal obligation to pursue this Charter. The principles include provision of leadership; provision of equitable and appropriate services and facilities for the community; protection and enhancement of the environment and ecologically sustainable development; being the custodian and trustee of public assets; and the effective planning, accounting and management of these assets.

These principles are reflected in Great Lakes 2030 in the four Key Directions developed by the community of;

1 - embracing and protecting our natural environment (objective - protecting the natural environment while addressing the challenges of population growth)

2 - planning for balance (objective - providing appropriate services and infrastructure, community facilities and opportunity for residents to continue to enjoy their existing lifestyle balanced with the impact of increases in population, additional development and influx of tourists)

3 - unique locations with a common purpose (objective - ensuring the unique character of our towns and villages is maintained while developing a network of services and community linkages that will also strengthen each community)


4 - leadership to challenge and inspire (objective - providing honest and accountable community leadership including the development and implementation of the community's strategic plan)

These key directions are supported by strategies outlining how we are going to address the community's priorities in that area and outcomes that indicate what the result will be, and will guide our actions for the next 20 years.

The other principles that form the basis of the community strategic plan are social justice principles, and the Australian Government's National Strategy for Ecologically Sustainable Development.

Council's 2011-2015 Delivery Program and 2011-2012 Operational Plan identify the actions Council intends to undertake to contribute to the achievement of each Strategy and Key Direction. The special rate variation package will provide the funding to allow Council to achieve the desired outcomes as expressed by the community.

Without the special variation Council will be required to make deep and significant cuts to its existing budget and will not be able to deliver Great Lakes 2030. Based on the provision of existing assets and services at current service levels, Council will be facing an estimated $1.9 million budget deficit by 2014-2015 growing to approximately $2.5 million by 2015-2016.

In order to deliver a balanced budget, not only will the delivery of new services and facilities not be possible, existing service levels would be cut and the condition of our existing infrastructure would continue to decline.

While the funds raised from the Environmental Levy are expended in their entirety on the identified programs and as such have a zero net effect on the overall budget, a decision not to approve its continuance would have a significant impact on the environment and the organisation.

In accordance with the original approval in 2001, the work undertaken through this levy has become one of Council's core functions and has been fully incorporated into Council's operations. As such there would be significant staff impacts, a longer term decline in the environment and serious community discontentment, given the significance that the community have placed on this in Great Lakes 2030 Key Direction One - Embracing and Protecting our Natural Environment. There would also be flow-on financial effects in that there would be a large drop in the amount of grant funds received by the organisation, the Environmental Levy being the source of Council's component of matching funds.

Council has determined that this scenario is unacceptable and would not be a responsible management option or be accepted by the community, and has therefore structured the draft 2011-2015 Delivery Program around this special rate variation package.


3.2 Financial planning information

Council’s application must be supported by a Long Term Financial Plan (LTFP) that has been developed in accordance with the prescribed Integrated Planning and Reporting requirements.

Attach a copy of Council’s LTFP, with required scenarios.

In the section below, include:

Commentary on how the special variation has been incorporated into the LTFP.

Guidance as to how, and where, the special variation has impacted upon the LTFP.

Commentary on the range of alternative income sources (e.g., borrowings and grants) available and how they have been considered.

Council's Response Council’s LTFP (copy attached as Annexure 'E') has been developed in accordance with the requirements of the Integrated Planning & Reporting (IP&R) legislation. In finalising the LTFP it has been prepared based upon two scenarios – a Base Case (or Business as Usual) and a scenario based upon this special rate variation application. Council, in working its way through the IP&R requirements modelled a number of various rate increase possibilities including two generic models presented to the public to ascertain the acceptance levels for a rate increase during late 2010.

This followed recognition by the elected Council and senior management over a number of years that Council was not meeting its obligations under the Charter due to an insufficient revenue base. Council had sought special rate variations from the then Department of Local Government with mixed success but still found itself in a position each year of having to make significant cuts to expenditure levels to obtain a balanced budget position. Some of this stemmed from a historically low rating base, from the loss of its water and sewerage functions in the late 1990’s which still has an ongoing impact and from local government costs outstripping the rate peg limit announced annually by the Department of Local Government.

During 2008 Council engaged Review Today Pty Ltd (headed by Professor Percy Allen) to review Council’s long term financial sustainability. It followed this up by engaging Morrison Low to assist in the development of a Long Term Financial Strategy. Morrison Low’s evaluation of Council’s Base Case position was that it was unsustainable. Their projections are shown in the graph below.


2008/2009

2009/20102010/2011

2011/20122012/2013

2013/20142014/2015

2015/2016

2016/2017

2017/2018

2018/2019

-4,000,000

-3,500,000

-3,000,000

-2,500,000

-2,000,000

-1,500,000

-1,000,000

-500,000

0

Years

Mill

ion

s

As required in the preparation of the LTFP Council has prepared a Base Case scenario based on existing service and maintenance levels (2010/2011) covering a ten year projection period. Various assumptions have been made in relation to indexation factors for the components of its costs and revenues and these are detailed in the LTFP and in section 3.4 below. Council has graphed this scenario and overlaid it against the projections prepared by Morrison Low. Council’s own modelling closely resembles that of Morrison Low with the major point of difference being that Council balanced its budgets for the periods 2008/2009 to 2011/2012 by making cuts to services, deferring maintenance, renewal and construction expenditure on infrastructure and by not replacing staff upon resignation or retirement. This graph is reproduced below.

2008/2009

2009/2010

2010/2011

2011/2012

2012/2013

2013/2014

2014/2015

2015/2016

2016/2017

2017/2018

2018/2019

2019/2020

2020/2021-6,000,000

-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

Years

Mil

lio

ns

Morrison Low GLC


Given the size of the deficits predicted from the modelling undertaken, arbitrary cuts to infrastructure maintenance and services will not solve this problem and a fundamental change to the operations of Council is required if additional revenue is not generated. In earlier discussions with IPART it was recognised that the previous manner of achieving a balanced budget was not scientific. Council indicated that it will be implementing an organisational service level review to obtain objective data for use as a basis for the strategic rebuilding of the organisation or to drive greater efficiencies and ensure that Council services are recovering costs where possible.

In these discussions with IPART it was agreed that this was an appropriate methodology for reducing the size of the organisation should the special rate variation application be unsuccessful. As such no effort has been made to balance the Base Case scenario past 2011/2012.

Council developed and discussed three scenarios with the public during late 2010, being a ‘No Change’ scenario (rate peg increase only), a ‘Steady Increase’ scenario (4 x 11% increases) and a ‘Rapid Increase’ scenario (2 x 20% + 2 x 10%), which resulted in mixed support for all scenarios. The feedback from the community, additional financial modelling and discussions with IPART led to the development of the special rate variation scenario which has been incorporated into the LTFP and forms the basis of this special rate variation application.

A comparison of the financial reports provided in the LTFP for both scenarios shows how the proposed special variation impacts on the LTFP. The Base Case (which is based on Council’s current operations and projects rate increases in line with the cost index) sees Council continuing to record operating losses from continuing operations with the size of these deficits increasing. Added to this, Council’s asset base is eroded, borrowings and accumulated cash and investments continue to be utilised to fund operating activities and there is a negative cash balance (i.e. is relying on overdraft facilities) at the end of the ten year LTFP.

Under the alternate scenario of a 20% increase in 2011/2012 followed by increases of 8% for three years followed by increases of 6% for two years, Council would start to record an operating surplus on operations from 2013/2014 and an operating surplus before capital grants and contributions from 2014/2015. The asset base would increase as would the asset renewal ratio, with borrowings and the debt service ratio decreasing, and Council would maintain a positive cash position over the term of the LTFP.

In the work done over the past three years in reviewing Council’s financial sustainability and developing financial plans, alternate sources of revenue and funding have been considered.

Council reviews its fees and charges annually and has applied a 5% increase to most discretionary fees for 2011/2012. Regulatory fees are charged at the maximum allowable. A review of the contestable Part 4A certification fees was undertaken for


2009/2010 with significant increases resulting. With Council being required to review the GST status of existing fees and charges during 2011/2012 and with the operational service level review to identify cost drivers and net cost of various Council services, the opportunity to ensure that Council has effectively priced its services will be fully taken.

Council has reviewed its borrowing position to determine whether it can borrow more to fund works. Section 6.2 of this application deals with the sustainability of Council's debt in greater detail however Council is of the opinion that a component of its current borrowing practice is financially unsustainable in the long term. It currently borrows approximately $2.4 million for road rehabilitation works and has done so for several years, having turned to this funding source when budget cuts were required to balance previous budgets. While allowable as the work undertaken is capital in nature, it is not a sustainable practice and leaves Council with little flexibility to borrow appropriately for new capital projects. In fact, the increasing deficit position under the Base Case is partially due to this ongoing reliance on borrowings to fund rehabilitation works. The special rate variation package proposes to “wean” Council off this funding source over an 8 year period by replacing borrowings with general revenue. The improvement to Council’s long term financial sustainability is obvious from the projections.

In relation to grant funding Council already pursues and receives significant levels of such funding particularly in the areas of community services (HACC Services) and natural resource management. Council’s Natural Systems section has been extremely successful in leveraging the funds received from the Environmental Levy into greater amounts that have allowed significant works to be undertaken. Council continues to source grants as it becomes aware of them however there are very few grants which are untied in nature and that can be expended on general operations. While the tied nature of the grants allow for community outcomes to be obtained, the priorities and desired outcomes are those of the grant provider which may not always reflect Council’s current priorities. That said, Council continues to show flexibility by reprioritising its programs and budgets (where matching funding is required) to take advantage of the funding.

In undertaking the consultation with the community on this special variation proposal and in response to questions from the public as to Council's success or approach to obtaining grant funding, the General Manager has advised that Council has been successful in this area and has a proven track record of completing projects and leveraging available funds. He has indicated that should the rate application be successful that Council will aggressively pursue government agencies for funds and opportunities to enter partnerships to increase revenues and community outcomes.


3.3 Efficient and feasible program of expenditure

Council must attach a detailed program of expenditure to be funded from the special variation for at least every year of the application, and if relevant, for additional forward years.

The program of works included in the application should provide sufficient detail for IPART and the community to know what the funds will be used for, what specific projects are proposed and when they will be undertaken.

Expenditure under the program of works must equal the additional revenue sought and must reconcile with Council’s LTFP. The application should clearly identify where in the LTFP the works appear.

In the space below, Council must also provide a commentary regarding the program of expenditure. This should include details of the research and feasibility work undertaken. In particular, state why the cost estimates are based on an efficient allocation of resources e.g., due to industry benchmarks, an independent assessment or certain assumptions.

Council's Response As Council has indicated in Section 3 this special rate variation application has been developed as a multi-year package that addresses multiple issues affecting Council’s long term financial sustainability, infrastructure maintenance responsibilities and service provision responsibilities. External reviews and studies and Council’s own financial and asset management forecasting all conclude that unless there is a significant increase in permanent revenue available for Council use, it faces a future whereby it will be unable to meet its responsibilities to the community and other stakeholders and will be financially unsustainable.

Through this package Council has attempted to address its ongoing deficit budget situation, unwind itself from its current practice of borrowing funds for urban road rehabilitation works, increase the amount of funds available for infrastructure maintenance and renewals as identified by its asset management plans and to provide some new capital facilities identified as priorities by the community prior to and during the development of Council’s Community Strategic Plan and Delivery Program. Council also has a current section 508(2) special variation for environmental purposes approved which expires at the end of the 2013/2014 financial year and this package includes its renewal at the existing level (6%) on a permanent basis.

The following table outlines the additional net revenue raised through a successful special variation application when the Base Case rates are deducted. The allocation of these funds is set out (not in priority order).


2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Rates Levied per s508A Application

28,678,012 30,923,782 33,345,114 35,962,255 38,087,624 40,338,603

Rates Levied per Base Case

24,710,600 25,451,918 26,215,476 27,001,940 27,811,998 28,646,358

Net Increase in Rates

3,967,412 5,471,864 7,129,638 8,960,315 10,275,626 11,692,245

Allocation of Additional Revenue

Program 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Civic Government 5,500 5,000

Tourism 30,000 30,000 30,000 30,000 30,000 30,000

Additional Pension Concession

127,500 127,500 127,500 127,500 127,500 127,500

Administration Buildings Maintenance & Renewals

15,000 15,000 55,000 15,000 15,000 15,000

Information Technology

37,000 9,000 10,000 9,500 38,000

Aquatic Centre Maintenance & Renewals

55,000 100,000 95,000 91,000 91,000 91,000

Library Maintenance & Renewals & purchase of Book Stock

60,000 62,000 64,000 66,000 68,000 70,000

Cemeteries – M & R 20,000

Community Buildings – Maintenance & Renewals

135,000 190,000 194,000 198,000 198,000 197,000

Section 94 Liability Reserve Transfer

375,000 375,000 375,000 375,000

Community Strategic Planning – Community Engagement Activities

24,000 26,000 26,000

Principal LEP Review

60,000

Additional Environmental Levy Projects

215,553 297,761 388,093 487,647 559,243 636,405

Environmental Health – Food Safety & Noise Protection Programs

2,000 17,000 2,000 2,000 2,000 2,000

Urban Road Rehabilitation Works

484,000 812,000 1,142,000 1,725,000 2,262,000 2,792,000


Allocation of Additional Revenue (continued)

Program (continued) 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Urban Road Construction Program

400,000 400,000 400,000 475,000 575,000 675,000

Rural Road Maintenance & Rehabilitation

500,000 450,000 450,000 450,000 650,000 1,210,000

Rural Road Construction Program

400,000 400,000 400,000 475,000 575,000 675,000

Rural Bridge Construction Program

100,000 450,000 450,000 520,000 500,000 500,000

Cycleway / Footpath Construction Program

50,000 50,000 100,000 100,000 100,000

Myall Way Footpath Construction Project

200,000 500,000 530,000

Stormwater Drainage Construction Program

50,000 50,000 50,000 100,000 100,000

Sporting Fields Maintenance, Rehabilitation & Capital Programs

40,000 105,000 70,000 330,000 395,000 520,000

Passive Recreation Area Maintenance, Rehabilitation & Capital Programs

840,000 740,000 830,000 1,575,000 1,285,000 870,000

Pools – Operations and Maintenance (Tuncurry & Nabiac)

55,000 197,000 203,000 210,000 216,000 222,000

Depot Management - 5,000 5,000 5,000 75,000 106,000 106,000

Rural Fire Service – Bulahdelah HQ

257,000

Corporate Review & Development Programs

25,000 50,000 50,000 50,000 50,000 50,000

Funding of Deficit – Base Case

461,443 1,311,637 1,902,954 2,543,165 3,097,057

Base Case Adjustments due to errors in postponed & pensioner rates

17,000 7,740 -1,662 -11,202 -9,655 -19,779

Additional Provisions for Rates Debts

4,500 9,495 15,028 18,881 23,053

Savings from Loan Reduction Program

-61,000 -192,000 -311,000 -478,000 -694,000 -959,000

Net Budget Result after Allocation of Revenues

-8,641 57,420 87,575 60,388 67,992 50,009


Additional details of the works to be undertaken and the timing have been circulated and discussed with the community as part of the latest round of community engagement. Details of these works have been attached to this application as Annexure 'F'.

