proposed continuation of special variation to rates … · 2013. 3. 15. · during november and...

PROPOSED CONTINUATION OF SPECIAL VARIATION TO RATES FOR INFRASTRUCTURE: Outcome of Community Consultation Report

26 FEBRUARY 2013

ATTACHMENT 7

2

CONTENTS

1. Executive Summary

2. Resolution

3. Background

4. Legislative Requirements for Community Engagement

5. Public Exhibition

6. Telephone Survey

7. Conclusion

ATTACHMENTS

A. Mayor’s letter to ratepayers

B. Looking After Our Community Assets: Important Information About

Your Rates brochure

C. Information Sheet 1: Proposed continuation of the current

infrastructure funding

D. Information Sheet 2: Ensuring the Council is efficient and effective

E. Blue Mountains Have Your Say screenshot and Gazette ad

F. Response to Comments Raised in Submissions

G. IRIS Research Telephone Survey Report December 2012

ATTACHMENT 7

3

1. Executive Summary During November and December 2012 the Council consulted its community on its proposal to apply to IPART to continue the special variation to rates for infrastructure which is due to expire on 30 June 2013.

This consultation included:

A public exhibition on the proposal; and

A telephone survey of a randomly selected sample of ratepayers.

As detailed within this paper, there was overwhelming support from the community for the proposal as follows:

70% of submissions received from the public consultation were in support of the proposal; and

76% of respondents to the telephone survey conducted on behalf of the Council also indicated support for the proposal.

This result complemented the response from participants at the 2012 Affordable and Acceptable Levels of Service. Just over 55% of participants said they would prefer a rate rise to a reduction in service (plus 23% said they wanted more information).

2. Resolution On 6 November 2011 the Council endorsed the following resolution:

1. That the Council consults with the community on the possible continuation of the current special variation to rates for infrastructure, in accordance with the community engagement strategy outlined in Attachment 1;

2. That a one-off budget variation of $30,000 be approved to fund the proposed community engagement strategy;

3. That staff address key assessment criteria that will be used by the Independent Pricing and Regulatory Tribunal to assess a s508(2) application from the Council to continue the existing special variation to rates for infrastructure; and

4. That a report comes back to the Council in February 2013 summarising the outcomes of the community engagement process with recommendations on any special variation to rates.

[Minute 487]

ATTACHMENT 7

4

3. Background The proposal involves applying to IPART to seek the continuation of the existing special variation to rates for infrastructure which was approved in 2010 for a period of three years. If approved, this continued variation will raise around $23 million which will fund priority community asset maintenance and renewal and it will allow the Council to cease the current practice of annually borrowing funds for asset renewal work.

Over the past three years, the revenue raised by the current special variation has been spent on a comprehensive program of asset renewal and maintenance works. The works have been prioritised by risk and community needs. Key highlights of the work undertaken include:

$1.7 million spent on renewing footpaths, kerbs, gutters and bridges across the City

$1 million for new filtration plant and pipe for Glenbrook Aquatic Centre

$0.56 million renewing recreation facilities (eg. park revitalisation and renewal of unsafe play equipment)

$0.35 million refurbishing community buildings (including libraries, public toilets and public halls).

As well, a further $1 million was spent on 1,278 parks maintenance jobs and 1,110 roads maintenance jobs.

4. Council’s Adopted Financial Strategy On 11 December 2012 the Council adopted six key strategies to improve the financial sustainability of the Council and the City over the next 10 years, whilst ensuring ongoing provision of key services and facilities required by the community. The adopted strategies are:

ATTACHMENT 7

5

As shown in the diagram below, renewing the current special variation is a critical element of Strategy 4 – Increase income.

5. Legislative Requirements for Engagement The Division of Local Government’s Guidelines for the Preparation of an Application for a Special Variation to General income dated October 2012 (the Guidelines) state that council must provide:

“Evidence that the community is aware of the need for and extent of a rate rise. This should be clearly spelt out in Integrated Planning and Reporting (IP&R) documentation and the council must demonstrate an appropriate variety of engagement methods to ensure opportunity for community awareness/input. The IP&R documentation should canvas alternatives to a rate rise, the impact of any rises upon the community and the council’s consideration of the community’s capacity and willingness to pay rates.”

IPART issued a fact sheet in November 2012 to provide guidance on how it will assess this criteria and the principles it will consider in whether a council’s application satisfies the community awareness and engagement criterion. These principles are:

The council has demonstrated an appropriate variety of engagement methods to ensure community awareness/input;

That the council clearly communicated the impact of the proposed rate increases to ratepayers; and

That the council clearly communicated what works and services the special variation will fund.

IPART also noted that in the case where the proposal is to continue an expiring variation, the documentation must clearly explain the following:

That the SV is to replace an existing SV;

ENCLOSURE 1ATTACHMENT 7

6

That the year-on year impact on rates would not be as great or would decrease if the SV no approved and only rate peg was applied; and

That the expiring SV is being replaced with a permanent increase to the rate base

IPART notes that the evidence of awareness and engagement should be proportionate to the size and impact of the proposed rate rise.

6. Community Engagement

6.1 Public Exhibition

The Council met the above requirements through a comprehensive program of engagement during the period 12 November to 16 December 2012 (5 weeks) on its proposal to continue the expiring special variation for infrastructure in accordance with the project’s engagement strategy.

6.1.2 Informing the Community of the Proposal

As required, the Council provided the following information in the documentation available to the community:

Requirement Done? How?

Ensure community awareness/input

Letter to all ratepayers from the Mayor, December 2012 with attached 4 page colour brochure

3 half page ads in Gazette, November and December 2012

4 notices in Council Communicator page of Gazette, November and December 2012

Information (4 page colour brochure and two information sheets) were available from:

o Bang the Table website –www.bluemountainshaveyoursay.com.au

o Katoomba & Springwood front counters

o all branch libraries.

• Community invited to make submissions either by:

o Using postage paid submission form

o By email, post etc.


7

Requirement Done? How?

Clearly communicate impact of on rates

In the Looking After Our Community Assets brochureratepayers were informed that if the variation did not continue, rates would reduce, on average by $53 for residential ratepayers, $1126 for business ratepayers and$82 for farmland ratepayers (though rate pegging wouldstill apply).

The brochure also set out the average impact of theproposal by Residential sub-category on both an annual and weekly basis. This information was also available inInformation Sheet 1 which also set the average impact ofthe proposal by Business Sub-Category and for Farmland ratepayers on an annual and weekly basis.

Clearly communicate replacing an expiring SV & will be continue permanently

The proposal to continue the rate variation of 4.4% pastits expiry date of 30 June 2013 on an ongoing basis was clearly communicated in both the Looking After OurCommunity Assets brochure and Information Sheet 1.

Clearly communicate funded asset works

A summarised program of the works to be funded by the revenue raised by the continued variation and the justification for these focus areas was included in the Looking After Our Community Assets brochure. A more detailed, annual program of works by focus area was included in Information Sheet 1.

The community was also informed that an added benefit of a continued variation is that it will enable the Council to continue to implement assets works as from 2013-2014 despite ceasing the current practice of borrowing funds for this purpose. The repayments and interest saved ($12.7 million over 10 years) will also be directed to asset renewal and maintenance.

Copies of all documents available for the public exhibition of the proposal are available in Attachments A to E.

6.1.2 Submission Process

The community was invited to make submissions and to facilitate this process a submission form, with a choice of responses being made available.


8

To access a greater representation of community views, any submission form posted to the Council was postage free. While the community were encouraged to use the submission form, they were informed of alternative submission methods as well, and a small number of such submissions were received. The choice of responses on the submission form (both hardcopy and electronic) were:

6.1.3 Outcome of Public Exhibition

Tally of submissions received

The community engagement process on this proposal was highly successful with a total of 1,287 submissions being received (1,170 during the exhibition period and 117 after it). This is more than double the 595 submissions received for the previous SV consultation in 2010.

