How did we get here?

Like many government and non-government organisations, the last few years of COVID-19 impacts have taken their toll. Income from our holiday parks, childcare centres and the Newcastle Airport was cut, while at the same time, construction, transport and insurance costs have continued to increase. These impacts are further exacerbated by natural disasters over the last couple of years.

In 2022 our budget forecasts identified a shortfall of $80 million over 10 years. It was important we took steps to ensure we are financially sustainable in the long term. This included increasing fees and charges, further roll out of paid parking, investigating surplus land for sale, continued efforts with seeking grants and a rate increase. We also investigated reducing services and removing the residential paid parking exemption but did not pursue these options given low community support – it was all on the table.

At its meeting on 26 October 2021, Council acknowledged the ongoing impacts of financial sustainability and our previous reliance on non-rate tourist income such as the Newcastle airport and holiday parks to keep rates low. They endorsed a number of key directions to improve our financial position over time, including creating a strong cash reserve to help Council avoid shocks from natural disasters or economic downturns, creating the Port Stephens Resilience Fund to future proof investment in important infrastructure, seeking grant funding and reducing operational costs.

In this meeting Council discussed how financial sustainability has been achieved through a range of strategies, including the Long Term Financial Plan, prior to 2020. Due to the impacts of the COVID-19 pandemic, Council's financial position has been affected and new strategies would need to be adopted to continue to provide a financially sustainable future.

The result of this meeting was that Council would support the key actions for continued financial sustainability as stated in the report, endorse the establishment of the Prosperity Fund and that Council would receive a report within 6 months to endorse associated governance processes for the Prosperity Fund.

We appointed independent experts Professor Dollery and Professor Drew to analyse our overall long term financial position. Professor Dollery and Professor Drew presented a number of reports and recommendations to Councillors in March 2022.

View the reports and recommendations here.

Since then, a number of measures have been implemented or investigated including:

  • We have saved $1 million by cutting back and tightening our budgets
  • A one-off 10% increase to fees and charges
  • Agreement to a further roll-out of paid parking
  • Potential land assets for sale have been identified
  • Locking in Council loans at record low-interest rates
  • Identifying increase income from developer contributions
  • Deferring non mandatory projects and not taking on any additional debt

At it's meeting on 28 June 2022, Council endorsed the Communications and Engagement Plan - Our Funded Future and approved to commence an engagement process with the community, discussing the financial sustainability of Council over the next 10 years. Options for the community to consider include the prospect of submitting a Special Rate Variation to the Independent Pricing and Regulatory Tribunal (IPART) for consideration for the 2023-2024 financial year.

On 18 July 2022 we commenced our conversations with the community seeking input into a number of non rate income and rate income options that could turn our financial position around and help us decided how we move forward.

Non-rate income options included increasing fees and charges, continuing to seek grant funding, selling underperforming assets and looking at other options for revenue. We also have five rate increase options ranging from a 26% to 45% overall rate increase, either in a single year or over a number of years. We also put forward the option to continue under the current scenario where income continues to increase each year by the 2.5% rate peg – but this option would mean reduced services in the future.

A number of  channels were available for the community to have their say including an online survey, Facebook Live event and a number of community information sessions both face to face and online.

The engagement program closed on 8 August 2022. We had a community awareness reach of 116,313 and participation of 7948. A number of key themes came out of community input across all engagement opportunities including the online survey comments, Facebook live event, community information sessions, special interest group presentations and Council interactions. These themes include:

  1. Level of understanding of complex local government financial matters: This included understanding rates in general, rating inequities, rate valuations and the ‘rate pie’, developer contributions and how that differs from rating income, and state legislation requirements.
  2. Efficiency and cost containment: This included cutting costs and looking at internal savings and the lack of trust in council financial management and modelling.
  3. Affordability: This included financial hardship and economic factors, especially for fixed income rate payers.
  4. Service levels: This included opposing service level priorities for example people want more services but are unwilling to pay for more.

Find out more by viewing the online survey results and engagement report.

At it's Council meeting on 23 August 2022, Council noted the outcomes of the community engagement and endorses to develop  the engagement plan for the next phase of the discussion. They also endorsed to develop revised Integrated Planning and Reporting documents, including Special Rate Variation options, to incorporate feedback gained from the community whilst balancing Councils financial sustainability for further engagement with the community.

At its meeting on 13 September 2022, Council endorsed to put the draft Integrated Planning and Reporting documents on public exhibition for a period of 28 days. The draft documents showed 2 options for a Special Rate Variation and included:

  • Delivery Program 2022 to 2026, incorporating the Operational Plan 2023 to 2024
  • Resourcing Strategy 2023 to 2033 incorporating the Workforce Management Strategy 2022 to 2026
  • Long Term Financial Plan 2023 to 2033
  • Strategic Asset Management Plan 2023 to 2033

A range of communication methods were used to raise community awareness of Council's financial position and the narrowed down options for community feedback. This included a media release, dedicated web page, print advertisement, social media, on hold messaging and direct emails to stakeholders. Community members could provide their feedback via an online survey, at one of seven drop in sessions held across Port Stephens, or public submission.

At it's meeting on 25 October 2022, Council deferred the decision to adopt the revised draft Integrated Planning and Reporting documents to the 8 November Council meeting.

On 8 November 2022, Council adopted the revised Integrated Planning and Reporting documents including:

  • Delivery Program 2022 to 2026, incorporating the Operational Plan 2023 to 2024
  • Resourcing Strategy 2023 to 2033 incorporating the Workforce Management Strategy 2022 to 2026
  • Long Term Financial Plan 2023 to 2033
  • Strategic Asset Management Plan 2023 to 2033

The Council also resolved to apply to the Independent Pricing and Regulatory Tribunal for a Special Rate Variation for a 9.5% increase for three consecutive years 2023-2024 to 2025-2026, to be a permanent increase that will be retained within the rate base. The Council also endorsed the inclusion of additional affordability measures into the Debt Recovery & Hardship Policy to further support ratepayers should a Special Rate Variation be approved.

Following the endorsement by Council on 8 November to apply to the Independent Pricing and Regulatory Tribunal (IPART) for a Special Rate Variation increase of 9.5% for three consecutive years, Council continued the conversation with the community, making them aware of Council's intention. This included a media release, social media, emails to key community groups, e-newsletter distribution, on hold messaging and updates to the website.

Council has submitted its application to IPART. The community will be able to make further community consultation via IPART which is expected to occur during February 2023. More details regarding the application can be found here.

The Independent Pricing and Regulatory Tribunal (IPART) announced Council was successful in its SRV application.

You can view the determination report on IPART's website.

The rate increase will commence 1 July and conclude 30 June 2025-2026.