Council, in developing this package, was aware that the additional revenue being sought would not be sufficient to fully fund any of the areas being targeted. As such Council has taken the view that by providing an additional allocation of funds to existing programs it will obtain incremental improvements in services and assets. In areas such as the reintroduction of the Urban and Rural Road Construction Program, works will be tailored to meet the available funds. The estimates used are based on Council’s historical costs, taking into account industry cost increases. Works have been prioritised based on Council’s Asset Management Plans.

In relation to the expenditure of the additional funds raised by the Environmental Levy over the course of this application and beyond, if its renewal on a permanent basis is successful, Annexure 'B' outlines the works programs that will benefit from the funds. It also notes that "it is proactive and beneficial that new plans, programs, monitoring and feedback be developed, refined or extended in order to extend the success of natural resource management outcomes to date". As such, there will be further work plans developed to allow for the protection and enhancement of the natural environment that will require these funds.


3.4 Impact on financial sustainability

In this section, Council must show the financial implications for it should the special variation be approved or not approved. Councils need to project either 2 or 3 scenarios over the relevant years of the special variation (including forward years if applicable):

1. Baseline scenario – Revenue forecasts excluding the special variation.

2. Special variation scenario – Revenue forecasts including the special variation.

3. Project proceeds without SV scenario - Where a project or priorities are intended to proceed regardless of the special variation approval, the council should also show the projected financial position if the related expenditure priorities/projects proceed without the special variation.

Also include information on key assumptions that underpin the LTFP and the special variation application.

Council's Response Council has considered two scenarios in detail when preparing its Long Term Financial Plan (LTFP). It has prepared a Base Case scenario on the premise of carrying on business as usual. It is proposed that the current 2010/2011 service and infrastructure maintenance levels will be maintained over the life of the Plan. The assumptions made are detailed in Council's LTFP (attached as Annexure 'E') but are summarised below:

Rates - Increase by 2.8% in 2011/2012 after which increases of 3.0% per annum apply to the balance of the Plan.

Annual Charges - Increase by 5% in 2011/2012 & 2012/2013 followed by a standard increase of 4% per annum for the balance of the Plan.

User Charges & Fees & Charges - Increase of 3.5% per annum for the life of the Plan.

General & Specific Purpose Operating Grants - Increase by 3.5% per annum for the life of the Plan.

Interest on Investments - Interest rate of 6.0% for 2011/2012 increasing to 7% for 2012/2013 then 8% for 2013/2014 and remaining at this level for the life of the Plan.

Employee Benefits & On-costs - Increases of 4.5% per annum are projected for the life of the Plan.


Borrowings - Interest rate payable on borrowings forecast at 8.0% per annum. Continuation of existing borrowing policy in relation to borrowing to fund urban road rehabilitation works.

Materials & Contracts - Increase of 3.5% from 2011/2012 to 2013/2014 reducing to 2.5% thereafter.

Depreciation & Amortisation - No change across the life of the Plan. This will be reviewed in conjunction with review of the LTFP in 2012/2013.

Other expenses - Same indexation as Materials & Contracts with the exception of Water & Sewerage Charges (6.0% for 2011/2012 to 2013/2014 then 4.0%), Waste Charges (5.0% for 2011/2012 & 2012/2013 then 4.0% thereafter) and Electricity Charges (5.0% for 2011/2012 to 2014/2015 then 3.0% thereafter).

The special variation scenario, titled "Towards a Sustainable Great Lakes" in the LTFP is based on Council being successful with its application to IPART for an increase in its general income of 20% in 2011/2012 followed by three years of an 8% increase followed by two years of a 6% increase before returning to the local government cost index (forecast at 3.0% per annum). This scenario also provides for the renewal on a permanent basis of the 6% Environmental Levy which was approved for a five year period by the Division of Local Government commencing in the 2009/2010 financial period and expiring at the end of the 2013/2014 financial period.

As stated in the LTFP, "This scenario is essentially represented as a layer added to the Base Case. A significant amount of additional revenue would be raised from this scenario and it is intended that the additional funding would be utilised to address infrastructure maintenance and capital programs, provide some programs and projects identified in Great Lakes 2030 and make structural changes to the underlying budget to improve the long term financial sustainability of Council."

The implications arising from the two scenarios have been discussed in various sections of this application. However, to highlight the differences, the Council budget result for the two scenarios is shown below.

Budget Result ($‘000’s) (surplus/(loss))

11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

Base Case 2 (461) (1,312) (1,903) (2,543) (3,097) (3,760) (4,426) (4,985) (5,592)

SRV (7) 60 89 62 70 52 391 215 517 434

These figures support the projections contained in the Income Statements of the two scenarios which are presented in the LTFP.

Essentially, Council’s Base Case scenario is unsustainable. Continuing to do what we have traditionally done, within the constraints of the rate peg or cost index is driving Council to a point whereby a significant retraction in services and


maintenance will be necessary to remain financially viable. There has been no change to the forecast long term position despite costs of more than $4 million over the past three years.

Council has recognised that intervention is required and has developed the special rate variation package as a means of addressing the issues of the current paradigm. It offers the opportunity to move to a more sustainable future in which the community are provided with the facilities, infrastructure and services that they demand.

It should be noted that the Environmental Levy does not have an impact on the bottom line result of Council. As a quarantined levy, income equals expenditure and this position has been built into the Base Case scenario and the 20% Special Rate Variation scenario.


3.4.1 Variations for capital expenditure

Does the application relate to infrastructure investment, whether for new assets or maintaining existing assets? Yes X No

Does the purpose of the proposed special variation require that a capital expenditure review be undertaken by Council in accordance with Council Circular 97/55? Yes No X

If Yes, has a review by the Council been undertaken? Yes No

If Yes, has Council submitted this to DLG? Yes No

(Note: If a capital expenditure review is required but has not been assessed by DLG, IPART will not be able to assess Council’s application.)

If the application relates to infrastructure investment, whether for new assets or maintaining existing assets, provide appropriate narrative, together with cross referencing to Council’s Asset Management Plans.

Attach relevant sections/pages of the AMP if the application relates to infrastructure investment.

Council's Response Independent assessment of Council's assets by Review Today Pty Ltd show a combined shortfall in funding for maintenance and renewal of $6.4 million per year. Council's Asset Management Plans indicate a slight increase in this shortfall amount.

The proposed rate increase will partially address this shortfall through the allocation of an additional $1 million in the first year rising to an additional $3.3 million in year six of the plan for additional asset maintenance and renewal. A breakdown of the allocation of these funds shows that it addresses the shortfall through a range of Council assets including buildings, roads, bridges and recreation assets with the main component being for roads and bridges. (Refer to Annexure 'F')

In addition to these amounts for maintenance, funding of $800,000 in the first year rising to $1.5 million in year six has been allocated to the sealing of unsealed rural and urban roads (Note - this partially reinstates the $1.7 million Urban and Rural Road Construction Program that was abolished in 2008 due to budget constraints). These are not new roads; they are existing unsealed roads taking traffic volumes beyond the capability of gravel roads. This work will assist in reducing Council's long term maintenance costs and provide other community benefits such as to health by reducing dust levels.

Copies of Council's Asset Management Policy, Strategy and Plans accompany this application as Annexures 'G' - 'M'. Council's detailed Asset Management Plan for Stormwater Drainage is currently under development. The financial data for the plan indicates that no major funding requirements for renewal works for this


infrastructure class are required within the next 10 year period. Council's current allocation for stormwater drainage is allocated towards drainage enhancement projects to improve water quality and also alleviate existing flooding issues.

The shortfall in funding for all asset classes is made up of the following amounts:

Current funding Required funding Shortfall

Roads 8,058,000 13,416,000 5,358,000

Bridges 633,000 926,000 293,000

Footpaths/cycleways 58,000 237,000 179,000

Recreation

infrastructure

703,000 1,054,000 351,000

Buildings 604,000 1,058,000 454,000

Stormwater drainage 881,000 868,000 (13,000)

TOTAL 10,937,000 17,559,000 6,622,000

The intervention level for assets has a significant impact on this costing and to demonstrate that Council's assets are not being over serviced; the following are extracts from the report by Professor Percy Allan of Review Today Pty Ltd regarding rating of and degradation of assets.

The table below is a generic description of condition ratings from '0' (new asset) - '10' (failed asset). Following that is a representation of a generic asset degradation curve.


The following diagram provides the results of community consultation and details of adopted intervention levels for each class of assets. This clearly demonstrates that Council's and the community's expectation is not that all assets will be retained in an 'as new' condition.

Council's Asset Management Plans have been based on the full life of each asset being achieved. Asset renewal is not undertaken until the asset has reached an unacceptable level which is then impacting on maintenance costs.

The following provides a further break-up of the roads assets which have been used to derive the overall intervention level for roads.


As a result of Council's community consultation program two additional specific areas of need have been identified. These areas are stormwater drainage upgrading in North Arm Cove, which has been addressed through the provision of funding of $50,000 in year 2 increasing to $100,000 from Year 5 onwards as well as an additional amount of $50,000 rising to $100,000 for the construction of footpaths and cycleways.

In addition to the maintenance and renewal of existing assets, the proposed rate increase will provide an additional amount of approximately $1m per year to provide new infrastructure or upgrade existing infrastructure which has been identified by the community through the Great Lakes 2030 Plan. A detailed list of these projects has been included in Council's application. However, a review of these projects shows that they are essential community facilities. As an example, the community of Nabiac has collected funds over a 20 year period to enable a local swimming pool to be constructed. Under the Base Case scenario Council cannot afford to operate and maintain this pool once it has been constructed. The special rate variation package will provide funds of $155,000 annually which will be needed to service and maintain the pool once constructed.


3.4.2 Impact of special variation on key performance indicators

Councils must complete Table 3.1 and Table 3.2 below to demonstrate the impact on its key performance indicators for the current year and 3 forward years under 2 possible scenarios – (1) the special variation is approved and (2) the special variation is not approved.

Table 3.1 Key performance indicators – Scenario 1 special variation is approved

Indicator 30/6/10 Actual

30/6/11 Estimate

30/6/12 Forecast

30/6/13 Forecast

30/6/14 Forecast

Operating Balance Ratio %

-1.18% -39.80% -5.13% -3.20% -1.50%

Unrestricted Current Ratio %

2.84% 2.22% 1.64% 1.54% 1.50%

Rates & Annual Charges Outstanding Ratio %

5.66% 5.56% 5.60% 5.57% 5.57%

Debt Service Ratio % 7.95% 7.84% 9.78% 10.79% 11.19%

Broad Liabilities Ratio %

59.90% 70.52% 94.20% 96.50% 97.05%

Asset Renewals Ratio 106.61% 138.40% 54.10% 70.80% 73.20%

Table 3.2 Key performance indicators ‐ Scenario 2 special variation is not approved

Indicator 30/6/10 Actual

30/6/11 Estimate

30/6/12 Forecast

30/6/13 Forecast

30/6/14 Forecast

Operating Balance Ratio %

-1.18% -39.80% -10.60% -10.90% -11.70%

Unrestricted Current Ratio %

2.84% 2.22% 1.57% 1.39% 1.10%

Rates & Annual Charges Outstanding Ratio %

5.66% 5.56% 5.55% 5.56% 5.56%

Debt Service Ratio % 7.95% 7.84% 10.53% 12.00% 12.96%

Broad Liabilities Ratio %

59.9% 70.52% 101.60% 107.60% 112.30%

Asset Renewals Ratio 106.61% 138.40% 42.10% 46.00% 47.20%

Note: Operating balance ratio is the net operating result (excluding capital items) as a percentage of operating revenue (excluding capital items).

Unrestricted current ratio is the unrestricted current assets divided by unrestricted current liabilities. “Unrestricted” means there is no restriction on the asset or liability imposed by regulation or some other externally imposed constraint.

Eg, restricted assets include developer contributions.

Rates and annual charges ratio is the rates and annual charges divided by operating expenses.

Debt service ratio is the net debt service cost divided by revenue from continuing operations.

Asset renewals ratio is asset renewals expenditure divided by depreciation, amortisation and impairment expenses.

Broad liabilities ratio is the total debt plus cost to clear infrastructure backlogs (Special Schedule 7) divided by operating revenue.


Also provide commentary on the impact of the special variation on Council’s key performance indicators. Explain any differences under the 2 scenarios.

Attach a schedule of Council’s projected performance indicators, as reflected under the LTFP scenarios and relevant extracts of the AMP if the application relates to infrastructure investment.

Council's Response As indicated previously the Base Case scenario has been prepared on the basis of existing 2010/2011 levels of infrastructure maintenance and service being maintained with rates increasing in line with the local government cost index (projected at 3.0% per annum). As detailed in section 3.2 Council's LTFP projects increasing net operating losses from continuing operations. This result is then reflected in the projected performance indicators, particularly the Operating Balance Ratio which shows an increasing negative result (increasing losses from continuing operations) and the Unrestricted Current Ratio which is decreasing indicating that Council is utilising its current assets (particularly cash) to fund its deficit budget position. Under the 20% Special Rate Variation scenario Council begins recording operating surpluses from continuing operations in 2014/2015 and this is also reflected in the performance indicators. The Operating Balance Ratio improves over time as shown below:

11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

Operating Balance Ratio (%)

-5.13 -3.20 -1.50 0.65 2.02 3.07 4.20 4.46 5.29 5.27

With reference to Tables 3.1 and 3.2 an explanation is required in relation to the Operating Balance Ratio for 30/6/2011 given its size in comparison to other years. During 2010/2011 Council handed control of the Crown Reserve Caravan Parks that it was responsible for back to the Land & Property Management Authority. From an accounting perspective the removal of this operation from Council’s accounting records will represent a loss on the disposal of assets which is to be recorded through the Income Statement. The result is a one-off spike in this ratio which represents an anomaly when compared to the other results. Section 6.2 that follows addresses the sustainability of borrowings and contains a comparison of the debt service ratios under both scenarios. There is a significant difference in this ratio between the scenarios as the timeframe lengthens and current borrowings are replaced with other revenue sources.