As shown below, 900 submissions (70%) of all submissions supported the continuation of the special variation to rates.

TOTAL SUBMISSIONS RECEIVED

TOTAL 1287

Support

Continuation

of Special

Variation

Oppose

Continuation

of special

Variation

Unclear

900 368 19

70% 28.5% 1.5%


9

Of those 1,287 submissions received, 1,170 submissions were received DURING the public exhibition period. As shown below, 815 of these submissions (70%) supported the continuation of the current special variation to rates.

A total of 117 submissions were received AFTER the public exhibition period. As shown below 85 of these submission (73%) supported the continuation of the current special variation to rates.

Submissions received during the exhibition

period

TOTAL No. 1170

Support

Continuation

of Special

Variation

Oppose

Continuation

of special

Variation

Unclear

815 337 18

70% 29% 1%

Received after exhibition period

TOTAL 117

Support

Continuation

of Special

Variation

Oppose

Continuation

of special

Variation

Unclear

85 31 1

72.6% 26.5% 0.9%


10

Comments raised in submissions

Approximately 85% of the respondents simply ticked the “I support” or “I do not support” boxes available on the submission form. However some respondents provided comments as to why they were either in support of the proposal or against it as follows:

Key Comments from Submissions Supporting Proposal

Sixty-one respondents provided comments on why they were in support. In summary the main four supporting comments were:

o Wanted an increase in services or assets

o Felt that it is important / critical to maintain the City’s assets

o Supported the continuation but also emphasised importance of funds being spent wisely

o Felt that local government was generally underfunded - “can’t do anything with insufficient funds”

And one very positive comment: “Continue the good work!”

Key Issues Raised in Submissions Not Supporting Proposal

A total of 124 submissions out of the 1,287 submissions received raised issues associated with not supporting the continuation of the special variation. The top five issues raised in the submissions were:

o Council wastes too much/ needs to be efficient

o Lack of services/facilities provided by the Council

o Rates too high already

o Council should live within budget

o Perceived mismanagement of investment funds by the Council

A response to these comments is provided Attachment F to this report.

6.2 Telephone survey

To support the community engagement process, a telephone survey was conducted by IRIS, an independent research company. They conducted the survey across 401 adult ratepayers. Participants were randomly selected across the LGA in proportion to population densities ensuring a geographic spread, an approximate 50:50 sex split and a spread of age groups to deliver a representative sample. The objective of the survey was to assess the level of support and the reaction to our proposal to continue the current special variation for infrastructure.

The survey was only administered to those ratepayers that had received and read the information package posted to each ratepayer and was conducted over 3, 4, 5 and 6 December 2012. A copy of the survey report is included in this report at Attachment G.


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6.2.1 Outcome

76.1%

Support - just over three quarters of ratepayers surveyed preferred to continue the current special variation

Statistical Confidence rating on results being a representative of broader community of ratepayers – 95% confident.

6.5% These ratepayers indicated they would support a proposal for a rates variation of a lesser amount.

17.4% These ratepayers indicated they would not support the proposal.

100%

6.2.3 Further Exploration of Opinions

A number of questions were put to the respondents to explore their satisfaction with the proposed expenditure focus of the proposal and the reasons why the proposal was note supported. Question topics included why this group would not support a rates rise, which services and facilities should be reduced, circumstances where they would support a rates increase and what proportion would support a proposal of a lesser amount. The responses to these questions are set out below.

Satisfaction with proposed expenditure focus

50.2% highly satisfied

29.9% satisfied

19.9% low level of satisfaction

Reasons for non support of the proposal

Of the 94 survey respondents (out of a total of 401) who did not support the continuation of the current special variation, key reasons given were as follows:

not getting value for rates dollars currently

was unaffordable / rates already too high

Council needs to be better managed

spending improvements targets some areas not all

Council wastes money

Council should become more efficient

Services & facilities that should be reduced instead of continuing the current variation

Council functions / activities

Sporting facilities / parks


12

Roads / footpaths

Cultural Centre

Circumstances where the continued variation would be supported

if the Council was accountable / demonstrated improvements

if improvements were made in local area

if Council sped up the road / kerb and guttering upgrade

6.3 Acceptable and Affordable Levels of Service Workshops

In June 2012 the Council implemented five community workshops with a total of 122 randomly selected residents to address the question: How can BMCC continue to afford to provide the wide rage of services and facilities required by the community into the future? Workshop participants were briefed on existing levels of service provided by the Council and on likely levels of service in 10 years time given projected levels of funding available. The risks and consequences of the available funding on each service and asset area were also considered.

A critical outcome of the workshops was to assess the community’s willingness to pay more for maintaining or improving existing levels of service – with participants being briefed on the fact that existing levels of service were projected to decline in many areas given likely available funding for asset renewal and maintenance.

Just over half of the workshop participants (55%) indicated they were willing to pay more to maintain existing levels of service or receive improved levels of service. Of the remainder, 22.6% needed more information before deciding and only 22.4% were not prepared to pay more. Significantly support for paying more was highest in the Blackheath Area (where residents have the lowest per capita incomes) and lowest in the Warrimoo Area (where residents have the highest per capita incomes). This pattern echoed results of the five 2010 Special Variation focus group workshops.

7. Conclusion All community engagement methods on the proposal indicated an overwhelmingly support for continuing the special variation. This complements the support of the community at the Affordable and Acceptable Levels of Service workshops in June 2012.

The proposal to continue the expiring special variation for infrastructure is critical element of the adopted financial strategies and combined with the other financial strategies will improve the financial sustainability of the Council in the long term.


21 November 2012

Dear Ratepayer, OUR CITY, OUR FUTURE – Looking After Our Community Assets Please find enclosed important information on a proposal that will enable the Council to continue to look after our community assets. These assets include our roads, stormwater infrastructure, community and recreational facilities. Some of the funding that the Council uses to manage these assets comes from a special variation to rates that was approved in 2010 by the Minister for Local Government. This special variation is due to expire on 30 June 2013. The Council faces significant challenges in providing services and facilities across 27 towns and villages at levels required by our community into the future. These challenges are exacerbated by our City being spread along 100kms of mountainous terrain that is susceptible to natural disasters including bushfires and severe storms. Many of our built assets are old and in need of continued maintenance and renewal. Currently it is estimated that 14% of our built assets are in poor condition and without additional funding this will grow to 31% by 2023. When assets deteriorate, the associated risks can be significant. Despite these challenges, the Council wants to ensure that our City is safe, vibrant and meets community needs. To achieve this, the Council is considering an application to continue the special variation past its expiry date. This will mean that on average, you will continue to pay $1.08 per week within your rates, which we will set aside specifically for our community assets. Your views on the proposal are important to us and will be taken into consideration. The enclosed brochure includes a submission form so you can let us know whether you support the proposal, or whether you understand that if the rate variation does not continue the Council will need to reduce the level of service in maintaining and renewing assets. To help us assess community views, a random cross-section of ratepayers will be asked to participate in a telephone survey to be conducted from 3 to 7 December 2013. This will be undertaken on behalf of the Council by IRIS Research, an independent research firm. Please keep the brochure near your telephone in case you are selected as a research participant. I would like to assure you that the Council is committed to meeting the needs of our community now and in the future. To ensure that we can be in the best position to do this, I encourage you to have your say on this proposal by completing the submission form provided. Yours sincerely,

DANIEL MYLES Mayor

ATTACHMENT AATTACHMENT 7

LOOKING AFTER OUR COMMUNITY ASSETS:Important Information About Your Rates

our city | our futureSUSTAINABLE BLUE MOUNTAINS

ATTACHMENT BATTACHMENT 7

INTRODUCTIONIn 2010, Blue Mountains City Council obtained approval for a special variation to rates of 4.4% to secure much-needed additional funding for maintaining and renewing built community assets. This variation raised $5.5 million over three years and is due to expire on 30 June 2013.

