The average Cessnock ratepayer will pay an extra $39 per year after the Independent Pricing and Regulatory Tribunal (IPART) approved Cessnock City Council’s special rate variation application for 2014-15.
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The special rate variation allows for the 9.55 per cent variation – which comprises two components: the rate peg of 2.3 per cent that is available to all councils and an increase of 7.25 per cent for road infrastructure renewal – to remain permanently.
This will generate an additional $24.78 million over 10 years.
“Council proposed the increase to continue to fund the renewal of road infrastructure due to the existing variation that has been in place for almost 10 years expiring on June 30, 2014,” Cessnock Mayor Bob Pynsent said.
“The additional revenue generated above the rate peg will continue to be applied to the road network to fund rehabilitation and resealing works.”
The rise will result in a net increase in rates of 3.5 per cent, or about $39 per annum for the average residential ratepayer.
The impact on an individual ratepayer will vary depending on the land value and rating classification of their property. This increase will replace a special variation that is already in place; therefore the impact on average residential rates across the city will be relatively modest.
The IPART noted in its determination that while the special variation will improve council’s operating position over the next 10 years, it will not secure the council’s financial sustainability.
“The ability of council to deliver the desired level of service to the community, as well as improvements in its infrastructure such as roads, remains a challenge for Cessnock and many other local government areas,” Cr. Pynsent said.
Cessnock was one of 32 councils that applied to IPART for a special rate variation for 2014/15.
Twenty-eight applications were approved in full, one was declined and three applications were partially approved.
In approving each council’s application, IPART has imposed conditions requiring that the additional income be used for the purposes outlined in their applications, and that each council report to the community each year while the special variation is in place on the outcomes achieved.
IPART chairman Peter Boxall said special variations are designed to give councils the flexibility to generate additional income above the rate peg to meet their specific needs, with an independent assessment process to approve the increase.
“All of these councils were able to meet the criteria for approval of the special variation by demonstrating a clear need for the additional revenue, that they had appropriately engaged the community about the proposed rate increases, and that they are taking steps to improve productivity and contain costs,” he said.
“Although some communities were divided about the increases, the councils have demonstrated that they have provided opportunity for input, weighed up community concerns against alternatives to the increases sought, and that they have considered the impact on ratepayers.”
The special rate variation is only one of a number of projects that Cessnock City Council is proposing in order to be financially sustainable and provide the levels of service and infrastructure agreed with the community.
According to council’s website, the Cessnock local government area contains more than 1010 kilometres of roads (not including roads in state forests or national parks), and council is the responsible authority for more than 900 kilometres of those roads.
Almost 610 kilometres of roads in the LGA are sealed with the annual budget to maintain and reseal council roads just under $3 million.
It costs council approximately $120,000 to seal just one kilometre of a suburban street. To maintain an unsealed or gravel road costs $4500 per kilometre.
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