Broad Liabilities Ratio It is necessary to explain Council's calculation of the Broad Liabilities Ratio. The definition for the calculation of this ratio utilises a figure contained within Special Schedule 7 of Council's Financial Reports (the estimated cost to bring up to a satisfactory condition standard). Special Schedule 7 as at 30 June 2010 indicates an amount of $73,216,000 is required to bring Council's assets up to a satisfactory condition standard (with satisfactory determined by Council). It should be noted that this amount has been historically based due to the lack of condition data for many of Council's assets. The data required to accurately calculate this figure is continuing to be collected as Council develops and refines its Asset Management Plans and, at the present time, Council's Asset Management Plans indicate a backlog totalling $36m. Apart from the refinement of the asset data, a significant reason for the differing amounts is one of definition. The current figure may prove to be accurate in the future but at the present time Council does not have the data available to confirm that it represents anything more than an estimate. Council has been developing its Asset Management Plans based on the NAMS plus methodology and has determined intervention levels i.e. the point at which Council will take action to restore an asset. The intervention level differs for each asset class but is designed to ensure the full life of an asset is achieved at the minimum cost possible. As an example, under Council's Asset Management Plan for Roads the intervention level for a road is condition level 8 which is described as: An asset in very poor overall condition with serviceability now being heavily impacted upon by the poor condition. Maintenance cost would be very high and the asset would be at a point where it needed to be rehabilitated. Until an asset reaches this intervention point it is not considered to contribute to the backlog within the Asset Management Plans and this intervention point is different to the condition rating of satisfactory identified within Special Schedule 7. Council has not determined where on its asset condition continuum that satisfactory is located and as such has no reliable data for its calculation. For the purposes of calculating the Broad Liabilities Ratio, the backlog amount obtained through Council's Asset Management Plans, has been used. The rationale is that these figures have been developed and tested through the asset management process while any projected figure for Special Schedule 7 would be a rough estimate or indexed increase on the previously reported figure. It is acknowledged that this will represent a lesser figure than if reliable figures were available for the cost to bring up to a satisfactory standard. In addition to this the same backlog figures have been used for the calculation of the ratio under both scenarios. Modelling of the impact of the additional funds provided from the 20% Special Rate Variation scenario on the Asset Management Plans has not been done but the impact would be to decrease the backlog amount as additional funds are being allocated to maintenance and asset renewal works.


Asset Renewal Ratio

This ratio is indicating that the special rate variation package is improving Council’s infrastructure maintenance performance. There are shortcomings with Council’s calculation of the ratio with no indexation of the depreciation figure across the life of the LTFP. This will be remedied in the review of the LTFP due in 2012. Additionally the allocation of funds between renewals and maintenance expenditure for budgeting purposes has been arbitrary. Further rigour is required to improve the quality of this estimate. Regardless of these issues, the difference in the figures between the scenarios and the improvement in the special rate variation scenario is logical given the targeted nature of the works program associated with the special rate variation package.

Schedule of Projected Performance Indicators (extracted from LTFP)

Base Case Scenario

11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

Unrestricted Current Ratio

1.57 1.39 1.1 0.78 0.38 0.04 -0.26 -0.58 -0.97 -1.05

Debt Service Ratio (%)

10.53 12.00 12.96 13.49 13.81 13.20 13.61 13.50 13.46 13.34

Rates & Ann. Chges Coverage (%)

56.82 56.02 56.16 56.32 56.40 56.36 56.51 56.58 56.63 56.69

Rates O/S Percentage (%)

5.55 5.56 5.56 5.56 5.56 5.56 5.56 5.55 5.55 5.55

20% Special Rate Variation Scenario

11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

Unrestricted Current Ratio

1.64 1.54 1.50 1.47 1.37 1.20 1.34 1.48 1.61 1.75

Debt Service Ratio (%)

9.78 10.79 11.19 11.16 10.99 10.00 9.95 9.43 8.94 8.34

Rates & Ann. Chges Coverage (%)

59.61 59.75 60.80 61.85 62.42 62.91 63.16 63.25 63.33 63.41

Rates O/S Percentage (%)

5.60 5.57 5.57 5.58 5.57 5.57 5.56 5.55 5.55 5.55


Rates and Annual Charges Outstanding Percentage

After Asset Renewals Ratio, Council is showing little difference in this ratio being of the opinion that it can maintain its debt recovery performance in combination with capping the rate increase proposed for the Farmland rural 1(a) zoned properties.


4 Community consultation

Councils must show adequate community consultation regarding the reasons for the variation and its impact on ratepayers.

4.1 The consultation strategy

In the section below, provide details of the consultation strategy undertaken by Council, including the range of methods used to inform the community on the special variation proposal and to obtain community feedback on this option (e.g., a survey, focus group, online discussion, town hall meeting, newspaper advertisement or public exhibition of document).

The information should clearly identify:

Key stakeholders in the consultation process.

Methods of consultation and why these were selected.

Timing of the consultations (including exhibition of Draft Community Strategic Plan, Draft Delivery Program and Draft Operational Plan as applicable).

Also attach an extract from Council’s Draft Delivery Program that sets out the special variation proposal. This extract must include the proposed rating structures that will apply both with the special variation and without the special variation.

Council's Response Community Engagement Strategy

Council has adopted a draft Community Engagement Strategy (copy attached as Annexure 'N') that outlines Council's commitment to engaging stakeholders in the development of a Community Strategic Plan which will reflect the community's aspirations for the future, as well as enhancing community understanding of Council's challenges, and financial and service provision priorities.

The Community Engagement Strategy recognises the need to move into a level of collaborative engagement with the community, and highlights the need to encourage community ownership of and commitment to the longer term strategic plan, Great Lakes 2030. The Strategy outlines stakeholder groups and includes details of the key activities, benefits, challenges and timeframes of engagement undertaken regarding Great Lakes 2030 and Council's special rate variation proposal.

Initial work had been undertaken on Council's approach to community consultation under an internal process improvement program (Great Lakes Improvement Program) in 2007. A Community Consultation team undertook research using a 7-step program to identify improvement recommendations to the overall community consultation process undertaken throughout Council's sections. Council utilised this


information as a starting point for the community engagement strategy and approach adopted by Council.

Council had also undertaken a Customer Satisfaction Survey in 2008, which provided valuable information on Council's services and in identifying community priorities.

To guide our approach to more inclusive community engagement on a corporate level we initiated a 'Community Engagement Team (CET)' within Council, comprising Council staff that regularly undertake community engagement on specific projects within their area of expertise. The CET includes Council's Director Corporate & Community Services, Manager Corporate Governance, Manager Economic Development, Corporate Planning Coordinator, Senior Strategic Landuse Planner, Communications Officer, Coastal Catchment and Catchment Coordinators. The team met regularly during 2010 to assist in the planning, review and refinement of Council's community engagement strategy regarding Great Lakes 2030 and Council's special rate variation proposal.

Based on their previous experience with engaging the unique communities that comprise the Great Lakes local government area on various proposals, plans and projects, the Team provided essential guidance on different methods of engagement for those communities.

This previous experience indicated clearly that we needed to develop a strategy that recognised the individuality of each of our communities in terms of engagement methods. For example, previous attempts at public meetings in Forster/Tuncurry, including meetings regarding proposed rate increases, would see only 10-15 people in attendance. It was therefore decided to trial taking our message out to the community of Forster/Tuncurry rather than expecting them to come to us.

We trialled this approach in October/November 2010 where we attended markets in Tuncurry, Pacific Palms and Nabiac as well as two days at Stockland shopping centre in Forster. Council also held public meetings held in Tea Gardens / Hawks Nest and Stroud, and manned a street stall in Bulahdelah. By the end of these activities Council had spoken face to face to nearly 600 people.

These results indicated a significant increase in the number of people engaging with Council on important matters, in comparison to the numbers previously experienced with just holding public meetings. Due to the 'success' of this method of engagement we chose to run the February/March 2011 engagement program on this model. The formal results of this round of engagement will be reported to IPART in April, however our initial indications are that the current engagement has been just as successful in terms of getting out to our communities.

In addition to the raw number of people attending these engagement activities, anecdotal evidence also indicates a preference for one on one engagement at markets and shopping centres and that we are reaching an audience that would not typically attend public meetings for various reasons. Some comments reflected hesitation in


speaking out in front of a crowd and the inconvenience of attending meetings, which supported Council's approach to varying methods of consultation.

Timeframes of community engagement - overview

The following timeline indicates community engagement undertaken by Council between 2008-2011 as part of development of the Community Strategic Plan and the special rate variation proposal, including public exhibition of Council’s IPR documents.

Key: Studies Exhibition Engagement - 1 Engagement - 2 Engagement - 3

Community engagement round '2' - late 2010 - community engagement based on Discussion Paper on GLC's current situation (infrastructure, finances etc), what the community wants (GL 2030), creation of a sustainable future and 3 options to address infrastructure challenges and financial sustainability.

Community engagement round '1' - late 2009 - public workshops throughout Great Lakes area to obtain input for Great Lakes 2030

Public meetings and media to present summary of Review Today P/L (Prof Percy Allen) study on GLC - achieving sustainable infrastructure, services & finances

Community Leaders Forum -Nov 2009- to obtain input for Great Lakes 2030

2008 2009 2010 2011

Community engagement round '3' - Feb/Mar 2011 - Planning a Sustainable Future and Special Rate Variation proposal including proposed allocation of additional funds

Draft Great Lakes 2030 on public exhibition through Feb 2010 (and letters sent to workshop participants with outcomes, advising of public exhibition)

Community satisfaction survey - community priorities and perceived performance

All draft IPR documents on public exhibition - Feb/Mar 2011 - including 2011-2015 Delivery Program and 2011-2012 Operational Plan

Great Lakes 2030 and Special Rate Variation Community Engagement -

Stakeholders, Activities, Timeframes

Details regarding stakeholder groups, methods of consultation and timing for Great Lakes 2030 and Council's special rate variation proposal are included in the following tables. The information reflects the range of activities undertaken to inform, consult, involve and collaborate with the community to shape the future of the Great Lakes area.

In relation to the most recent round of community engagement, we have spoken to over 750 people face to face at market stalls and meetings, with a majority of those


being one on one conversations. Details regarding the outcomes of this consultation, as well as the results of an online and phone survey, are currently being analysed and will be provided to IPART after consideration by Council in April, as per the extension that has been granted for this element of the Application.

Great Lakes 2030 - Community Engagement

Stakeholder Key activities Timeframes

Community workshops held throughout GL LGA

October 2009

Mailing to non-resident ratepayers

October 2009

Community leaders forum November 2009

October/November 2010 (cancelled due to low numbers)

Shopping centre stalls October/November 2010

February/March 2011

Community market stalls October/November 2010

February/March 2011

Community meetings October/November 2010

February/March 2011

Written feedback form (hard copy and web)

October/November 2009


February/March 2011

Web based survey February/March 2011

Community

Council Communicator newsletter to ratepayers

July 2010

October 2010

January 2011

Workshops October/November 2009

Presentations at meetings October/November 2009

February/March 2011

Meetings with groups in geographically similar areas

October 2009

February/March 2011

Mailout of information for comment to community and interest groups

October 2009


February/March 2011

Community groups (including special interest and target groups i.e. youth)

Calendar competition with primary schools

Late 2010

Workshops October/November 2009

Group sessions/workshops for specific industry/business groups


Industry groups

Presentations at meetings October 2009

February/March 2011

Meetings with Department representatives

October 2009 State and Federal agencies

Circulation of information for comment

October 2009

Adjoining Councils - Port Stephens, Dungog, Gloucester, Greater Taree

Mayor and GM seek input through Region Organisation of Councils (ROC)

October 2009


Great Lakes 2030 - Community Engagement (continued)


Reports to Council meetings 2009, 2010, 2011 Great Lakes Council - Councillors Strategic Meeting - workshops 2009, 2010, 2011

Internal community engagement and project teams

2010, 2011

Workshops October 2009

Great Lakes Council - staff

Project updates/staff briefings 2009, 2010, 2011

Special Rate Variation - Community Engagement


Shopping centre stalls October/November 2010

February/March 2011

Community market stalls October/November 2010

February/March 2011

Community meetings October/November 2010

February/March 2011

Written feedback form (hard copy and web)


February/March 2011

Web based survey February/March 2011

Community leaders forum (and mailout in 2010, 2011)

October/November 2010 (cancelled due to low numbers)

Council Communicator newsletter to ratepayers

July 2010

October 2010

January 2011

Community

Independent random telephone survey

March 2011

Presentations at meetings February/March 2011

Meetings with groups in geographically similar areas

February/March 2011

Community groups (including special interest and target groups i.e. youth)

Circulation of information for comment


February/March 2011

Industry groups Meetings with specific industry/business groups

February/March 2011

State and Federal agencies Meetings with IPART and DLG representatives

2010 (DLG)

January & March 2011 (IPART)

State and Federal MPs Discussions with S Bromhead, C Bowman, B Joyce

Late 2010, early 2011

Reports to Council meetings 2009, 2010, 2011 Great Lakes Council - Councillors Strategic Meeting - workshops 2009, 2010, 2011

Internal community engagement and project teams

2010, 2011

Workshops October 2009

Project updates/staff briefings 2009, 2010, 2011

Great Lakes Council - staff

Managers forums for development of Delivery Program, Operational Plan and Special Rate Variation and general IPR

2009, 2010, 2011


The following diagrams indicate the scope and breadth of the community engagement program undertaken throughout the Great Lakes area in February and March 2011 in relation to Council's special rate variation proposal and the draft Delivery Program and Operational Plan. Results of this engagement will be reported to IPART in April.

Council has classified its recent engagement opportunities as:

Special interest groups Groups including Lions Club, Probus etc (General Manager presentation)

Small district community meetings

Progress/community associations that represent small geographical areas (General Manager presentation)

Market stalls Senior Council staff (4-5 staff members per market) - at 5 markets

Large district community meetings

Community meetings in 3 major towns (General Manager presentation)


Schedule & type of community engagement - February/March 2011

DATE ACTIVITY

Tuesday 8th February Coomba & District Progress Association

Wednesday 9th February Friends of the GL Library Service

Saturday 12 February NACRA

Monday 14th February Great Lakes Rotary Club

Wednesday 16th February Rotary Club of Tuncurry Forster

Thursday 17th February Forster Tuncurry Lions Club Executive

Monday 21st February Green Point Progress Association

Wednesday 23rd February Wallamba Men's Probus

Thursday 24th February Staff Briefings

Tuncurry Markets Saturday 26 February

Nabiac Markets

Sunday 27 February Palms Markets

Monday 28th February Forster Waterside Group Executive

Pindimar/Bundabah Community Assoc

TGHN CCC

Tuesday 1 March

TGHN community meeting

Thursday 3 March Stocklands

Wednesday 9 March Bulahdelah community meeting

Staff Briefings - Operations Thursday 10 March

Stroud community meeting

Sunday 13 March Forster Town Park Markets

Monday 14 March For/Tun Lions Club

Tuesday 15 March For/Tun Chamber Executive

Saturday 19th March Nerong Progress Association

Monday 21st March Nabiac Futures Group

Wednesday 23rd March Forster Keys Ratepayers

LEGEND

Special interest groups

Small district community meetings

Market stalls

Large district community meetings

Chambers of Commerce

Internal staff briefings


The following extracts from Draft Delivery Program 2011-2015 set out the special rate variation proposal including proposed rating structures with the special rate variation and without.