The Council aims to provide the best possible services and facilities to the community, while remaining financially sustainable today and in the future. To be able to do this, the Council is considering applying to the Independent Pricing and Regulatory Tribunal (IPART) to continue the current rate variation on an ongoing basis. Many councils in NSW apply for such variations and the majority of applications are approved.

This brochure provides information on the proposal, what it means for you and how you can have your say.

Why we are proposing to renew the special variationOver the next 10 years, we estimate that we will have a funding shortfall of $131 million to maintain the current condition of our built community assets. This is because our costs are increasing faster than available revenue (as shown in the graph below). If we do not renew the current variation we will experience a reduction in revenue, meaning we will have even less money for renewing and maintaining essential community assets.

Therefore, the proposed application to IPART is to continue the rate variation of 4.4% past the expiry date of 30 June 2013, in addition to the annual rate peg increase which is estimated at 2.7% for next year. Rate pegging is the limit set by State Government by which rates can increase annually; frequently, the Council’s costs exceed the rate peg.

Benefits of renewing the rate variationBy each ratepayer continuing to pay an average $1.08 per week, the Council can raise around $23 million over 10 years – which it would spend on priority community asset maintenance and renewal.

Continuing the rate variation would also allow us to stop borrowing funds for asset work, as we have had to in the past. Over 10 years, this would save the City $12.7 million – allowing further funds to be spent on improving the condition of our existing community assets.

Combined, the continued rate variation and reduction of debt would reduce the asset funding gap over this period by $35.7 million. We recognise the challenge is ongoing, and we have put in place longer-term strategies which would ensure our asset funding gap is under control within 10 to 20 years.

COSTS RISING FASTER THAN RATE PEG INCREASE

Rate

peg –

2.7%

Emplo

ymen

t – 4

.5%M

ateri

als –

5%

Fuel

– 6%

Supe

rannu

ation

– 7

.3%

Emerg

ency

cont

ribut

ions –

10%

Electr

icity

– 11

%*C

ost s

hiftin

g – 2

4%

20.00%

25.00%

0.00%

5.00%

10.00%

15.00%

Cost Shiftingoccurs when either the Federal or State Government passes on to local government, responsibility for providing additional services, assets or regulatory function, without providing corresponding funding. In recent years, the Council has been subject to both Federal and State Government cost shifting, placing even more pressure on Council finances.

*Based on 4 year average. Includes the Council‘s contribution to NSW State Government emergency management services.


How the Council is being efficient and effectiveOver the last seven years the Council has worked very hard to achieve in the order of $12 million in efficiency and productivity savings - and is committed to continuing this work into the future.

The proposal to continue the rate variation is part of Council’s broader strategy over the next 10 years to address our financial and asset funding challenges.

Key components of this broader strategy will be a focus on debt reduction and targeted service reviews including engagement with the community on affordable and acceptable levels of service. In addition, the Council will increase advocacy and partnerships with other levels of government to ensure a fair share of funding (usually through special grants) for the City, particularly given our unique characteristics and challenges.

How we spent funds from the current special variationSince 2010, revenue from the current special variation has been spent on a comprehensive program of asset renewal and maintenance works, prioritised by risk and community needs. Key highlights include:

– $1.7 million renewing footpaths, kerb, gutters and bridges across the City

– $1 million for Glenbrook Aquatic Centre on a new filtration plant and pipes

– $0.56 million renewing recreation facilities (eg. park revitalisation and renewal of unsafe play equipment)

– $0.34 million refurbishing community buildings (including libraries, public toilets and public halls).

As well, a further $1 million was spent on 1,278 park maintenance and 1,110 road maintenance jobs.

How we will allocate future special variation fundsOver 10 years, the $23 million raised from continuing the current rate variation would be directed to the following areas:

– $15 million to the road reseal program

– $2.8 million to renewing stormwater assets

– $0.35 million to renewing park facilities

– $0.19 million to renewing sportsgrounds.

We would also spend a further $4.5 million on regular maintenance programs for parks, town centres and roads, including weed management, litter removal, fence and furniture repairs and footpath sweeping.

The focus on these areas has been determined by asset planning work which has identified key risks to be managed and community priorities identified through the annual community surveys and the 2012 Affordable Levels of Service Community Workshops.

Sealed Roads

Condition: Current - 11% in poor condition.

10 year projection - 26% in poor condition without additional funding.

Risk: If we don’t regularly maintain our roads, it will cost us 4 times more to repair in the future when they fail.

Community Views: Sealed roads are consistently a high community priority.

Stormwater

Condition: Current – 4% in poor condition.


Risk: Failing stormwater assets increases run-off on to properties, roads and into the environment.

Community Views: Stormwater assets are consistently a high community priority.

Park Facilities



Risk: Failing assets will be removed and not repaired, resulting in a decline in park appearance and usability.

Community Views: Requests from the community for increased maintenance in parks is growing.

Sportsgrounds



Risk: If deterioration of oval surfaces is not prevented, fields not fit for play will be closed temporarily.

Community Views: Lower Mountains sports grounds are over-utilised.


Residential Sub-Category

Average Rates (with Variation)

Average Rates (without Variation) Difference


Average Rates (without Variation) Difference

Annually Weekly

Mounts/Bell/ Megalong/Mt Victoria $901 $863 $38 $17.33 $16.59 $0.74

Blackheath $1,156 $1,107 $49 $22.23 $21.28 $0.94

Medlow Bath $1,111 $1,064 $47 $21.36 $20.46 $0.91

Katoomba & Leura $1,149 $1,101 $49 $22.11 $21.17 $0.94

Wentworth Falls $1,222 $1,170 $53 $23.51 $22.50 $1.01

Bullaburra to Woodford $1,094 $1,048 $46 $21.04 $20.15 $0.89

Linden $1,164 $1,114 $49 $22.38 $21.43 $0.95

Faulconbridge to Valley Heights $1,274 $1,220 $55 $24.51 $23.46 $1.05

Warrimoo to Lapstone $1,440 $1,379 $61 $27.69 $26.52 $1.17

Megalong Valley $1,366 $1,307 $58 $26.26 $25.14 $1.12

Rural Residential $2,067 $1,978 $89 $39.75 $38.04 $1.70

Community Consultation: 12 November to 16 December 2012For more informationInformation sheets are available:Online: www.bluemountainshaveyoursay.com.auHardcopy: Katoomba or Springwood offices

and all branch libraries

Any questions:Email: [email protected]

How I can have my sayOnline: www.bluemountainshaveyoursay.com.auEmail: [email protected]: Our City, Our Future - Continued Special Variation Application,

Blue Mountains City Council, Locked Bag 1005, Katoomba NSW 2780 (or use Submission Form below)

Deliver to: Katoomba or Springwood Council offices

Please place this Submission Form in an envelope - no stamp is required if addressed to:

Our City, Our Future - Continued Special Variation ApplicationBlue Mountains City CouncilReply Paid 83259Locked Bag 1005KATOOMBA NSW 2780

Name:

Address:

Suburb: Postcode:

I am letting the Council know (please tick one of the boxes):

I SUPPORT the continuation of the current special variation to rates as I want the Council to continue to look after community assets.

OR I DO NOT SUPPORT the continuation of the current special variation

to rates and I understand that this will mean the Council will need to reduce the level of service and facilities it provides to the community.

