Council’s aim was to increase rates by 74.59% (inclusive of the state-capped rate peg) over the next four financial years but the Independent Pricing and Regulatory Tribunal (IPART) did not approve of the two subsequent increases of 14% in 2025-26 and 10% in 2026-27.
IPART instead approved the first two years of increases – of 19% in 2023-24 and 17% in 2024-25.
Council sought the special rate variation (SRP) to fund asset renewals and improve its financial sustainability.
“We have not approved the council’s application,” IPART’S 100-page report by Carmel Donnelly PSM, Chair Deborah Cope and Sandra Gamble advised.
“While the council demonstrated that it met most of the Office of Local Government (OLG) criteria for an SV (Special Variation), we found that there were key shortcomings in its community consultation.
“Those shortcomings included the council not clearly communicating the cumulative percentage increase of its proposed SV to the community, and a substantial portion of the council’s community consultation not completed without providing the Baseline (or no-SV) scenario in its LTFP.
“Instead, we have approved a two-year temporary SV of 39.2% (inclusive of the state-capped rate peg).”
IPART said its decision was made after considering the council’s financial needs, the effectiveness of its community consultation and the impact on affected ratepayers.
“Our assessment found that without an SV, the council’s financial position would continue to deteriorate over the next 10 years,” the report stated.
“It is apparent that without additional funds, this would impact the council’s ability to renew infrastructure and deliver services to the community.”
Some stakeholders raised concerns about the impact of the council’s proposed SV increase on the affordability of rates according to IPART.
“Many submitted that the increased cost of living and interest rates were having an impact on households’ finances. In addition, stakeholders submitted that the council had not conducted effective consultation and had not transparently communicated with the community.
“We have considered these concerns as part of our assessment and factored them in to our decision to approve a 2-year temporary SV.
“On balance, we consider that the impacts of increases resulting from a 2-year temporary SV of 39.2% are generally reasonable given the proposed purpose of the SV to fund asset renewals and improve financial sustainability.
“With this increase, the council’s average estimated residential and business rates in 2024-25 will still be lower than most other comparable councils.
“However, we acknowledge that there are some ratepayers that are more vulnerable to increases in rates under the SV. In addition, estimated average farmland rates in 2024-25 will generally be higher than other similar councils.”
Federation Council’s adopted hardship policy to assist ratepayers who have difficulty paying their rates in November 2022 was noted by IPART.
The policy also has SV-specific hardship provisions for residential and farmland ratepayers to have ordinary rates deferred to 30 June in the applicable financial year.
“We consider that the size of the increases in 2023-24 and 2024-25 mean that it is important that the council effectively communicates how its hardship policy would be applied to ratepayers experiencing hardship,” IPART said.
“We also found that the council has demonstrated past achievements in delivering productivity improvements and had quantified future cost containment strategies that are proportionate to the size and resources of the council.”
IPART maintained council should continue to pursue productivity improvements to minimise costs to ratepayers and ensure financial sustainability over the long-term.
In the long-term, IPATR said, council needs to balance its financial sustainability with the impacts on all ratepayers and decide on what is in the best interests of the community. IPART said if council makes a future SV application, it should seek to adequately demonstrate improved community engagement consistent with the OLG criteria for an SV.