4.2 Outcomes from community consultations

Councils must also provide a summary of the outcomes from community consultations (e.g., number of attendees, percentage of responses indicating support, overall sentiment of representations). In addition, provide a summary of submissions received in response to the exhibition of the Delivery Program/Operational Plan, where they relate to the proposed special variation. Identify the level of community support for the proposal (including by relevant stakeholder group) and any action proposed by Council to address issues of common concern.

Council's Response

Overview of October/November 2010 community engagement

October 2009 saw the communities of the Great Lakes meet to provide input to Great Lakes 2030 - the community's first long term strategic plan - a long term plan for the future of the Great Lakes area. The draft Plan was placed on public exhibition and Council utilised the information within the draft to inform the development of the 2011-2015 draft Delivery Program, 2011-2012 draft Operational Plan and Council's special rate variation proposal.

At the same time, Council took detailed stock of their current situation - both in terms of infrastructure and community assets, and financial sustainability. Our aim was to utilise this information, with feedback from the community in Great Lakes 2030 regarding their future aspirations for the area, to come up with a plan for creating a sustainable future.

In October 2010 Council commenced an innovative program of community engagement as referred to in Section 4.1. The intention of this round of engagement was three fold and included:

Where we want to be (Great Lakes 2030 outcomes)

Where we are (National and State perspective, Council infrastructure backlog and challenges)

How to get there (scenarios to address the challenges presented above)

One of the main focuses of this round of engagement was to inform and consult with the community in a clear and concise manner on the current challenges facing Council balanced against what they want to see in the future. We also wanted to involve the community in the development of appropriate scenarios to address this balance, and obtain an indication of their support or appetite for some level of a special rate variation.

To this end, we prepared support materials for distribution to the community at markets, on Council's website and through direct mail outs. The following


presentation was also utilised at the three public meetings held during this round of consultation.

Copies of the Great Lakes 2030 Discussion Paper - Planning a Sustainable Future, and Great Lakes Discussion Paper - Summary and the feedback form utilised are included as Annexures 'O', 'P' & 'Q'.


Outcomes of October & November 2010 community engagement

The following table identifies the dates, locations and number of attendees of each of Council's community engagement activities from October and November 2010.

Date Location Number of attendees

23/10/10 Tuncurry Markets 130

30/10/10 Nabiac Markets 47

31/10/10 Pacific Palms Markets 110

3/11/10 Nabiac Village Futures Group 6

4/11/10 Stockland Forster 105

9/11/10 Tea Gardens Hawks Nest community meeting

47

10/11/10 Stroud community meeting 27

13/11/10 Stockland Forster 67

24/11/10 Bulahdelah street stall 29

Total number of people 568

Council was overwhelmed at the willingness of the public to take the time at the markets to stop at Council's stand and listen to the information being presented. Display stands were utilised which included much of the information from the community presentation on the previous pages. We also displayed photos of roads from throughout the Great Lakes area that depicted examples of the various condition ratings of sealed and unsealed roads.

Anecdotal information from this round of engagement indicated that people gained a solid understanding of Council's position, many people commenting that it had never before been explained more clearly or thoroughly.

Through these conversations, we also realised that many people have a misunderstanding of issues regarding Council's efficiencies. For example, the pothole patching process - the public see Council placing cold mix in a pothole, only for it to open up again after wet weather or heavy traffic, and conclude that Council is inefficient. It is not widely known that this is a well accepted practice of patching roads to keep them as safe as possible for travel, with consideration of existing funding. Council may very well know that there is a defect deeper within the road structure however does not have funds available to address the structural issues with the road.

Even after explanation of the above, many community members tend to stand by their argument that if you had done it right the first time then it wouldn't happen. Although we may agree, without the funding Council can not undertake the extensive repairs required.


Feedback

A feedback form was utilised as part of the 2010 engagement program - available hard copy or on Council's website. The form asked five questions around the following topics:

1. Great Lakes 2030 - completeness of Key Directions, Challenges and Strategies

2. Options to address financial sustainability - preferred option

3. Options to address financial sustainability - allocation on how additional rate income should be allocated

4. Communication and Consultation - preferred methods for keeping up to date with Council information

5. Additional comments - to assist Council in the development of plans to deliver Great Lakes 2030

120 replies were received, of which 13 were form letters supporting 'Option 1 - Do nothing different' and increase by CPI only. The summary of responses to question '2' regarding the preferred option to address financial sustainability is shown below.

While we recognise the response rate is relatively low, we believe this indicates some form of 'acceptance' of the reasons presented for the rate increase options, if not for the specific options themselves.

Our experience indicates that if the public are in strong opposition to something, that they will be 'vocal' in expressing this opinion. In this instance it would appear that a number of people consulted with were content to adopt a 'wait and see' approach as to a firm special rate variation proposal on planning for a sustainable future. October/November 2010 – Broad Rating Options Response Hard copy On line Other Total Rapid increase 17 5 3 25

Steady increase 12 7 1 20

Limited increase 2 0 0 2

No increase 23 8 12 43

Option 1 form letter 13 0 0 13

No clear indication 10 1 6 17

Total replies 77 21 22 120

Some increase 47

No increase 56

No clear indication 17

Total replies 120


Rating option summary

Some increase 39%

No increase 47%

Undecided 14%

The overall sentiment of the responses received in relation to the options to address financial sustainability are summarised below. It should be recognised that Council encouraged the community to become familiar with the information being presented, and then provide informed feedback on the options presented.

Because of this approach, it is difficult to summarise the comments provided as they vary in detail and scope, however, a 'shopping list' of issues raised is presented as an indication of the sentiment of the community. The comments run the full gamut from support for even greater rate increases, to inability to pay and strong objection against any increase over CPI. A number of people who expressed an inability to pay commented on the impact of increases from other industries and utilities on their household budget.

It is important to note that this feedback is only on broad rate variation scenarios with no specific program of works or detail on how the additional funds would be applied. Further analysis and community engagement on the specific rate variation proposal together with strategies to overcome any issues of common concern will be covered in detail with Council's further submission on community engagement outcomes from February/March 2011. This 2011 engagement focussed specifically on the special rate variation package being sought.

The following comments were taken from answers provided to questions '2' and '3' above in the 2010 engagement process.


Affordability

Affordability for pensioners Affordability with other increases (electricity, water, etc)

Acknowledge difference between those unwilling to pay and those unable to pay and provide assistance to those unable to pay

Increase pensioner rebates

Will be forced to sell my home, Federal government doesn't increase my pension to allow ability to pay

Send out monthly rate notices

Council operations

Salaries should be cut, including Councillors Number of employees at Admin Offices - too many? - cost of Council administration

General Council efficiencies Over duplication of sports complexes

Cut back on Council 'errors' such as continuous placing of sand at Jimmys Beach

Inefficient infrastructure work - do it right the first time

Address inefficiencies - people and work practices

Examine Council efficiencies, contracting works vs in-house labour for roads construction and maintenance

Administrator could investigate where the money already collected from rate payers has been spent - are we getting value for money

Is Council getting value for money spent?

Time labour force spent working on site limited due to distances that have to be travelled - this is inefficient

Amalgamate with Port Stephens - amalgamate to reduce costs and duplication

Look into cost savings - there are many that don't include cutting staff and/or services

Contract work out to save money

Live within your means

Make cuts to existing services and facilities 'Make do with what you have' - 'live within your means' - make a budget and stick to it

Other ideas for increasing revenue

Sell Council assets to raise money Tax holiday rentals/tourists

Apply for more funding and encourage communities to do so

State and Federal governments to fund shortfall; provide appropriate funding to Councils - when shifting State responsibilities to Council provide the funding for them to be carried out

Increase rateable blocks by allowing greater flexibility in subdivisions

Run community facilities so that they cover costs - don’t provide for free or subsidised - many rate payers don't directly benefit from community facilities

Increase lobbying of State and Federal government for more funding

Undertake detailed cost savings

Implement user pays Develop Council-run enterprises to provide a source of funding independent of rates income


Rate pegging

Rate increase is necessary Continue rate capping - Council greedy

Peg rates at CPI Remove rate pegging

Comments on any proposed rate increase

Infrastructure will continue to decline if issues aren't addressed

Solid asset management will require more than the rate peg limit

Rapid improvement - with rebate to pensioners on rates

Should undertake review of existing facilities, then rapid increase

People expect services and facilities are deteriorating severely

Rapid improvement - to maintain infrastructure balanced with Great Lakes 2030 priorities

Rate increase only acceptable alternative - have had it 'too good for too long'

Rapid improvement - so things can be fixed properly rather than having to go back and do them again

Rapid improvement so improvements can be undertaken now

Large increases should be avoided due to other pressures, however some increase necessary

Need to ensure clear and practical explanation on how any extra funds would be utilised

Infrastructure maintenance as a priority, will continue to decline the longer the delay

Gradual increase Spread rate increase across years so that cost and benefits are shared across generations

Rate increase needs to sufficiently fund maintenance of existing infrastructure

Rapid improvement - so funds for improvement are available sooner rather than later

Rapid increase is the beginning of a solution Apply consistent increases over a number of years

Challenge in community acceptance over rate peg limit as the community is used to this, may be merit in longer term rate increase option

The 'doing nothing' option is unacceptable

It is disheartening that none of the options adequately address the infrastructure backlog; additional support from State and Federal Government necessary

Think a steady improvement would be delivered more effectively

Comments on any proposed rate increase (continued)

GLC increases would be higher than state averages because of multiple rate increases above rate pegging

Ensure our natural assets are appropriately maintained after long term neglect of these assets

How should any increase be spent?

Rapid improvement - with improved communication with the community

Infrastructure maintenance as a priority

Appropriate asset/infrastructure maintenance Rapid improvement - with ongoing higher rate

Infrastructure maintenance to fund shortfall Important to provide clear plan of expenditure of additional income

Infrastructure maintenance as a priority with a balance reserved for other projects

Infrastructure maintenance to fund shortfall - once fully funded then can fund other projects (no new major infrastructure)


How should any increase be spent? (continued)

Infrastructure spending on a variety of assets, not just roads. Need improved public and active transport options - and improved footpaths and cycleways to encourage healthy communities and supporting strategies

Allow Council management to decide

Replace wooden bridges on a gradual basis with assistance from State Government

Roads, drainage, cycleways and recreation areas

Combination of slow increases, forget any new programs

Increase and improve infrastructure used by tourists i.e. roads, public toilets, BBQ areas etc

Community to comment on priorities on long term strategies and funding priorities

Use to take advantage of available grants from State and Federal government

Spend wisely - not on staff vehicles, perks and outside consultants

Shared around the area - not all spent in Forster/Tuncurry

Media coverage

Great Lakes Council has provided regular updates to a wide range of regional media to inform the community of the ongoing development of Great Lakes 2030 including the special rate variation proposal and opportunities to be involved in that planning. Council has an established media profile and close relationships with all major media outlets in our region.

A summary of media coverage in the major media sources from July 2010 - November 2010 follows. Council does not currently subscribe to a media monitoring service, hence the following list is not exhaustive of all media coverage. Information on media coverage for the current round of community engagement will be included in the additional information being provided to IPART in April.

The Mayor also has regular spots on the local radio station where they discuss Council issues and projects affecting the community are covered. The community engagement regarding Great Lakes 2030 and Council's long term financial sustainability regularly headlined these interviews during this period. Media bulletins (with short media clips ideal for radio and community newsletters) are emailed each week to all media and these also regularly covered information on the community consultations, public exhibitions and general information on the development of Great Lakes 2030.

In addition, Council's quarterly mail out to ratepayers - Council Communicator - has included feature articles in each edition informing ratepayers on progress of the plan and how to be involved. This publication has a circulation of approximately 25,000.


Summary of Media Coverage – 2010 Community Consultation Media Item Print Radio TV Other

29.11.10 Deadline looming for community to have their say

GLA 1.12, ABC 30.11, Prime 30.11,

8.11.10 The community gets involved - Great Lakes 2030

GLA 17.11, MRT 23.11,

NOTA 25.11,

NOTA (letters) 2.12,

Prime 12.11,

1.11.10 Regional consultation kicks off at Tuncurry

GLA 3.11 ABC 3.11, ABC Coffs Harbour, 3.11,

USA Today, India Times websites, mybiz.optus

15.10.10 Determining our future together GLA 20.10, GLA 27.10, NOTA 28.10,

ABC-R 15.10, Prime 19.10 Port Stephens Examiner 27.10

11.10.10 Media Briefing - Great Lakes 2030

(Media invited to Council to launch October/November community engagement)

28.7.10 Council progressing on Great Lakes 2030

GLA

9.7.10 Council budget delivers no surprises

MRT 13.7, GLA 14.7, NOTA 22.7,

MaxFM 12.7, NBN 14.7,

GLA Great Lakes Advocate NOTA Myall Coast NOTA Newspaper MRT Manning River Times ABC-R ABC Regional Radio 2RE (incl.Max FM) 2RE and Max FM Radios (news is combined) NBN NBN Television Prime Prime Television The Great Lakes Advocate represents the main weekly local newspaper for the majority of Great Lakes' residents. The primary distribution area for this paper includes Forster, Tuncurry, Pacific Palms, Seal Rocks and south to Bulahdelah including surrounding townships. The reported circulation of the Advocate is 5956 with a readership of 14,890. This is a significant number considering the total population of the Great Lakes local government area is 34,695.

There are also a number of other community based media sources that reach our smaller communities and regularly feature Council information that impacts on those communities, such as the long term strategic plan. Across the Fence (circulation approximately 900, covering Nabiac, Coolongolook and Wootton); Great Lakes Business newsletter (circulation approximately 580, including businesses from across the Great Lakes and others with an interest in local business development); Cove News (circulation approximately 300, covering the North Arm Cove area)

Extension on feedback from current engagement

As agreed with IPART in a letter dated 13 January 2011, Council has been granted an extension on the outcomes of current community consultations to be submitted separately by 22 April 2011. This includes any submissions received on the Draft Delivery Program and Operational Plan where related to the special rate variation proposal.


5 Rating structure and the impact on ratepayers

Councils must also fill in the worksheets in Part A of the application which will provide the information and calculations underpinning the proposed ratings structure, the impact of the special variation and average rate increases.

5.1 Proposed rating structure for the revenue path

In the section below, provide a detailed explanation of the proposed rating structure for the variation under two scenarios – the proposed rating structure if approved and the proposed structure should it not be approved.

Council's Response The following information is taken from the Statement of Revenue Policy contained within Council's draft Delivery Program which is currently on public exhibition and addresses Council's rating structure. Council is required to categorise all rateable land into one of four broad categories. These categories are Farmland, Residential, Business and Mining. Council may create sub categories within each of these categories. It is proposed that the following categories and sub categories be used in the 2011/2012 rating period and for the duration of the special rate variation proposal period.

CATEGORY SUB CATEGORY

DEFINITION OF USE

Residential Dominant use is for residential purposes. Includes vacant land zoned to permit use for residential purposes.