SUBMISSION FORM

What this means for youIf the current rate variation continues, your rates will continue to include:

– For residential property owners, an average of $1.04 per week

– For business property owners, an average of $2.23 per week, and

– For farmland owners, an average of $1.57 per week.

However, if the current variation does not continue, rates will reduce - on an annual basis - by $53 for residential rates, $116 for business rates and $82 for farmland rates (though the rate peg increase and any changes due to amendments to the rating structure will still apply).

Average residential rates are detailed further in the table below. Similar rates for business and farmland can be found on the Council’s website at www.bluemountainshaveyoursay.com.au. Estimates for your property can be obtained by emailing [email protected].


How you can have your say Online: www.bluemountainshaveyoursay.com.au Email: [email protected] Post: Our City, Our Future— Continued Special Variation Application, Blue Mountains City Council, Locked Bag 1005, Katoomba NSW 2780 (or use Submission Form available online) Deliver to: Katoomba or Springwood council offices

Information Sheet 1:

Proposed continuation of the current

infrastructure funding

ATTACHMENT CATTACHMENT 7

Services & facilities enjoyed by the community

Each year Blue Mountains City Council provides an extensive range of services and facilities to the community in response to assessed needs and priorities as well as due to our responsibilities under the Local Government Act 1993 and other relevant legislation. To support the provision of the services, the Council manages approximately $1.2 billion worth of assets and facilities. This includes:

637km sealed roads 493km kerbs & gutter

120km unsealed roads 7,665 drainage pits

160km footpaths 11,000ha bushland

34 bridges 96km walking tracks

105 parks 22 sportsgrounds

66 playing courts 6 libraries

17 pools in five locations 31 RFS & SES buildings

5 skate parks 66 public toilets

15 halls including 5 community centres

9 cemeteries

126 bus shelters 2 waste management facilities

189 litter bins

$24 Waste management

$8 Development &

health

$24 Library, Cultural &

Community Services

$14 Roads & footpaths

$24 Parks & recreation

$7 Governance

$4 Safety &

Emergencies

$3 Economy

$1 Stormwater

$5 Environment

How services and facilities are funded

The Council’s total budget (that is revenue in and expenditure out) for 2012-2013 is $111,495,522. If this total budget equalled $100, this is where this revenue comes from and how we spent it:

$10 Grants

$50 Rates & charges

$14 Fees

$26 Other

$100

+ + +

Each year we have in our

purse:

This income has come from:

$100

Each year we spend:

This is spent on the following:


Challenges faced by our City

Many NSW councils, including our City, are currently experiencing significant financial and asset funding challenges exacerbated by: Rate pegging:

Constrained rate revenue as a result of 35 years of the NSW State Government imposed rate pegging which limits the amount by which councils can increase their rate income in any given year irrespective of the amount that costs have actually increased by. As a result NSW councils have the lowest rates in Australia. For example, as shown in the chart below, for 2013-2014 the Council will be allowed to increase rates by 3.4% however it predicts material costs will rise by 5%, fuel by 6% and electricity by 11%; and

Cost shifting: Significant additional cost burdens from the continual shifting of responsibilities for service provision from the Federal and State Governments to local government, without corresponding funding. For example, in 2010-2011 the impact of cost shifting on Blue Mountains Council was $7.5 million in additional expenditure requirements.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Chart 1: Costs Rising Faster than Revenue

*Based on 4 year average and includes Council’s contribution to NSW State Government emergency management services

*

WHAT IS RATE PEG? Rate peg is the percentage limit that all NSW councils can increase their total rates income by. It is set annually by IPART. The rate peg for 2012-2013 is 3.6%. The rate peg for 2013-2014 will be 3.4%.


Additional challenges faced by our City

For Blue Mountains Council there are also the additional impacts of: Responsibilities for service provision to 27 towns and villages dispersed

settlements located over an extensive geographic area with the need for a significant degree of duplication of services and facilities such as pools, libraries, community centres, halls, RFS buildings, public toilets, parks and sports fields;

The City’s location adjacent to the Sydney metropolitan area which

creates resident expectations for high service levels; Additional expenses due to the Council managing the responsibility for

emergency management in an area that is prone to costly natural disasters including bushfires and severe storms;

Additional expenses due to the area being World Heritage which

requires costly measures to reduce impacts of settlement on the natural environment;

Additional expenses due to the area being a major tourism destination;

and Limited opportunity for additional rate revenue from population growth

due to limited land available for development.


Council’s asset funding challenges

As our costs have been rising faster than revenue, we have not had the funds to adequately maintain and renew our community assets. As a result these assets are deteriorating. As shown in the chart below, currently 36% of our assets are in good condition and 50% are in fair condition. However, we estimate that over the next 10 years we will have a shortfall of $131 million in order to prevent deterioration of the assets as they age and require additional renewal and maintenance. Currently around 14% of community assets are in poor condition. Without additional revenue it is estimated this will increase to 31% by 2023. When assets deteriorate to a poor condition, the associated risks can be significant and facility closures may be necessary.

Chart 2: Current and Projected Condition of Assets

CONTINUING TO LOOK AFTER OUR COMMUNITY ASSETS In 2010 a special rate variation of 4.4% was approved for a three year period and this expires on 30 June 2013. The Council is proposing to apply to the NSW Independent Pricing & Regulatory Tribunal (IPART) to continue this special variation on an expiring special variation to rates. If this variation is not renewed, we will experience a reduction in revenue—and we will have less money for renewing and maintaining essential community assets. If it is renewed, ratepayers will continue to pay an average of $1.08 per week which will raise around $23 million over 10 years. These funds will be directed to priority community asset maintenance and renewal.


Benefits of renewing the current infrastructure funding

Continuing the rates variation will also allow the Council to cease borrowing funds for asset maintenance and renewal work as has been done in the past. Borrowing funds is a valid means of renewing our community assets and it is prudent to do so accordance with the principle that both current and future generations should pay for works on assets which will be used both now, and into the future. This has allowed us to maintain a vibrant City. However, we have reached our capacity to incur new debt. It is timely that we now make our debt work for us by having a period of consolidation where funds from the continued variation replace the annual borrowings for asset work. The additional benefit is that savings of $12.7 million over 10 years from loan repayments will also be directed to maintaining assets.

How the current variation funds were spent

Since 2010, revenue raised by the current special variation has been spent on a comprehensive program of asset renewal and maintenance works. The works have been prioritised by risk and community needs. Key highlights of the work undertaken include: $1.6 million spent on renewing footpaths, kerbs, gutters and

bridges across the City $1 million for new filtration plant and pipe for Glenbrook Aquatic

Centre $0.56 million renewing recreation facilities (eg. park revitalisation

and renewal of unsafe play equipment) $0.35 million refurbishing community buildings (including libraries,

public toilets and public halls). As well, a further $1 million was spent on 1,278 parks maintenance jobs and 1,110 roads maintenance jobs.

ENSURING WE ARE EFFICIENT AND EFFECTIVE

Prior to considering renewal of the variation, we first looked at ways of saving money and generating alternative streams of revenue. Examples of these achievements are set out in the following table:

FIND OUT MORE ABOUT OUR ACHIEVEMENTS Information Sheet 2—Ensuring the Council is efficient and effective

Continuous business improvement initiatives

Workplace reforms Strategies to increase revenue

Saved around $12 million over past seven years through efficiencies including

Implemented workplace reforms to constrain employment, including:

Implemented a number of strategies to increasing revenue, including es-tablishment of:

$400,000 savings on contract costs from conversion from crates to mobile recycling bins

Organisational restructure in 2005 with recurrent savings of $860,000

Property Disposal & Investment Fund (at 30 June 2012 the fund contained $1.8 million)

$556,500 annual savings due to 2,100 tonnes of waste being diverted from landfill with change to mobile recycling bins

Strategy of careful scrutinsation by executive team of continued need for positions once they become vacant

Commercial Activities Service to generating revenue through activities such as caravan parks and RTA agency


How we will allocate future special variation funds

Over 10 years, the $23 million from the continued rate variation would be directed to the following areas: $15 million to the road reseal program

$2.8 million to renewing stormwater assets

$0.35 million to renewing park facilities

$0.19 million to renewing sportsgrounds In addition, we would also spend a further $4.5 million on regular maintenance programs for parks, town centres and roads. This will include gardens, fence and furniture repairs, litter removal, weed management and footpath sweeping.