Residential Towns

Separate sub category for Nabiac, Stroud, Bulahdelah, Forster, Tuncurry, Green Point, Pacific Palms, Hawks Nest, Tea Gardens, Seal Rocks, Pindimar, Coomba Park & North Arm Cove. Includes vacant land zoned to permit residential purposes.

Business

Includes all properties, which cannot be categorised as Residential or Farmland. Includes vacant land zoned for such purposes.

Business Towns Separate sub category for business properties in the towns of Forster and Tuncurry. Includes vacant land zoned for such purposes.


CATEGORY SUB CATEGORY

DEFINITION OF USE

Farmland All land deemed to be Farmland in accordance with the provisions of Section 515 Local Government Act 1993. All residential type blocks at North Arm Cove, Pindimar etc, which are, zoned Rural 1(a). These properties cannot receive building approval; however limited agricultural use may be permitted. These properties have in the past been levied the lowest level of rates issued by Council.

Mining Land is to be categorised as mining if it is a parcel of rateable land and its dominant use is for a coal or metalliferous mine.

In the 2010/2011 rating period Council used rates consisting of a base amount and an ad valorem rate across the various categories and sub categories throughout the Council area and it is proposed that such a structure be used in the 2011/2012 rating period. This structure has been utilised in the development of both scenarios - the Base Case scenario (rate peg) and the 20% Special Rate Variation scenario. The Ordinary rate will comprise of a base amount and an ad valorem rate with the two components explained below. Base Amount:

The base amount is a fixed component and must be the same on every property subject to that rate.

The base amount must not exceed 50% of the total rates collected by that

rate.

If the rate is applied to more than one category or sub-category the 50% rule must not be exceeded in regard to any of the categories or sub-categories.

When determining the level of the base amount Council has had regard to

the requirement of Section 536 of the Local Government Act.

Council's overheads dissected across ratepayers would result in the amount collected from the base amount exceeding limits imposed by Section 500 of the Local Government Act.

In addition Council does not receive sufficient grants to render appropriate services throughout the Council area and as such relies on general purpose rates for their provision.

Council has examined the valuation range across its rate base and is of the opinion that rates levied wholly as an ad valorem rate would not result in an equitable distribution of the rate and as such has used base amounts to obtain a more equitable distribution.


Ad Valorem Component:

The ad valorem component is calculated by multiplying the rateable value of a property by a rate set in the dollar by Council.

The higher the value of a property the higher the ad valorem component.

The ad valorem component must collect a minimum of 50% of any rate.

Council proposes that this structure will apply for the duration of the six year special variation, if successful. Having considered where the burden for rates lay (what percentage of the total rates received comes from the various categories and sub-categories) Council was of the opinion that to make a change would increase the confusion within the community when attempting to explain how much rates would rise under the special variation proposal.

Council has also determined that the proposed increase will apply evenly across all categories and subcategories with the exception of the Farmland category. In this instance Council has determined that the non-urban Rural 1(a) zoned blocks that are contained within this category will only receive an increase equivalent to the cost index - 2.8% while all other Farmland assessments will increase by the proposed 20%. This means that the average increase for the Farmland category in Year 1 (2011/12) will be 12.77% as shown in Worksheet 5 of Part A of this application. Council intends that this exception will apply across the six year term of the proposal.

The reasoning behind this decision has previously been discussed with IPART and relates to the particular development constraints associated with blocks of this nature, which are predominantly located in North Arm Cove.

In summary Council is not proposing that there will be any changes to the categorisation of land within its area by the creation or deletion of categories or sub-categories during the period of special variation. It is not proposing to shift the burden of incidence of rates from one category to another during the period of the special variation. It is proposing that the structure that applied in 2010/2011 will apply in 2011/2012 and beyond for both scenarios identified within the Statement of Revenue Policy.

As previously mentioned within this application, there is an existing section 508(2) special variation built into Council's current rate structure for natural resource management purposes (the 6% Environmental Levy). This approval expires at the end of the 2013/2014 financial year at which time Council would be required to remove approximately $1.8 million from its budget. Council is applying through this application to have that component of its general income reinstated and made permanent with appropriate conditions tying that amount (6%) to the existing purpose. This renewal shows as a 14.06% increase in 2014/2015, the reality of the situation is that the actual impact on ratepayers will be 8% if the special rate variation proposal is approved.


5.2 Impact on rates

Provide comment on the impact of the proposed increases on different rating types and categories, as detailed in Worksheet 5 of Part A.

Council's Response As indicated above Council's proposed special rate variation is to apply evenly across all categories and sub-categories, with the exception of the Rural 1(a) zoned Farmland properties. Worksheet 5 reflects this proposal with the average increases being the same, subject to some small fluctuations in Year 1 resulting from roundings in the calculation. The increases are consistent for the remaining years of the proposal. Council has presented this information to the community during its community engagement activities.

Annual charges that appear on the rate notice with the Ordinary rate are proposed to increase by 3% in year 1, 4% in years 2 and 3, and by 5% in years 4, 5 and 6. The majority of properties receive a Domestic Waste Charge and a Waste Management Charge in addition to the Ordinary rate. For Year 1 the increases in these annual charges are $9.70 and $1.80 respectively. Council introduced a stormwater management levy several years ago which is set legislatively and no increase is proposed or foreseen for this charge for the duration of the special rate variation proposal.

5.2.1 Minimum Rates

Does Council have minimum rates? Yes No X

If Yes, provide details including proposed share of ratepayers on the minimum rate for the relevant category with and without the special variation.


5.2.2 Community’s capacity to pay proposed rate increases

Discuss the capacity of ratepayers, in each sub-category, to meet the rate increases (e.g., relative to similar councils in the context of the local socio-economic profile). Provide relevant supporting information.

Council's Response In summary Council's socio-economic profile comprises a high level of retirees with 36% of the population over the age of 60. The area is an attractor for “sea changers” and baby boomers who choose to move to the area. The coastal areas have large retired populations and the inland areas are characterised as having mature families and empty nesters. Overall income levels are relatively low when compared to the state average. Young people in the 15-24 age group often leave the area to attend university.

In terms of other taxes and utility charges which impact on ratepayers, rates are generally at the lower end of the spectrum and therefore have a low impact on a ratepayer's disposable income in relative terms. The exception to this is properties with extremely high values in relative terms to other property values in the Council area. This can occur in areas which are sought after such as desirable coastal locations. Council does have some areas which fall into this category such as the beachfront in Hawks Nest, Seal Rocks and Pacific Palms. These very high valued areas are characterised by the majority of properties being of a holiday rental nature which are in effect operated as businesses with the negative gearing tax concessions which then apply. Inherent in the capacity to pay principle is that there is recognition of the cyclic nature of income, low income for younger ratepayers, increasing as earning potential increases, with a return to lower incomes later in life. In the income tax system this is recognised by paying out tax income in the form of pensions or other benefits. In the local government rating system this is recognised in pension concession arrangements, postponement, remission and rebate of rates and charges. Section 5.3 will address Council’s response to minimising the impact of the proposed rate increase on ratepayers who receive a pension rebate. Council does not have the capacity to assess the levels of disposable income of ratepayers across the Council area. As part of the community engagement, discussions have been held with individual ratepayers in relation to the impact of the proposed rate increase in terms of the actual dollar impact to their individual circumstances. There is a wide variation in response as some ratepayers on fixed incomes who have been impacted by significant increases in electricity charges, water and sewerage charges, health insurance and pharmaceutical costs comment that they cannot afford rates to also increase. Council’s proposed increase in the pension rebate is viewed as a positive concession by these ratepayers.


The issue for Council is that other utility costs and taxes have increased with valid reasons and this has impacted on individual ratepayers capacity to pay. Council also has valid reasons for seeking to increase rates to ensure that communities have a sustainable Council to deliver service to the community. The proposed rate increase will be uniform across each of Council's rating sub categories. Council's rating structure consists of a base amount and an ad valorem amount. As such high valued properties will be impacted upon to a greater extent as they pay a higher rate. In many cases in the Great Lakes area these high valued properties are located in coastal holiday rental areas.


5.3 Addressing hardship

Does Council have a Hardship Policy in place? Yes X No

If Yes, Council must attach a copy of the Policy.

Does Council propose to introduce any measures to limit the impact on vulnerable groups such as pensioners? Yes X No

Provide details of the measures to be adopted, or why no measures are proposed.

Council's Response

Great Lakes Council currently has approximately 5,100 pensioners entitled to a reduction in their rates. The present situation sees an eligible pensioner entitled to a discount of one half of the combined total of the ordinary rate and domestic waste management charge to a maximum of $250. Pro-rata rebates are applicable for ratepayers becoming eligible during any year. Almost all of Council's pensioners receive the maximum rebate.

The State Government reimburses Council 55% of the each rebate given (normally $137.50) with Council writing off the balance of $112.50. This distribution of the liability of the rebate has not changed since the mid 1990's.

Council has recognised that if the special variation is approved there will be an impact on that section of the community who receive government support and are entitled to a Health Benefit Card. To assist with affordability Council proposes to increase the maximum rebate to $300 with the $50 increase being paid for by Council. As such Council will be responsible for the majority of the amount granted as a rebate.

Council currently provides other facilities to assist ratepayers who may be under financial pressure to meet their commitments. It can arrange for direct debit payments, will allow weekly payments or deductions without charging interest, can make special arrangements and has a Hardship Policy that can be considered (attached as Annexure 'R').

Council also has large areas of land classified as Non Urban Land with the main area being North Arm Cove. Details of the uniqueness of this area have been discussed with IPART representatives at the meetings held as part of the application process. The number of Council assessments classified as non-urban is 3314. There is currently a high level of outstanding debt associated with this area and increasing rates will only compound this issue. As this will create a significant and ongoing collection and sale of land for unpaid rates liability Council proposes to hold the level of rate increases in this area to the rate peg.


6 Financing strategy

6.1 New capital financing strategy

Council must provide an overview of its strategy for funding new capital works, whether this is from rates revenue, debt, user charges or a combination of these and the expected impact of this strategy over the course of the special variation.

Council's Response Council will be borrowing for various capital works during the course of the special variation period. Section 6.2 below outlines the amounts that Council intends to borrow during 2011/2012 and discusses its proposal to reduce its reliance on borrowings to fund urban road rehabilitation works, believing that this practice is impacting negatively on Council's long term financial sustainability.

Of the balance of the Infrastructure Programs borrowings these are allocated to Rural Bridge Construction, Cycleway Construction, Footpath Construction, Stormwater Drainage Construction, Regional Road Reconstruction (to match grant funding) and other capital projects (traffic management facilities, linkages between developer constructed infrastructure and existing infrastructure). This is already built into Council's existing budget and repayments funded through general revenue.

By decreasing the amount borrowed for urban road rehabilitation Council envisages that this will provide it with some flexibility in the future to borrow for other major capital works items identified in various Council plans e.g. Section 94 Plans. These items include projects like new community centres in Tea Gardens / Hawks Nest and South Forster. Council does not have the capacity at this point in time to consider funding these types of major projects.

The special rate variation works program includes a number of new capital works programs and it is proposed to fund these items from rate revenue. Some of these items could be debt funded and Council has considered the impact of this approach. Debt funding does spread the cost of the works over future years and is in alignment with the principle of intergenerational equity. There are also some increased budget surpluses achieved in the first two or three years of the proposal but these start to diminish as the cumulative impact of the repayment of these loans starts to take effect. By the end of the six year variation period Council would be making loan repayments in excess of $1 million per year. However Council is projecting budget surpluses of between $200,000 and $500,000 for the years 7 to 10. As such the long term impact of proceeding with this debt funding method would be to return Council's budget to a deficit position.


In constructing this special rate variation package Council was attempting to have an amount of around $1 million of revenue available to fund community identified capital works. Council's preference in funding these items is to consider each project based on its particular circumstances and identify what is the most appropriate funding model and whether other sources of revenue such as matching grant funding is available. In summary, Council's preference at the present time is to unwind itself from its current borrowing practice which will have a positive impact on its long term financial sustainability and places Council in a better position to be able to selectively use debt for major capital projects, rather than being the default funding source for any capital project regardless of size or importance.


6.2 Sustainability of debt

Does Council propose to undertake any borrowings in 2011/12? Yes X No

If Yes, what is the purpose of these borrowings and do they link to the special variation application?

If No, why is Council seeking a special variation, rather than undertaking borrowings?

Note that councils using loan funds are reminded that they need to submit to the Division of Local Government (DLG) an annual “Borrowings Return” in accordance with DLG’s annual “Requested Borrowings Return” circular.

Regardless of the nature of the proposed expenditure (i.e., whether for capital or operating needs), Council must also include its estimated net debt position and debt servicing ratio over the period of the special variation and an explanation of the sustainability of this position for the Council and the community.

Explain how the strategy is consistent with the principles of intergenerational equity, as explained in the DLG Guidelines.

Council's Response

Great Lakes Council will continue with its loan borrowing program during 2011/2012 having indicated that it intends to borrow the following amounts under its Base Case scenario: Waste Management $4,200,540

Tuncurry Supermarket Development $5,000,000

Infrastructure Programs $3,604,419

Total Borrowings under Base Case $12,804 959

Should Council be successful with its special variation application it will borrow a lesser figure being: Waste Management $4,200,540

Tuncurry Supermarket Development $5,000,000

Infrastructure Programs $3,119,619

Total Borrowings under Special Variation $12,320,159

Of the above borrowings those related to Waste Management are serviced by waste management charges while those related to the Tuncurry Supermarket Development will be serviced from the rental that has been negotiated with the tenant. As such these borrowings do not have an impact on the general revenue. A proportion of the


Infrastructure Programs amount links to this special variation and is discussed below.

For 2011/2012 under the Base Case scenario Council will borrow $2,424,000 to fund urban road rehabilitation works having had to resort to this funding source several years ago when faced with a deteriorating financial position. While these works are technically capital works the reality of the situation is that they represent a recurrent operational works program. In attempting to fund Council's operations it has turned to this source of funding to allow this work to continue so that the urban road network is maintained.

The Base Case has been prepared on the basis that this source of funding will continue to be utilised and the amount borrowed will increase by 3.5% per annum to match expenditure. The Division of Local Government's Guidelines at point 6.4.2 (page 30) states "But if a council is using debt to fund its recurring operating deficits, this is unlikely to be sustainable. It also transfers the burden of its current operations onto future ratepayers, which is inconsistent with intergenerational equity."

Council understands this and has built the unwinding of this funding source into its special rate variation package. The special rate variation package is for the amount that is currently borrowed for urban road rehabilitation to be progressively reduced over a nine year period, with a reduction of 20% in the first year followed by reductions of 10% per annum until this source of funding has been completely replaced by general revenue.

The impact of the existing practice and the benefits of unwinding Council from this practice are shown below in the comparison of borrowings under the two scenarios. This shows the amounts borrowed for urban road rehabilitation and other purposes per year, the principal outstanding each year and the resulting debt service ratios under the two scenarios for the 10 year period covered by the Long Term Financial Plan. The figures are sourced from Council's Long Term Financial Plan.

2011/2012 to 2015/2016 ($'000's)

2011/2012 2012/2013 2013/2014 2014/2015 2015/2016

Total Borrowings - Base Case

12,805 6,714 5,881 5,260 4,175

Total Borrowing - Special Variation

12,320 5,902 4,738 3,785 2,363

Urban Road Component - Base Case

2,424 2,509 2,597 2,688 2,781

Urban Road Component - Special Variation

1,939 1,697 1,454 1,212 970


2011/2012 2012/2013 2013/2014 2014/2015 2015/2016

Other Purposes - Base Case

10,381 4,205 3,284 2,572 1,394

Other Purposes - Special Variation

10,381 4,205 3,284 2,572 1,394

Principal Outstanding - Base Case

37,595 40,891 42,906 43,898 43,390

Principal Outstanding - Special Variation

37,110 39,627 40,592 40,285 38,257

Debt Service Ratio - Base Case

10.53% 12.00% 12.96% 13.49% 13.81%

Debt Service Ratio - Special Variation

9.78% 10.79% 11.19% 11.16% 10.99%

2016/2017 to 2020/2021 ('000's)

2016/2017 2017/2018 2018/2019 2019/2020 2020/2021

Total Borrowings - Base Case

5,846 4,527 4,706 4,896 5,092

Total Borrowing - Special Variation

3,695 2,032 1,865 1,704 1,788

Urban Road Component - Base Case

2,897 2,980 3,084 3,192 3,304

Urban Road Component - Special Variation

727 485 242 0 0

Other Purposes - Base Case

2,967 1,548 1,622 1,704 1,788

Other Purposes - Special Variation

2,967 1,548 1,622 1,704 1,788


2016/2017 2017/2018 2018/2019 2019/2020 2020/2021

Principal Outstanding - Base Case

44,563 44,002 43,401 42,708 41,973

Principal Outstanding - Special Variation

37,718 35,836 32,685 29,908 27,287

Debt Service Ratio - Base Case

13.20% 13.61% 13.50% 13.46% 13.34%

Debt Service Ratio - Special Variation

10.00% 9.95% 9.43% 8.94% 8.34%

Continuing to focus on the impact of the infrastructure borrowings and bearing in mind that there will continue to be borrowings for capital infrastructure creation across the life of the Long Term Financial Plan, the following indicates the difference in principal and interest repayments between the Base Case and the special rate variation proposal.

Principal & Interest Repayment for Road Infrastructure Purposes ($'000's)

11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

Base Case

3,617 3,905 4,234 4,554 4,882 5,094 5,400 5,578 5,818 6,003

Special Variation

3,617 3,835 4,045 4,198 4,310 4,257 4,248 4,061 3,803 3,604

The existing practice of borrowing to fund urban road rehabilitation works is clearly impacting on Council's long term financial sustainability. By winding back from the current position a steady improvement in Council's financial position is possible, and this is reflected in the projected financial reports contained in Council's LTFP.


7 Productivity improvements

Council must provide details of any productivity improvements and expenditure reductions made in the last two years (or longer) to improve its financial sustainability. The costing should clearly indicate if the savings are one-off or ongoing in nature.

Also provide details, including estimated costing of plans for efficiencies and productivity improvements during the period of the special variation. These proposed initiatives, which may be capital or recurrent, must be to reduce costs.

The application should identify how and where the proposed initiatives have been factored into the council’s resourcing strategy (e.g., LTFP and AMP).

As additional supportive information, Council may wish to provide evidence of improvements in its performance on key indicators that measure productivity. Council may also wish to include its current and/or projected financial position if these initiatives had not been implemented. Note that the criteria may still be met without these elements.

Council's Response

The following summarises measures taken to achieve productivity improvements and efficiencies in Council’s operations in recent years. Budget Savings 2008/11 to achieve Balanced Budget Non Replacement of Staff Positions (ongoing savings)

Purchasing Officer $70,000

Records Team Leader $56,300

Records Part Time Support $8,500

Customer Service Part Time Support $20,500

Development Assessment Planner $76,000

Trainee Planner $35,400

Strategic Planner $76,000

Design Engineer $66,700

Property Engineer Part Time $34,000

Cleaner (Restructure 2 positions to 1 position) $60,000

Manager Environmental Services (Area Restructured) $85,500

Senior Strategic Planner $80,000

Debt Recovery Officer $50,000

Total savings $718,900


Service Reductions Close Bulahdelah and Pacific Palms Tourist Office $83,200 Ongoing savings

Reduction is library book purchases ($99,000 in 2009 and $36,200 in 2010)

$67,600

To be incrementally reinstated under rate

variation.

Reduce Indoor Staff Overtime $43,500 Ongoing saving

Reduce training, conferences and recruitment $89,750 Ongoing saving

Discontinue Continuous Improvement Program Consultancy $25,000

Ongoing saving (now delivered in-house)

Reduce Flood Studies

$57,000


variation

Reduce Engineering Consultancy $20,000 Ongoing saving

Discontinue Community Grant Program and Donations $54,500

To be reinstated under rate variation

Discontinue Surf Club Donations $28,000

To be reinstated under rate variation

Discontinue Australian Post Payment option for rate payments $46,000 Ongoing saving

Reduce Hall and Facility Maintenance

$80,850


variation

Reduce Mowing Maintenance

$35,000


variation

Reduce various Parks and Recreation Maintenance

$79,000


variation

Reduce Urban Road Rehabilitation

$120,650


variation

Reduce Road Maintenance

$65,600


variation

Discontinue Urban Road Construction

$836,000


variation

Discontinue Rural Road Construction

$893,600


variation

Reduce Rural Road Maintenance

$163,200


variation

Reduce Drainage Maintenance

$61,300


variation

Reduce Traffic Management Facilities

$35,500


variation

Reduction in Misc Road, Cycleway and Footpath Budgets $17,400 $3,543,450

Total Staff & Service Reductions $4,262,350


Efficiency Measures Introduced Contract Renegotiations (ongoing savings) Contract Savings P.A

Energy - Small Sites $15,000

Mooring Permissive Occupancy with LPMA $10,000

Library IT Equipment Replacement (3 to 4yr Replacement Cycle) $8,500

Telecommunications $97,000

(Group Tender with various Council's being pursued for further savings)

Bulk Diesel Fuel Purchases $7,500

Freight Services $5,000

Banking Services $25,000

Sub-total $168,000

Signage Contract (link with Hunter Council's tender) 5% Annual Saving

Co-operative Arrangement Efficiencies Strategic Alliances Council is an active member of two Strategic Alliances (Hunter Councils and the

Mid North Coast Group of Councils) which has provided a number of benefits over the years (and continues to do so). Examples include the financial savings from joint purchasing, the development of joint policies in such areas as Human Resources, Occupational Health and Safety, Information Technology, Geographical Information Systems, etc., access to Records Storage (in the joint facility owned by all member councils of Hunter Councils), and access to the Hunter Council's Environmental Management Program (and the funding it attracts).

Council has initiated and developed partnerships with Greater Taree City Council, Hunter Central Rivers CMA and the Department of Environment, Climate Change to tackle catchment management, environment restoration and coastal management. This has delivered substantial external funding through pooling of resources and has improved the efficiency of Council's staff time and financial resources for natural resource management. Council resource shares a Section 94 Planning Officer with Greater Taree City Council. This initiative sees a full time officer job share between two councils to facilitate costs savings and consistency of policy across adjoining councils. Joint Waste Contracts Council has joined with the neighbouring councils at Gloucester and Taree to provide a more comprehensive 3 bin waste collection system and one centralised recycling facility which would not be possible on its own.


Council has also joined with other nearby Councils to provide a more cost effective collection and processing service for : - hazardous waste - scrap metal Council is presently pursuing other efficiencies with regional contracts for green waste processing and concrete grinding.

Library Radio Frequency Identification System

Introduced concurrently with Greater Taree City Council through a joint Grant Application to the State Library. $100,000 of grant funds received. Achieves auto checkout of library stock reducing pressure on limited staff resources and limiting future staff growth demands.

Organisational Restructures

Restructure to create Governance Manager Role - January 2007 For some time Council recognised the need to focus on Governance issues to

ensure compliance with legislation and best practice requirements. With budget limitations, it was not possible to fund a new Governance Role. A restructure proposal was developed and negotiated with relevant staff which enabled the creation of a Governance Manager Role at no additional cost. Prior to the restructure, Council had an Executive Manager Corporate Finances and a Finance Manager. These roles were combined into a Finance Manager Role and additional responsibilities shared across existing finance resources. The former Finance Manager moved to the role of Administration Manager and the former Administration Manager moved to the new role of Manager of Corporate Governance.

This is a significant productivity saving in the order of $90,000 ongoing and

has enabled Council to achieve important Governance improvements across Council's operations including Risk Management, Internal Audit, Delegations, Policies, Fraud Prevention, Councillor Training and general Governance Compliance.

Library Restructure - December 2007

The Great Lakes Library Service has one of the highest per capita usage in

NSW. The Council's demographic is weighted heavily towards retirees who value the library services. Many residents in this demographic group have special needs. The service was unable to meet many of these needs due to budget constraints. Through the use of technology and outsourcing the position of Technical Services Librarian was removed from the structure. The savings from this position were applied to outsourcing book cataloguing work and increasing the hours of the Children's Librarian Position from 21 hours to 35 hours with the position amended to an Outreach Librarian position. As a result additional services to meet community needs were achieved at no additional cost.


Release Area Program

Implementation of a Release Area Program where developers completely

funded a section within Council to undertake the timely and efficient rezoning of land already identified in Council's growth strategies. Probity issues were addressed by compliance with ICAC recommendations - the total program was valued at $1.6M. The program is no longer continuing as development has slowed after the GFC however the model is still considered when developers who own land with development potential wish to accelerate the study process. One proposal is currently under consideration by Council.

Restructure of Environmental Services Section With the implementation of Councils Waste Strategy a number of major projects were commencing within the waste program e.g. closing 3 landfills, design and construct 3 waste transfer stations and construction of a new landfill facility. Rather than employ an additional Project Engineer Council restructured the Environmental Services section to elevate the Waste port folio with the new Manager taking on Project Management and former Managers duties divested to other branch supervisors.

Sustainability Efficiencies

S - Team (Sustainability Team) Council established an S-Team in November 2007 to develop a Sustainability

Strategy and progress sustainability initiatives across Council's operations. Some of these initiatives have resulted in water and energy saving initiatives which translate to cost savings. These are summarised below:

Water and Energy Efficiency Audit across Council's operations resulting

in various initiatives which are being progressively implemented such as use of timers on hot water units, more efficient use of air conditioning units, improved scheduling of cleaning of facilities to avoid use of power when buildings are unoccupied.

Great Lakes Aquatic Centre

Power Factor Correction Unit resulting in savings of $6,000 p.a. from 2009.

Water Harvesting Tanks installed to reduce water consumption, resulting in a saving of 1 million litres of water p.a. from 2009.

RLCIP Funding of $1.8 Million obtained to renovate and expand the Centre and install a solar energy unit to reduce ongoing operational costs of the centre. Current energy costs


for the Centre are $160,000. Conservative savings are estimated to be $8,500 p.a. (increasing as energy prices rise).

Stage two of energy efficiency audits - Funding from DECCW has been secured which will fund 70% of the costs. Council contribution will be approximately $5450. Professional opinion estimates that with rising energy costs the likely outcomes/recommended actions are expected to produce a 3-5 year payback period

Admin Headquarters Building

Various energy and water efficiency measures taken in 2008

including energy efficient exit lighting, dual flush toilets, electronic water dispensing taps, hot water service timers and replace inefficient dishwashing units.

Fleet Vehicles

Light vehicle purchasing - retention period of 6 cylinder and

commercial vehicles increased in line with life cycle costing optimum retention period (5yr - 120,000km). Also many vehicles have been changed from 6 cylinder to 4 cylinder or diesel resulting in better resale value and lower running costs and petrol consumption.

Parks

Sub surface irrigation system installed in 1 key reserve with

another due to be installed in 2009. This results in water savings as irrigation occurs according to need and sub surface conditions rather than on a routine basis.

Savings in parks fertilisation costs of $15,000 p.a. by replacing previous supply with organic chicken manure solution.

Miscellaneous Efficiencies

Volunteer Parks Program

Council has an award winning program which provides many willing community members an opportunity to contribute to the community through dune care, parks, maintenance etc. Through Council's support of this program, $500,000 of works is estimated to be contributed which would otherwise be required through Council resources.

Implementation of New Website Council utilised a team of internal staff to implement a new hosted

website solution which provided improved functionality and service to the community. This was implemented at a fraction of the cost of website redevelopments at other councils. The solution cost $10,000 for


set up, a savings of $90,000 - $150,000 on the estimated costs of external solutions.

Council Office Refurbishment Council's headquarters at Breese Parade, Forster was originally constructed

in 1981 and has basically remained unchanged since that time (in terms of space, furniture and floor coverings). Due to severe overcrowding and totally inadequate working conditions for the staff, Council had been planning a second floor extension for some time (at an estimated cost of $6 million).

However in view of the financial constraints that Council has been constantly operating under for some years, a decision was made to utilise an existing reserve account (that was originally established to help fund initial loan repayments on the second floor extension) to purchase a demountable building (to house 22 staff) and refurbish the current building with new carpet and systems furniture, in order to improve conditions and make more efficient use of the limited space available. This project has cost in the vicinity of $400,000 but has resulted in the major $6 million extensions being deferred.

Great Lakes Improvement Program (GLIP) Council has a continuous improvement program known as GLIP which

utilises a team based approach to review key work processes with a view to seeking productivity improvements and/or improved customer service. Since the program was introduced in 2004, some 22 work processes have been reviewed, with over 120 employees gaining important skills to date. An example of one of these processes that has been undertaken is Customer Service. The outcome was the very successful introduction of Council's current Customer Service Centre which acts as a one stop shop. It has provided improved customer service for Council's customers as well as increased productivity through Council's technical officers (Planners, Building Assessment Officers, etc) having more time to focus on their professional role through not having to answer general enquiries etc.

The GLIP program previously cost around $25,000 per annum as external

consultants were utilised in the training associated with this process (which was more than offset by productivity increases and improved customer service). Due to budget constraints for 2009/10 Council increased in-house capability and continues with the program through the use of internal staff who have gained the required experience in recent years. The Program focuses on cost saving initiatives, service improvements, environmental outcomes and risk minimisation. The 2010 program focussed on two key projects across Council boundaries and was undertaken with Greater Taree City Council where Great Lakes Council expertise was used to facilitate the process in Taree. The two projects were sediment and erosion control in Council operations and the Review of Environmental Factors (a key risk area). Grant funding has been sourced to implement the recommendations.


Two to three processes are reviewed each year and this program will continue.

Minimbah Quarry Site Establishment of the Minimbah Landfill Quarry Site which will service the

maintenance of Council roads in the Minimbah area for many years. Estimate savings of $1 million over 20 years. Previously no quarry with suitable materials was available in this locality. The other major benefit was the material needed to be excavated to create the Landfill void space and had a beneficial reuse on local roads and the clay material used for capping its main Tuncurry Landfill rather than buying suitable material.