Sealed Roads

Stormwater

Park Facilities

Sportsgrounds

Condition: Current - 11% in poor condition 10 year projection - 26% in poor condition without additional funding Risk: If we don’t regularly maintain our roads, it will cost us four times more to repair in the future when they fail Community views: Sealed roads are consistently a high community priority

Condition: Current – 4% in poor condition 10 year projection - 15% in poor condition without additional funding Risk: Failing stormwater assets increases run-off on to properties, roads and into the environment Community views: Stormwater assets are consistently a high community priority

Condition: Current - 45% in poor condition 3 year projection - 55% in poor condition without additional funding Risk: Failing assets will be removed and not repaired, resulting in a decline in a park’s appearance and usability Community views: Requests from the community for increased maintenance in parks is growing

Condition: Current - 10% in poor condition 10 year projection - 43% in poor condition without additional funding Risk: If deterioration of oval surfaces is not prevented, those fields not fit for play will be closed temporarily Community views: Lower Mountains sports grounds are over-utilised

TRANSPARENT REPORTING TO THE COMMUNITY If IPART approves the proposed continuation of the special variation, it will be a condition of approval that annually we report to the community on: Progress of projects funded from the variation Details of any changes to the projects compared with the initial proposal Outcomes achieved as a result of these projects.

The focus on these areas has been determined by asset planning work which has identified key risks to be managed and by community priorities identified through annual community surveys and the 2012 Affordable Levels of Service Community Workshops conducted in five locations across the Mountains.


Proposed program of renewal works

We need to continue the current special variation if we are to maintain the current level of service the community enjoys. The following program over the next 10 years will be undertaken with funds raised if the current special variation is continued.

YEAR

Transport and Public Access:

Road Reseal Program

$

Stormwater Renewal

$

Recreation:

Parks Facilities Renewal

$

Recreation:

Sports Facilities Renewal

$

Total $

2013-2014

1,379,446

125,000

77,000

30,000

1,611,446

2014-2015

1,384,463

185,000

53,000

32,000

1,654,463

2015-2016

1,434,510

142,000

55,000

33,000

1,664,510

2016-2017

1,456,542

214,000

0

34,000

1,704,542

2017-2018

1,504,807

168,000

0

35,000

1,707,807

2018-2019

1,637,255

334,000

0

36,000

2,007,255

2019-2020

1,548,195

344,000

0

37,000

1,929,195

2020-2021

1,442,380

418,000

0

38,000

1,898,380

2021-2022

1,691,209

39,000

392,000

39,000

2,161,209

2022-2023

1,633,684

444,000

0

40,000

2,117,684

TOTAL

15,112,491

2,413,000

577,000

354,000

18,456,491


What this means for you

If the current variation continues, your rates will effectively not change (except for the annual announced rate peg increase). The impact of the variation within your rates if continued is as follows: Residential property owners, an average of $1.04 per week Business property owners, an average of $2.23 per week and Farmland property owners, an average of $1.57 per week. If the current variation does not continue, then rates will reduce accordinaly. Average rates by residential township are set out below, with average rates by business sub-category and for farmland set out on the following page. Estimates for your property, based on its land value, can be obtained by emailing [email protected].

Estimated Impact of Continued Special Variation for 2013—2014

Table 1: Residential rates

Residential Sub-Category

ANNUALLY WEEKLY


$

Average Rates (without

Variation) $

Difference $


$


Variation) $

Difference $

Mounts/Bell/ Megalong/ Mt Victoria $901 $863 $38 $17.33 $16.59 $0.74

Blackheath $1,156 $1,107 $49 $22.23 $21.28 $0.94

Medlow Bath $1,111 $1,064 $47 $21.36 $20.46 $0.91

Katoomba & Leura $1,149 $1,101 $49 $22.11 $21.17 $0.94

Wentworth Falls $1,222 $1,170 $53 $23.51 $22.50 $1.01

Bullaburra to Woodford $1,094 $1,048 $46 $21.04 $20.15 $0.89

Linden $1,164 $1,114 $49 $22.38 $21.43 $0.95

Faulconbridge to Valley Heights $1,274 $1,220 $55 $24.51 $23.46 $1.05

Warrimoo to Lapstone $1,440 $1,379 $61 $27.69 $26.52 $1.17

Megalong Valley $1,366 $1,307 $58 $26.26 $25.14 $1.12

Rural Residential $2,067 $1,978 $89 $39.75 $38.04 $1.70

NOTE: figures in the following tables are rates only & do not include amounts for annual charges for emergency services or domestic waste


Table 2: Business rates

Table 3: Farmland rates

ANNUALLY WEEKLY


$


Variation) $

Difference $


$


Variation) $

Difference $

Farmland $1,946 $1,864 $82 $37.43 $35.84 $1.59

COUNCIL’S HARDSHIP RELIEF POLICY The Council recognises that at times some people may have difficulty paying their rates. In such cases, the Council can consider a repayment plan where outstanding rates are covered by periodic payments. For Residential and Farmland ratepayers who experience permanent financial hardship, the Council’s Hardship Relief Policy may also provide rate relief. Ratepayers are also encouraged to pay their rates by weekly, fortnightly or monthly contributions as a way of budgeting. Periodical payments can be arranged through the Council via a direct debit authority. To find out more, please contact the Council’s Revenue section on 4780 5000 to discuss this in depth and to request the relevant application forms.

Business Sub-Category

ANNUALLY WEEKLY


$


Variation) $

Difference $


$


Variation) $

Difference $

Business General $2,570 $2,466 $104 $49.43 $47.43 $2.00

Business Industrial Katoomba $1,826 $1,752 $74 $35.11 $33.69 $1.42

Business Industrial Springwood $1,805 $1,732 $73 $34.71 $33.30 $1.40

Business Katoomba $4,131 $3,965 $167 $79.45 $76.24 $3.21

Business Leura $3,704 $3,554 $150 $71.23 $68.36 $2.88 Business Wentworth Falls $2,817 $2,704 $114 $54.18 $51.99 $2.19

Business Springwood $4,508 $4,326 $182 $86.70 $83.20 $3.50

Business Industrial Valley Heights $3,023 $2,901 $122 $58.14 $55.79 $2.35

Business Industrial Lawson $2,204 $2,114 $89 $42.38 $40.66 $1.71

Business Blackheath $2,203 $2,114 $89 $42.36 $40.65 $1.71

Business Lawson $2,447 $2,348 $99 $47.06 $45.16 $1.90

Business Hazelbrook $3,595 $3,450 $145 $69.13 $66.34 $2.79

Business Blaxland $2,486 $2,386 $100 $47.81 $45.88 $1.93

Business Glenbrook $2,912 $2,795 $118 $56.00 $53.74 $2.26


Have your say

From 12 November to 16 December 2012, we are seeking the community’s views on our proposal to continue the current special variation to rates to enable us to continue looking after community assets. To ensure that the community is aware of the need for and the extent of the continued rate variation, a letter from the Mayor, Councillor Daniel Myles will be sent to each ratepayer outlining details on the proposal, where to find further information if required and how you can have your say. To help us assess community views, a cross-section of ratepayers will also be asked to participate in a telephone survey to be conducted from 3 to 7 December 2012. This will be undertaken on behalf of the Council by IRIS Research, an independent research firm. Please keep the brochure near your telephone in case you are selected as a research participant. In order to reach community members who are not ratepayers, we will also publish a number of advertisements in the Blue Mountains Gazette. The community’s views on the proposal are important to the Council and will be taken into consideration prior to the Council decision in early 2013.