Food Premises (Food Safety Partnership)

New inspection fee for food Premises which funded one Environmental Health Officer enabling all high and medium risk food premises to be inspected thereby reducing risk of public safety. This service was not previously provided.

Future Productivity Improvements

Council’s approach to future productivity improvements will depend on the success or otherwise of the rate variation application.

Should Council’s application be successful a Service Level Review will be undertaken with the aim of ensuring that what we do, we do as efficiently as possible in line with service levels agreed with the community. This review will be undertaken generally in line with the following Framework:

a. Where are we now – analysis of current direction, current service levels

and costs

b. Where do we need to be – analysis of change drivers for service and service levels

c. Gap analysis – Identify the gap between the current and future provision

d. How can the gap be resolved – options and implications for reducing the service level gap

e. Engagement of elected members in service level setting

f. Engagement of the community in an informed debate on future service levels

g. Determining new affordable Service Levels

h. Identifying performance measures for successful service delivery.

The above review Framework aligns directly with Councils Community Strategic Plan and Delivery program:


Key Direction 4 - Leadership to Challenge and Inspire;

Strategy 26 - Ensuring Actions taken and decisions reached are sustainable;

Activity 4.26.1 - Regularly review Council’s levels of service to ensure they are in line with community expectations.

Should Council’s application be unsuccessful the Service Level Review will be structured differently with a focus on Service level reductions to address the forecast budget deficits which would arise from the long term financial plan base case scenario. While ultimately there could be service level adjustments arising from the service level review under a successful rate variation application scenario the consequences of the rate variation application not being successful would require a major deconstruction of Council Services and then a subsequent re-build of a significantly downsized Council operation providing minimal services. Such a scenario would actually be in direct conflict with the desired community outcomes identified in the Community Strategic Plan as many services would have to be discontinued.


8 Implementation of Integrated Planning and Reporting

framework (IPRF)

Implementation of the IPRF is a criterion for section 508A applications. If Council has not implemented the IPRF, it should consider applying for a section 508(2) special variation instead.

Has the Council implemented the IPRF? Yes X No

If Yes, which IPRF Grouping did the Council nominate to be in?

Great Lakes Council has nominated as a Group 2 council

Councils should provide a brief summary of their progress in implementing the IPRF to date.

Council's Response Great Lakes Council formally commenced on the IPR journey in late 2009 when, in collaboration with the community, workshops were held to inform Great Lakes 2030, the 20-year community strategic plan. In anticipation of the IPRF legislation however, Council had undertaken preliminary work to guide us through the IPR process.

A timeline summarising Council's key initiatives to implement the framework, including preliminary financial sustainability studies and community survey is included in this application on page 31. In addition to the items indicated in that diagram, Council has also undertaken the following;

Long Term Financial Strategy undertaken by Morrison Low in August 2009

Submission of draft IPR documents to the DLG in March 2011 following on from Council's meeting with IPART on 7 March 2011

Council resolved to adopt the following documents for the purpose of community consultation and exhibition at their meeting on 22 February 2011:

Community Engagement Strategy

Community Strategic Plan (20-year)

Resourcing Strategy

Long Term Financial Plan

Asset Management Strategy

Workforce Management Plan

Delivery Program (2011-2015) encompassing the Operational Plan (2011-2012), statement of revenue policy and fees & charges (2011-2012)


At the same meeting Council also resolved the following:

That a range of consultation activities in accordance with the consultation schedule be conducted throughout February and March 2011.

That Council indicate its intention to make an application to the Independent Pricing and Regulatory Tribunal (IPART) for a Special Rate Variation over a 6 year period. The proposed variation consisting of a 20% increase for the first year, an 8% increase for three years, and a 6% increase for the subsequent two years.

That Council increase the rebate given to eligible pensioners by $50 to $300 (Council contribution $162.50, State Government Contribution $137.50).

That rates applicable to Non Urban land only be increased by the annual rate pegging limit determined by IPART for the duration of the 6 year special rate variation.

Round '3' of Council's community engagement on Great Lakes 2030 closes on Friday, 25 March 2011. This also coincides with the deadline for public submissions on Council's draft plans developed to support the delivery of Great Lakes 2030 including Council's special rate variation proposal.

All submissions will then be considered by Council in April and reported to IPART in accordance with the previous approval given to Council to have an extension on the deadline for this element of the application. The final 2011-2015 Delivery Program and 2011-2012 Operational Plan will then need to be amended based on the outcome of the special rate variation proposal.


9 Other information

9.1 Special variation history

In Table 9.1, insert details of all special variations that Council has applied for in the last 10 years (whether approved or not approved). In the space below, provide any additional summary information Council wishes to convey regarding its special variation history.

Council's Response Table 9.1 Special variation history

Year Percentage variation sought

(including rate peg)

Percentage variation approved

(including rate peg)

Period of approved variation (years)

Reason for variation

2000/01 5.70% 3.66% Permanent Infrastructure

2001/02 7.80% 6.69% 3 years Environmental Levy

2003/04 14.96% 14.96% 5 years Maintenance of existing service levels

2004/05 7.31% 7.31% 5 years Renewal of Environmental Levy

2005/06 18.50% 3.50% Maintenance and improvement of existing

service levels

2006/07 9.60% 3.60% Maintenance of existing service levels

2007/08 9.68% 9.68% Permanent Infrastructure renewals and library books

2008/09 14.31% 14.31% Permanent Renewal of 2003/2004 approval

2009/10 10.69% 9.51% 5 years Renewal of Environmental Levy (with an increase in

amount to 5%), additional funds (1%) for dredging

works & a levy on businesses for tourism

activities

Provide details/evidence of how Council has complied with the conditions attached to any previous special variations approved (e.g., Extracts from Annual Reports or website links to Annual Reports including page number references).


Council's Response Special Variation History

Without going into major detail of each of the special variation applications sought by Council over the last 10 years the following summary of the purpose of each of the applications together with the result is set out below.

2000/2001

Council sought a special variation of 3% ($364,724) in addition to the announced rate peg of 2.7% to allow for the reconstruction of a bridge destroyed by flood ($140K), additional funding of road rehabilitation works ($105K) and to meet matching fund requirements for RTA grant funds provided for The Bucketts Way improvements ($120K). The DLG granted an increase of 0.96% to meet the grant funding requirements and refused the balance of the application advising Council to find the additional funds from further efficiencies or productivity savings or by reviewing the priorities within its works program.

2001/2002

Council sought a special variation of 5% ($640,500) in addition to the announced rate peg of 2.8% to allow for on-ground lake management environmental initiatives identified in various environmental plans (including the Smiths Lake Estuary Management Plan, Myall Lakes / Port Stephens Estuary Management Plan, Draft Wallis Lake Catchment Plan, stormwater management plans, vegetation management strategy) based on an adopted priority schedule. The DLG approved an increase of 3.89% (6.69% including the rate peg) or $500,000 for these purposes and imposed a three year approval period.

2003/2004

Council sought a special variation of 11.4% ($1,650,000) in addition to the announced rate peg of 3.6% for the purpose of maintaining current service levels and infrastructure maintenance programs. Council was facing a shortfall of $3.6 million in revenue resulting from the loss of its water and sewerage functions and general cost increases outstripping the rate peg and had flagged with the DLG the need to obtain several increases to address its long term financial sustainability. The DLG approved an increase of 11.36% (14.96% including the rate peg) for these purposes and imposed a five year approval period.

2004/2005

Council sought a renewal on a permanent basis of the special variation granted in 2001/2002. Council sought a special variation of 3.89% in addition to the announced rate peg of 3.5% to allow for the continuation of the natural resource management programs that had been commenced with the 2001/2002 special variation. The DLG


approved an increase of 3.81% (7.31% including the rate peg) and imposed a five year approval period.

It should be noted that this was a renewal of a previous special variation and the actual impact on ratepayers over the previous year was a 3.5% increase in rates i.e. the rate peg limit.

2005/2006

Council sought a special variation of 15.13% (utilising 0.13% catch-up) in addition to the announced rate peg of 3.5% for the purpose of balancing Council's budget while providing an improved level of service to the community. The need for a second significant increase in rates to address the long term financial sustainability of Council had been raised with the DLG during meetings for the 2003/2004 special variation. The DLG refused Council's application citing community consultation requirements and a need to demonstrate benefits to be derived from such an increase.

2006/2007

Council sought a special variation of 6% in addition to the announced rate peg of 3.6% for the purposes of balancing Council's budget while maintaining levels of service similar to previous years. This figure was based on advice that the Minister for Local Government would not be approving any "double digit" applications. The DLG refused Council's application citing the impact of cumulative rate increases in previous years and the impact that rising land values were having on ratepayers, particularly pensioners.

2007/2008

Council sought a special variation of 6.28% (utilising 0.18% catch-up) in addition to the announced rate peg of 3.4% for the purpose of infrastructure renewals and library book purchases. A $1 million loan was also to be taken out to boost the funds available for works. The DLG approved a permanent increase in Council's general income of 9.68%.

2008/2009

Council sought a renewal on a permanent basis of the special variation granted in 2003/2004. Council sought a special variation of 11.11% (utilising -0.09% catch-up) in addition to the announced rate peg of 3.2% for the purposes of maintaining existing levels of service and infrastructure maintenance. The DLG approved a permanent increase in Council's general income of 14.31%.

2009/2010

Council sought a renewal on a permanent basis of the special variation granted in 2004/2005. Council sought a special variation of 7.19% in addition to the announced rate peg of 3.50% for the purposes of the continuation of the previously approved



environmental levy with an increase in the amount to 5% (being the amount originally sought in 2001/2002), the inclusion of 1% dedicated to dredging projects allowing Council to match Government grants and 1.19% allocated to Council's tourism budget and levied upon businesses in the Council area.

The DLG approved an increase of 6.00% (including the rate peg and catch-up of 3.51%) for a period of five years. It refused the Tourism Levy component of the application.

It is acknowledged that Council has been particularly active in applying for special rate variations over the past ten years and that some of these applications have been for significant amounts.

However in terms of actual success the timeline below summarises the contents of Table 9.1.

1991-1996 1997/98 1998/99 2000/01 2001/02 2003/04 2005/06 2007/08 2009/10 2010/11

Setting aside the 11.3% approval from 2003/2004 for a moment; since 1991 Council has received three special variations to its general revenue in 20 years. These were 7.9% in 1998/99, 0.96% in 2000/01 and 6.1% in 2007/08 - a total of 14.96% above the rate peg. The 11.3% was to partially reinstate Council's revenue levels following the loss of water and sewerage functions to MidCoast Water in 1997/98, with the DLG being advised and acknowledging that a second increase of similar size was required to fully restore Council's revenue capacity to its former levels. Despite the DLG's acknowledgement of the issue and impact an approval was not forthcoming.

Loss of water and werage when

idCoast Water established

seM

7.9% To address financial position & allow for appropriate works

program

0.96%To fund infrastructure maintenance of roads

& bridges

3.89%Environmental levy - approved for 3 year

period

11.3%To maintain existing levels

of service and infrastructure maintenance

(direct impact of loss of MidCoast Water)

6.1% To fund

infrastructure maintenance & service delivery

2.5% Additional amount approved

for Environmental Levy - including 1% for dredging

The two approvals for the Environmental Levy are not included in the above figure as they are specific purpose approvals. Further, the unsuccessful applications and renewals are not included as they do not show the impact of what has actually been received, but confuse the explanation.

Evidence of Compliance with Conditions of Special Variation Consents

Environmental Levy

The 2001/2002 consent for the initial Environmental Levy required that "Council demonstrate that sustainable management practices of the natural resources of the Great Lakes have been fully incorporated as a core function of the organisation in the event the Council seeks an extension to the duration of this increase".

Council reported annually on the achievements of the Natural Systems Section of its Planning & Environmental Services Division. This Section was responsible for the program of expenditure of funds raised from the Environmental Levy. In 2001/2002 the achievements were:

2001/2002 Annual Report Excerpt (section 1-6)

"The work program during the period focussed on the implementation of Council’s environmental special rate projects, development and implementation of the healthy lakes program, finalising development of the Wallis Lake Catchment Plan, implementation of stormwater quality and estuary management plans and securing grant funds to match Council’s contributions where possible. In addition this Section has an ongoing contribution to development assessment and strategic planning through provision of professional comment and analysis of flora/fauna assessment and water quality. Unfortunately delays in receiving advice on Commonwealth NHT funding for the Wallis Lake Catchment Plan and State Estuary Program funding have significantly delayed completion of the construction phase of several special rate projects. Funding was announced during August 2002. Projects will be transferred to 2002/2003. Key projects have been progressed during this reporting period include: Appointment of a new Environmental Officer to meet the increased workload

associated with the introduction of new legislation and policy and the introduction of the environmental special rate and associated projects.

Completion of the Townsend Street Wetland.

Completion of the Bramble Parade Wetland.

Completion and exhibition of the Draft Wallis Lake Catchment Plan.

Successful completion of stage 1 erosion control project on the Upper Myall Road.


Completion of the design for 5 constructed wetlands in the Pipers Creek Catchment.

Ongoing implementation of the Smiths Lake Estuary Management Plan including:

Sandbar Beach dune stabilisation, stage 1.

Completion of draft designs for erosion control works in the Smiths Lake Catchment.

Facilitation through the Smiths Lake EMC implementation of the Trial Waterway Zoning Plan by Waterways Authority.

Ongoing participation in the Port Stephens/Myall Lakes EMC.

Significant work has occurred on Council’s Healthy Lakes Program including:

Ongoing community education and awareness of stormwater pollution issues e.g. litter, car washing, garden waste, fertilising practices;

The Small Business Environmental Awareness Program has commenced with packages sent out to over 450 businesses in Forster/Tuncurry and is now being followed up by face to face advice;

Monitoring and reporting on effectiveness of constructed wetlands, litter baskets and GPT’s installed by Council. The Townsend Street Wetland has already achieved the expected pollutant treatment rates;

Sought funds ($227,500) through the State Estuary Management Program to match Special Rate for the Environment (SRE) funds for priority projects from Council’s Estuary and Catchment plans. "

Similar reports were included within the body of the 2002/2003 and 2003/2004 Annual reports. In applying for the permanent renewal of the Environmental Levy in 2004/2005 a comprehensive summary of the programs and achievements of the previous three years was prepared and presented in support of the application. A copy of this submission can be provided if required. Council was successful in obtaining a renewal of the Environmental Levy albeit time limited for another five years. The reports to the public are outlined below:

2004/2005 Annual Report Excerpt (page 87)

"As supported by the Great Lakes community, Council applied for an Environmental Special Rate (ESR) in 2001. A rate of 3.89% was approved by the State Government for a 3 year period, raising over $1.6 million for environmental restoration and protection during this period. An application for an extension of the ESR was lodged and awarded in 2004 for a further 5 years. This has raised over $600,000 for the 2004/2005 financial year. Over the past year the ESR has and will continue to fund a vast number of environmental projects and subsequent on-ground works aimed at protecting our natural environment. The following table outlines ESR projects undertaken throughout the 2004/2005 financial year."