LET US KNOW

How you can have your say

Online: www.bluemountainshaveyoursay.com.au Email: [email protected] Post: Our City, Our Future—Continued Special Variation Application,

Blue Mountains City Council, Reply Paid 83259 Locked Bag 1005, Katoomba NSW 2780 (or use Submission Form available online or in the brochure) Deliver to: Katoomba or Springwood council offices

Community Consultation: 12 November to 16 December 2012

Let us know whether: you support the continuation of the current variation to rates as

you want the Council to continue to look after community assets or

you do not support the continuation of the current variation to rates and you understand that this will mean the Council will need to reduce the level of services and facilities is provides to the community.


How you can have your say Online: www.bluemountainshaveyoursay.com.au Email: [email protected] Post: Our City, Our Future— Continued Special Variation Application, Blue Mountains City Council, Locked Bag 1005, Katoomba NSW 2780 (or use Submission Form available online) Deliver to: Katoomba or Springwood council offices

Information Sheet 2:

Ensuring the Council is efficient and effective

ATTACHMENT DATTACHMENT 7

Our efficiency and effectiveness

Over the past few decades we have significantly improved our efficiency and productivity. This is evidenced by the fact that each year we have always delivered a balanced cash budget despite the fact that annually costs rise faster than increases to revenue. As shown in the chart below, in real terms, for us this means employment costs for 2012-2013 are pre-dicted to rise by 4.5%, materials costs by 5%, fuel by 6%, superannuation by 7.3%, emergency management contributions by 10% and electricity by 11%. However the Council will only be able to increase its rates revenue by 3.4% as announced by IPART.

Our financial challenges have also been exacerbated by:

Thirty-five (35) years of NSW State Government imposed rate pegging which limits the extent to which NSW councils can annually increase their rates. As a result, NSW has the lowest rates in Australia.

Significant impacts of cost shifting from the Federal and NSW State Government to local governments for additional service or asset responsibility without the provision of corresponding income. The impact of this to us in 2010-2011 was $7.5 million in additional ex-penditure requirements. Examples of such cost shifting are:

Payment of a Waste Levy to the State Government— $1,336,374;

Payment of emergency services contributions to the State Government for the NSW Fire Brigade, RFS and SES— $1,914,572.

Costs of processing development applications under the Environmental Planning and Assessment Act (NSW) 1979—$1,213,980.

Expenditure on public library operations which was originally funded by the State Government under a funding arrangement but which is now the Council’s responsibility—$939,000.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

*Based on 4 year average and includes Council’s contribution to NSW State Government emergency management services

Chart 1: COSTS RISING FASTER THAN REVENUE

“We have always delivered a balanced cash budget despite the fact that annually costs rise faster than increases to revenue”

*


“We have worked hard to implement a

range of strategies to improve productivity

and efficiency, improve business and raise further

revenue”

Efficiency and Revenue Raising Initiatives

In addressing the challenges of costs rising faster than revenue, we have worked hard to implement a range of strategies to improve productivity and efficiency, improve business and raise further revenue, with examples of achievements set out below. Efficiency initiatives examples

It is estimated that we have saved around $12 million over the past seven years through continuous business improvement initiatives such as:

$2.3 million since 2010 and projected ongoing annual savings each year of $1 million from 2013 from changing the Council’s workers compensation model to a Work Cover Retro-Paid Loss Model

$2.2 million achieved in the Lawson Town Centre project due to work re-design and re-phasing

$690,000 due to disposal or refurbishment of obsolete heavy fleet vehicles and the reduction from six to four cylinders in light fleet vehicles

$556,500 ongoing annual savings each year from 2,100 tonnes of waste being diverted from landfill Kerbside Domestic Recycling Contract change from crates to mobile recycling bins – and reduced OH&S risk with subsequent contract cost saving of approximately $400,000 on annual service cost (based on comparison with the final year of previous contract): - Recycling volumes increased by approx. 31% with new service

(approx. 2,153 tonnes increase in first year) - This resulted in approx 2,100 tonnes of waste being diverted from

landfill - thus extending landfill life and resulting in significant savings to the Council (equivalent of $556,500 per year since 2008-09

- Extending the life of the landfill is critical given the high costs that would be associated with having to transfer all our waste outside the City to other landfills. It is estimated if we had to do this it would cost in the order of $11 million per annum

- The role-out of bins was audited against the existing rates data base. The audit identified over 700 properties that were not correctly recorded. This generated a substantial recurrent income increase over $110,000 in the 2008-09 financial year

$500,000 one off savings through negotiated reduced purchase price for computer hardware

$460,000 ongoing annual savings each year through the reduction of parks, roads maintenance, sign truck and cemeteries team staff through more efficient work practices maintaining productivity or through using day labour in peak times

$300,000 ongoing annual savings each year through the reduction of equipment owned by City Services such as a Bagela asphalt recycler, Beaver float trailer, crew caravan, backhoes, bogie tippers and trailers and water carts

$300,000 ongoing annual savings each year through use of community volunteer labour for bushcare programs.


“Over the past 10 years, we have implemented

workplace reforms to constrain

employment”

Some of our efficiency initiatives have been implemented to reduce the impact of rising electricity costs and have the added benefit of reducing greenhouse emissions. Key highlights are:

$32,953 annual savings and a reduction of 204 tonnes of greenhouse emissions from the installation of a German energy optimisation unit for air handling units at Springwood Aquatic Centre

$24,000 annual savings and a reduction of 141 tonnes of greenhouse emissions from the installation of energy efficient lighting at Council headquarters

$14,486 annual savings and a reduction of 36 tonnes of greenhouse emissions from various energy efficiency measures at Katoomba Aquatic Centre including lighting, timers, power factor correction

$12,552 annual savings and a reduction of 65 tonnes of greenhouse emissions from the installation of turbidity meters and Variable Speed Drives on pool pumps at Springwood Aquatic Centre.

Key future initiatives planned include:

$1 million ongoing annual savings each year as a result of reviewing procurement and implementing strategic and improved procurement approaches

$550,000 ongoing annual savings from implementing a gas management system at the Blaxland Waste Management Facility and thereby avoiding a carbon pricing liability. It is estimated that over the next 20 years, this will save the Council $11 million.

Keeping employee numbers low

Over the past 10 years, we have implemented workplace reforms to constrain employment including the strategy of careful scrutinisation by the executive team of the continued need for positions once they become vacant.

As a major cost reduction initiative, in 2005 we implemented an organisational restructure which resulted in the existing five group structure being reduced to three with significant reductions in recurrent expenditure costs. Salaries, wages, vehicle and oncost savings of $860,000 were achieved through the reduction of two Group Managers, four Branch Managers and four administrative staff positions. As shown in the chart on the following page, since that time we have consistently kept our staff numbers within that benchmark and at the same time continued to deliver a high level of services and facilities to the community. For the last three years, our employment numbers have remained under the average for the period.

Any variance in number is due to annual projects which require additional staff resources (this way we keep consultants costs to a minimum).