ESR Projects - 2004/2005 Project: Wallis Lake Catchment Plan

Further work on implementation of Wallis Lake Catchment Management Plan

$36,500

Project: Wallamba River erosion management

Planning of works, negotiation with landholders, seeking approvals and on-ground works

$40,000

Project: Darawakh/Frogalla wetland

Purchase of further properties towards the rehabilitation of the 800 ha wetland system to reduce acid sulfate soil runoff to the Wallis Lake system. Also commencement of wetland rehabilitation strategies. rehabilitation

$170,000

Project: Hawks Nest/Tea Gardens koala management

Working with the National Parks & Wildlife Service towards the implementation of the Koala Management Plan, tree planting and education programs undertaken

$5,000

Project: Seagrass monitoring

Ongoing community monitoring program

$3,000

Project: Restoring urban creeks

Ongoing community education program

$3,000

Project: Lower Hunter Environment Strategy

Contribution by Council to the Lower Hunter REMS project

20,000

Project: Environmental maintenance

Maintenance of seven constructed wetlands in Forster and Tuncurry

$110,000

Project: Healthy Lakes Program

Ongoing business partners education program to improve environmental management by business community

$10,000

Project: Research project Wallis Lake

Project completed looking at nutrient responses in Wallamba River to aid ongoing land use and catchment management activities

$5,000

Project: Employment expenses

For Environmental Officer, Healthy Lakes Officer and project staff working on above projects

$211,500

TOTAL $614,000



"As supported by the Great Lakes community, Council applied for an Environmental Special Rate (ESR) in 2001. A rate of 3.89% was approved by the State Government for a 3 year period, raising over $1.6 million for environmental restoration and protection during this period. An application for an extension of the ESR was lodged and awarded in 2004 for a further 5 years. This has raised over $600,000 for the 2005/2006 financial year. Over the past year the ESR has and will continue to fund a vast number of environmental projects and subsequent on-ground works aimed at protecting our natural environment. The following table outlines ESR projects undertaken throughout the 2005/2006 financial year."

ESR Projects - 2005/2006

Project: Wallis Lake Catchment Plan

Further work on implementation of Wallis Lake Catchment Plan

$36,000

Project: Wallamba River erosion management


$35,000

Project: Darawakh/Frogalla wetland rehabilitation

Purchase of further properties towards the rehabilitation of the 800 ha wetland system to reduce acid sulphate soil runoff to the Wallis Lake system. Also commencement of wetland rehabilitation strategies

$156,000

Project: Hawks Nest/Tea Gardens koala management


$5,000

Project: Seagrass monitoring

Ongoing community monitoring program

$1,000



$20,000

Project: Environmental maintenance

Maintenance of seven constructed wetlands in Forster and Tuncurry plus gross pollutant traps

$110,000


Ongoing education program to improve environmental management by business community and residents – urban stormwater performance monitoring

$8,000

Project: Smiths Lakes Estuary Management

Smiths Lake flood study and plan implementation

$33,000

Project: Port Stephens Estuary Plan implementation

Foreshore Management Plan

$25,000

Project: Employment expenses

For Environmental Officer, Healthy Lakes Officer and project staff working on above projects

$206,000

TOTAL $635,000



"As supported by the Great Lakes community, Council applied for an Environmental Special Rate (ESR) in 2001. A rate of 3.89% was approved by the State Government for a 3 year period, raising over $1.6 million for environmental restoration and protection during this period. An application for an extension of the ESR was lodged and awarded in 2004 for a further 5 years. This has raised over $658,168 for the 2006/2007 financial year.

Over the past year the ESR has and will continue to fund a vast number of environmental projects and subsequent on-ground works aimed at protecting our natural environment. The following table outlines ESR projects undertaken throughout the 2006/2007 financial year."

ESR Projects - 2006/2007

Project: Wallis Lake Catchment Plan

Further work on implementation of Wallis Lake Catchment Plan

$36,300

Project: Wallamba Riverbank Erosion Plan


$40,000

Project: Darawakh/Frogalla Wetland Rehabilitation

Purchase of further properties towards the rehabilitation of the 850ha wetland system to reduce acid sulphate soil runoff to the Wallis lake system. Also continuation of wetland rehabilitation strategies

$152,700

Project: Coastal Catchment Initiative

Development of Water Quality Plan for Wallis, Smith and Myall Lakes

$50,000


Ongoing education program to improve environmental management by business community and residents – urban stormwater performance monitoring

$2,000

Project: Smiths Lake Estuary Management Stage 5

Smiths Lake flood study and plan implementation

$20,000

Project: Environmental Maintenance

Maintenance of seven constructed wetlands in Forster and Tuncurry, plus two gross pollutant traps

$100,000

Project: Employment Expenses

Senior Ecologist; Environmental Education Officer; Environmental Project Officer

$229,698



$22,500

Project: Hawks Nest/Tea Gardens Koala Management


$5,000

TOTAL $658,198



"As supported by the Great Lakes community, Council applied for an Environmental Special Rate (ESR) in 2001. A rate of 3.89% was approved by the State Government for a 3 year period, raising over $1.6 million for environmental restoration and protection during this period. An application for an extension of the ESR was lodged and awarded in 2004 for a further 5 years. This has raised over $720,694 for the 2007/2008 financial year.


ESR Projects - 2006/2007 Project: Wallis Lake Catchment Plan Implementation

Funding towards the employment of a Catchment Support Officer for the implementation of Wallis Lake Catchment Plan

$27,000

Project: Wallamba Riverbank Erosion Plan


$10,000


Purchase of further properties towards the rehabilitation of the 850ha wetland system to reduce acid sulphate soil runoff to the Wallis lake system. Also continuation of wetland rehabilitation strategies

$210,000

Project: Coastal Catchment Initiative

Development of Water Quality Plan for Wallis, Smith and Myall Lakes

$80,000


Ongoing education program to improve environmental management by business community and residents

$15,000



$100,000



$237,698



$22,500

Project: Hawks Nest/Tea Gardens Koala Management

Working with Department of Environment and Climate Change towards the implementation of the Koala Management Plan, tree planting and education programs undertaken

$5,000

TOTAL $707,198



"As supported by the Great Lakes community, Council applied for an Environmental Special Rate (ESR) in 2001. A rate of 3.89% was approved by the State Government for a 3 year period, raising over $1.6 million for environmental restoration and protection during this period. An application for an extension of the ESR was lodged and awarded in 2004 for a further 5 years. This has raised $743,756 for the 2008 - 2009 financial year.

Over the past year the ESR has and will continue to fund a vast number of environmental projects and subsequent on-ground works aimed at protecting our natural environment. The following table outlines ESR projects undertaken throughout the 2008 - 2009 financial year."

ESR Projects - 2008/2009 Project: Wallis Lake Catchment Plan Implementation

Funding towards the employment of a Catchment Support Officer for the implementation of Wallis Lake Catchment Plan

$21,250

Project: Sustainability Strategy

Sustainability Strategy adopted and implementation underway through S-team and specific energy and water audits

$10,000


Purchase of further properties towards the rehabilitation of the 850ha wetland system to reduce acid sulphate soil runoff to the Wallis Lake system. Also continuation of wetland rehabilitation strategies

$293,100

Project: Smiths Lake Estuary Plan

Implementation works

$20,333


Ongoing education program to improve environmental management by business community and residents

$15,000



$90,000



$245,228



$20,395

Project: Hawks Nest Tea Gardens Koala Management


$5,000

Project: Urban Stormwater Quality Improvement

Bramble Parade, Pipers Creek

$23,450

TOTAL $743,756


In applying for the permanent continuation of the expiring Environmental Levy Council was again able to document the achievements and community support for this special variation. The subsequent approval (once again for five years) requires annual reporting of the program. The report for 2009/2010 is included below.


"As supported by the Great Lakes community, Council applied for an Environmental Special Rate (ESR) in 2001. A rate of 3.89% was approved by the State Government for a three year period, raising over $1.6 million for environmental restoration and protection during this period.

An application for an extension of the ESR was lodged and awarded in 2004 for a further five years. This has raised $743,756 for the 2008/2009 financial year. An application for an extension of the ESR to 6% including a 1% component as a dredging rate was lodged and awarded in 2009 for a further five years. This rate raised $1,277,688.42 for the 2009/2010 financial year.


ESR Projects - 2008/2009 Project: Maintenance Navigation Dredging

Pipers Creek, Corrie Channel and Tuncurry

$473,051

Project: Dredging investigations

Wallis Lake and lower Myall River

$116,230

Project: Wallamba River

Riverbank Restoration and Water Quality Improvement

$339,180

Project: Wallis Lake Catchment Plan Implementation

Funding towards the employment of a Catchment Support Officer

$35,000

Project: Sustainability Strategy

Work to implement the Great Lakes Council Sustainability Strategy adopted and implementation underway through S-team and specific energy and water audits

$10,000


Purchase of further properties towards the rehabilitation of the 900ha wetland system to reduce acid sulphate soil runoff to the Wallis Lake system. Also continuation of wetland rehabilitation strategies

$210,000

Project: Smiths Lake Estuary Plan

Implementation works

$25,000


Ongoing education program to improve environmental management by business, community and residents

$15,000


ESR Projects - 2008/2009 (continued)



$115,000

Project: Employment Expenses $275,000



$22,000

Project: Hawks Nest Tea Gardens Koala Management


$5,000

Project: Urban Stormwater Quality

Improvement Bramble Parade, Pipers Creek

$300,000

TOTAL $1,940,461

General Special Variations

The 2003/2004 special rate variation approval contained no reporting requirements given that its purpose was for the continuation of existing levels of service and infrastructure maintenance as defined by Council.

For the 2007/2008 financial period approval was given for a 6.10% increase for costs associated with infrastructure renewal and library book purchases as defined by Council with a requirement to report within the annual report for the period 2007/2008 to 2011/2012 on the income received, expenditure per program/project and outcomes achieved. Council has not complied with this reporting requirement.

The 2003/2004 variation was subject to a five year approval period and Council sought the renewal of the special variation for the 2008/2009 rating period. Approval was given for a 11.20% increase for costs associated with the maintenance of existing services and infrastructure maintenance as defined by Council with a requirement to report within the annual report for the period 2008/2009 to 2012/2013 on the income received, expenditure per program/project and outcomes achieved. Council has not complied with this reporting requirement.

Given that the increase was for the continuance of existing service and infrastructure maintenance levels i.e. to assist in balancing Council's budget, there were not specific allocations of funds to programs or projects. The funds, the quantum of which can be identified, were dealt with as general revenue.


9.2 Reporting

Provide details of the mechanisms Council will put in place to transparently report to their community on the special variation.

Indicate how Council proposes to report this information to its community and what performance measures it will be putting in place to measure the success of the projects or activities funded from the variation.

This information should clearly identify:

The additional income obtained through the variation.

The projects or activities funded from the variation.

Details of any changes to the projects or activities funded from the variation compared with Council’s initial proposal (and such changes must be consistent with the terms of the Instrument of Approval).

The outcomes achieved as a result of the projects or activities.

Council's Response Councils reporting process will ensure that the information above is clearly communicated to the community. Council has engaged very effectively with the community over the past eighteen months during the integrated planning and reporting process. Suitable engagement channels have been established and Council will build on these to deliver an effective reporting process. The following mechanisms have proved to be effective in the Great Lakes community and will be utilised:

Council Communicator – Quarterly Publication issued to all ratepayers with Rate Notices.

Quarterly Reports to Council – Council’s budget position including variations and progress on KPI’s in Council’s delivery program will be reported quarterly to Council and placed on Council’s website.

Community meetings – annual community meetings/market stalls will be held across the Council area to provide the community with an update on the progress with the achievement of programs funded by the rate increase.

Media – Council will provide regular media updates to advise on projects occurring and any delays in projects.

Website – Council’s website includes a Great Lakes 2030 section and this will be continually updated to include project and program details to inform the community of progress in delivering the program contained in the rate variation proposal.


Annual Report - Council will provide an Annual Report on the achievements on implementing the Delivery Program and the effectiveness of the principal activities undertaken in achieving the objectives in the Community Strategic Plan at which those activities are directed. This will include a copy of Council's audited reports and State of the Environment Report. The full report will be available on Council's website.

End of Term Report - Council will report on the Council's achievements in implementing the Community Strategic Plan over the previous four year period of that elected Council.

Statutory Reporting - as required.

Council’s rate variation application is primarily focussed on delivering improved maintenance of infrastructure assets to meet asset management objectives. The measure of achievement in this area is ultimately an outcome which demonstrates an improved condition rating of assets over time. In the interim the achievement of the program of works will be used as a measure of progress towards this outcome. The reduction of reliance on loans will be measured by the retirement of debt for maintenance rehabilitation programs. The new capital projects contained in the application include details of years in which they will be completed. The progress of achieving these timeframes will be reported. Essentially this will be reported on the basis of delivery on time and within budget.


9.3 Council resolution

Sections 532 and 535 of the Local Government Act require a council to make a resolution to adopt a rate or charge, following consideration of any matters concerning the Draft Operational Plan.

If possible, attach a copy of Council’s resolution to adopt its (draft) Community Strategic Plan, Delivery Program and 2011/12 Operational Plan following public exhibition, including the special variation (subject to IPART’s determination). If the resolution is not yet made by 25 March 2011, a copy of the resolution must be provided separately to IPART by cob 3 June 2011. In these circumstances, Council should indicate the planned timing of the resolution below.

Note that the assessment of the application cannot be finalised without a copy of this resolution.

Council's Response

Council will be considering public submissions on the draft Community Strategic Plan, 2011-2015 Delivery Program and 2011-2012 Operational Plan at its April meeting and the resolution will be forwarded to IPART after that meeting.


10 Checklist of application contents

Item Included?

Community Strategy Plan, Delivery Program & Draft Operational Plan extracts

Long Term Financial Plan extracts

Asset Management Plan extracts

Performance indicators

Proposed program of expenditure

New capital financing strategy

Contributions Plan documents (if applicable) N/A

Hardship policy

Community engagement strategy

Community feedback Partial - as per extension granted

Annual Report extracts

Resolution to apply for the special variation To be forwarded after

consideration of submissions at April

Council meeting

Note that it is the responsibility of Council to provide all relevant information as part of this application. It is not the role of IPART to pursue Council for information already requested in this application template or the application guidelines.



11 Certification by the General Manager and the

Responsible Accounting Officer

I certify that to the best of my knowledge the information provided in this application is correct and complete.

General Manager (name): GLENN HANDFORD

Signature Date:

Responsible Accounting Officer (name): GARY COLLINS

Signature Date:

Once signed, this certification must be scanned and emailed to [email protected].

section 508a special variation application form part b...these guidelines are available on the...

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