“The Council faces significant challenges in providing services and facilities across

27 towns and villages which are spread along 100kms of

mountainous terrain over an area of

1,431km2”

Chart 2: FULL TIME EQUIVALENT STAFF LEVELS 2005 TO 2012

Revenue raising initiatives

Since 2006-2007, we have implemented specific strategies aimed at increasing revenue. These include, for example:

Implementing a property disposal and investment program (PDIP) In 2005 the Property Disposal and Investment Fund was established to accumulate income generated from property sales and development for re-investment and capital. Fifty percent of the annual return on investment generated from the program is reinvested into the fund with the balance used to fund asset renewal and maintenance. As at 30 June 2012, the fund contained $1.8 million.

Identifying and implementing viable revenue generating initiatives In 2009 we established a Commercial Activities Service with the aim of generating revenue for the Council. Current activities within this service include: - Caravan parks - RTA agency - Commercial buildings and properties - Pay for parking at Echo Point - Commercial ventures at leisure centres.

Impact of our geography on employee numbers

The Council faces significant challenges in providing services and facilities across 27 towns and villages which are spread along 100kms of mountainous terrain over an area of 1,431m2 which is at great risk of natural disasters including bushfires and severe storms. The spread out nature of our City requires duplication of services and a corresponding duplication of staff and resourcing to provide these services. This is to ensure a reasonable access to a variety of services by the majority of the community.

Source: DLG Comparative Information on NSW Local Government Councils 2010/11 and 2011/12 BMCC Financial Statements


.

How we compare to similar councils

The charts below and on the following pages compare our council with a number of other councils which are in similar groups as classified by the Division of Local Government for comparative purposes to us or are councils that have similar population numbers to us.

Land area

As shown in the chart below, our land area is one of the top three largest areas in the comparative group. Of note, our land area is is significantly larger than many of these councils including those such as Campbelltown, Penrith and the Hills which have significantly larger populations than we do.

We need to actively manage and monitor much of this land including the natural environmental as the area is a catchment for Sydney Water. Because of our great risk of bushfires, we also need to manage vast areas of bushland to ensure our community is safe from fire events.

As a result, we spend more on environmental and emergency management services than the NSW average as shown in chart 4.

The majority of the comparative councils do not have such responsibilities and these significantly add to the number of employees we need in order to provide services and facilities to our community.

Chart 3: LAND AREA—KM2 COMPARISON BLUE MOUNTAINS AND OTHER COUNCILS

1431

201 312

1175940

2775

400 462

5.7305

16.5

404

2556

740

Land area (km2)

Source: DLG Comparative Information on NSW Local Government Councils 2010/11


Number of assets

In ensuring a reasonable access of the community to services and facilities, the Council must duplicate many of its services and facilities. As a result, the Council manages many more assets per head of population than other councils as shown on the charts on the following pages. In addition, many of the assets are old and need of continued maintenance and renewal to keep them at a standard that is not only safe, but is also acceptable to the community. This also adds to our staffing numbers. Our $1.2 billion worth of assets and facilities includes:

0

50

100

150

200

250

300

350

400

Environmental

management

Recreation, leisure

and cultural services

Community services

and facilities

Safety & emergency

management, regulatory

compliance and health services

Community and

town planning amenities

$

Blue Mountains NSW State Average

Chart 4: EXPENDITURE ON SERVICES PER RESIDENTS—BMCC AND NSW STATE AVERAGE

637km sealed roads 493km kerbs & gutter

120km unsealed roads 7,665 drainage pits

160km footpaths 11,000ha bushland

34 bridges 96km walking tracks

105 parks 22 sportsgrounds

66 playing courts 6 libraries

17 pools in five locations 31 RFS & SES buildings

5 skate parks 66 public toilets

15 halls including 5 community centres

9 cemeteries

126 bus shelters 2 waste management facilities

189 litter bins

Blue Mountains spends more managing the environment , safety and emergencies per resident than the NSW average. However it spends less on recreation, leisure, cultural, community and town planning services and amenities than the NSW average.

Source: DLG Comparative Information on NSW Local Government Councils 2010/11


0102030405060708090

Chart 5:

Blue Mountains Council Assets Compared to Councils with Similar Populations

Comparing Blue Mountains with inner city populations shows that we have a greater requirement for duplication of facilities due to settlement dispersement and total land ar

Blue Mountains Council

Average of Hurstville & Marrickville Councils

Blue Mountains has significantly more public toilets and RFS/SES buildings than Hurstville and Marrickville


WEBSITE SCREENSHOT AND GAZETTE ADS

Blue Mountains Have Your Say website

ATTACHMENT EATTACHMENT 7

Half page ad published in Gazette

Council communicator ad published in Gazette

Our City | Our Future – Looking After Our Community Assets Community consultation to 16 December 2012 Have your say on an important proposal that will enable the Council to continue to look after community assets including roads, stormwater infrastructure, park facilities and sportsgrounds through the continuation of an expiring special variation rates. By each ratepayer continuing to pay an average $1.08 per week, the Council can raise $23 million over 10 years – which it would spend on priority community asset maintenance and renewal. The Council is seeking you views on whether:

you support the proposal which would enable the Council to continue to look after community assets, or

you do not support the proposal and you understand that this will mean the Council will need to reduce the level of service and facilities it provides to the community.

Further information is available: Online: www.bluemountainshaveyoursay.com.au Hardcopy: Katoomba or Springwood offices and all branch libraries Have your say: Online: www.bluemountainshaveyoursay.com.au Email: [email protected] Post: Our City, Our Future – Continued Special Variation Application at the address below (or use the available submission form – no stamp required). For any enquiries or for an estimate of what this means for your property’s rates, please email [email protected].

ATTACHMENT EATTACHMENT 7

COUNCIL’S RESPONSE TO COMMENTS RAISED IN SUBMISSIONS

Set out below are the Council’s response to the most commonly raised comments in submissions received on the proposal to continue the current special variation to rates.

Comment Raised

Response

Council wastes too much/ needs to be efficient

Over the last decade, the Council has worked hard to implement a range of strategies to improve productivity and efficiency, improve business and raise further revenue. Examples of achievements are set out in Information Sheet 2: Ensuring the Council is Efficient and Effective which is Attachment D of this report.

Lack of services/ facilities provided by the Council

The Summary Dashboards provide information on the services and facilities provided by the Council to the community. From these Dashboards, it can be seen that the Council currently does in fact provide a wide range of services to meet the broad needs of a diverse community. To support these services it also manages a portfolio of over $1 billion worth of built assets. Because of the geographical layout of our City, many of these services are duplicated to ensure a reasonable access by the community. As explained in Information Sheet 2, the Council manages more assets per head of population than many councils with similar population numbers due to our large local government area. For more information, go to the Summary Dashboards (Enclosure 4 of the Council report), Information Sheet 1 (Attachment C of this report) or Information Sheet 2 (Attachment D of this report).

Rates too high already

This City does have higher rates than a number of other NSW councils. There are a number of reasons for this, including:

The area is primarily residential with a significantly smaller number of businesses compared to the majority of other local government areas within the Sydney metropolitan region. This places a greater burden on residential ratepayers to contribute the revenue the Council needs to provide services and facilities as required by the community.

The spread out nature of our local government area, over a vast area of 1,431km2 adds to the cost of service provision.

The Council faces higher resourcing requirements for emergency management due to the fact the City is located in one of the most bush fire prone areas in the State than many other councils.

Being located within a World Heritage National Park which is also one of Sydney’s water catchment areas, requires us to spend more revenue managing our environment than many other NSW councils.

For more information, please refer to Information Sheet 2 at Attachment D.

Council should live within budget

Over the past few decades, the costs the Council faces in delivering services and facilities to its community have increased at a faster rate than the Council’s ability to generate income. A major contributor is the result of

ATTACHMENT FATTACHMENT 7

Comment Raised

Response

35 years of rate pegging (the State Government’s annual rate increase limit) which is generally below inflation. Many of the Council’s costs have increased by a greater percentage than rate pegging (and in many cases greater than inflation). The landscape of the Blue Mountains region, with 27 towns and villages spread along a 100km transport corridor with many outlying small settlements, all surrounded by a World Heritage National Park ,adds to costs for the Council. As a primarily residential local government area with little industry and business and almost no new land available for development, the Council is greatly restrained in its ability to generate additional revenue outside of rates. The result of these factors is that the Council has a diminishing amount of revenue available to meet the costs of upgrading and replacing its built facilities and infrastructure. The Council has worked hard over the past years to contain its expenditure and save money with operational efficiencies. This has been very successful and any savings have ensured that levels of service provided to the community have continued. While the Council will continue to strive for a more efficient work place, any future savings will not be enough to continue to provide the current level of services without additional revenue. A special variation to increase rates (as the Council has proposed) is the process made available to local governments by the State Government to increase rates revenue when required, particularly if funding is needed for ageing facilities and infrastructure. Annually around 20 – 30 NSW councils apply for a special variation and applications will only be approved if a council proves a sound business case, including the implementation of all possible alternatives for productivity savings and revenue raising.

Perceived mismanagement of investment funds by the Council

Blue Mountains City Council just like many other councils, charities, superannuation funds and financial institutions, invested in structured products under the advice of investment financial advisors and within State Government legislation of the time. As has been well documented the GFC (including the collapse of Lehman Brothers and many other financial institutions) had significant impacts on businesses that held structured products in their investment portfolios. The Division of Local Government has since amended and updated the Ministerial Investment Order that applies to all NSW councils. In turn, Blue Mountains Council has amended its Investment Policy and Strategy to align with the new requirements. The Council’s new investment policy and strategy adopted by the Council has the following purpose and objectives: “To comply with the Ministerial Investment Order issued in February 2011 which states: “An investment is not in a form of investment notified by this order unless it also complies with an investment policy of council adopted by a resolution of council. All councils should by resolution adopt an investment policy that is consistent with this Order, and any guidelines issued by the Chief Executive (Local Government), Department of Premier


Comment Raised

Response

and Cabinet, from time to time. While exercising the power to invest, consideration needs to be given to preservation of capital, liquidity and the return in investment.

(a) Preservation of capital is the principal objective of the investment portfolio. Investments are to be performed in a manner that seeks to ensure security and safeguarding the investment portfolio. Officers are to manage the investment portfolios to safeguard the portfolios in accordance with the spirit of this Investment Policy and the Ministerial Investment Order, and not for speculative purposes.

(b) The investment portfolio will ensure there is sufficient liquidity to

meet all reasonably anticipated cash flow requirements, as and when they fall due, without incurring significant costs due to the unanticipated sale of an investment.

(c) The investment is expected to achieve an acceptable rate of

return having reference to the Council’s risk tolerance. Any additional return target set by the Council will also consider the risk limitation and prudent investment principles.

The Councils investment strategy since the start of the GFC has been to place all new investments only with the four major banks, including St George which is part of the Westpac Group and Bankwest which is part of the Commonwealth Bank of Australia Group.


2012 Telephone Survey on Proposal to Continue

Expiring Special Variation to Rates for Infrastructure

Report

Prepared for

Prepared by

IRIS Research Ltd

December 2012

IRIS Research ABN 16 002 278 793 Level 1, IC Central, Innovation Campus, Squires Way, Fairy Meadow

Postal address: Northfields Ave, Wollongong NSW 2522. Telephone: (02) 4285 4446 Fax: (02) 4285 4448 Net: http://www.iris.org.au Email: [email protected]

I n s i g h t f o r B u s i n e s s & G o v e r n m e n t

ATTACHMENT GATTACHMENT 7

Blue Mountains City Council – Special Variation to Rates Survey 2012 2

TABLE OF CONTENTS

EXECUTIVE SUMMARY ....................................................................................... 3

1 INTRODUCTION ........................................................................................... 5

1.1 BACKGROUND .................................................................................................................................... 5 1.2 RESEARCH OBJECTIVES ........................................................................................................................ 5 1.3 RESEARCH METHODOLOGY .................................................................................................................. 5 1.4 SURVEY RESPONSE ............................................................................................................................... 6

SURVEY RESULTS ................................................................................................. 7

2 SUPPORT FOR PROPOSED SPECIAL VARIATION ......................................... 8

2.1 ASSESSING PREFERENCE ....................................................................................................................... 8 2.2 EVALUATING OPINION FOR NON SUPPORT .......................................................................................... 10 2.3 SATISFACTION WITH PROPOSED EXPENDITURE FOCUS ............................................................................ 14

3 RESPONDENT CHARACTERISTICS ............................................................. 17

3.1 SEX ...........................................................................................................................................17 3.1 AGE ................................................................................................................................................ 17 3.1 LOCATION ........................................................................................................................................ 18



EXECUTIVE SUMMARY This report presents the results of the Blue Mountains City Council

continuation to the special variation to rates survey, 2012. IRIS Research

was commissioned by Council to conduct a comprehensive telephone-

based survey among the area’s rate payers. The survey sought to gauge

community support and reaction to a proposed continuation of the

special variation to rates.

The key finding of this survey is a large majority of rate payers (76.1%) in

the Blue Mountains Local Government Area would prefer a continuation

of the special variation to rates.

A series of questions were posed to the 23.9% of rate payers not

supporting continuation or supporting it with conditions in order to explore

their opinions further; It was found that a further 6.5% of rate payers would

support a proposal for a rates variation of a lesser amount. This would

indicate around 82.6% (6.5% + 76.1%) of rate payers would support a

continuation of the special variation to rates with a proportion of those

supporting with conditions.

Further exploration of the opinions of the 23.9% group revealed the

following findings;

Preference for reduction in services over a rates rise

The key themes for not supporting the proposed special variation to rates

included a perception of not currently receiving value for rate dollars, rate

rise being unaffordable and Council should be better managed.



Which services and facilities should be reduced

Rate payers not supporting the proposal were asked which services and

facilities should be reduced. It was found that the most popular

suggestions included; Council should reduce its own expenditure on

overseas trips and Council meetings, sporting facilities and parks, followed

by roads and foot paths and the cultural centre.

Circumstances where non supporting rate payers would support special variation

Conditions where supporting a continuation in the special variation to

rates included if Council was accountable and could demonstrate

improvements, if improvements were made in the local area and if it sped

up the road upgrade.

Around 27% of those rate payers indicating they prefer a reduced level of

service to a continuation, would actually support the proposal but at a

lesser amount.

Satisfaction with proposed expenditure focus

A satisfaction mean score of 3.37 out of 5 was given for the proposed

allocation of the special rates variation funds. This score falls in the

medium level of agreement range (3.00 to 3.74). In terms of proportions

50% have a high level of satisfaction whilst only around 20% had a low

level of satisfaction and 30% gave a medium level satisfaction rating.



1 INTRODUCTION

1.1 BACKGROUND

IRIS Research was commissioned by Blue Mountains City Council (BMCC)

to undertake a survey of rate payers within the BMCC Local Government

Area. In 2010 BMCC obtained approval for a special rates variation of

4.4% to secure funding for maintaining and renewing built community

assets. The variation is due to expire on 30th June 2013. This quantitative

study is one component of BMCC’s engagement with the community on

the topic of the proposal to apply for a continuation of the current special

variation to rates.

1.2 RESEARCH OBJECTIVES

The main objectives of this study were;

To assess the level of support and reaction to Council’s proposal

to apply for a continuation of the current special variation to

rates.

To explore rate payer opinion for not supporting a special

variation to rates.

1.3 RESEARCH METHODOLOGY

The methodology for this quantitative study was chosen in order to best

meet the client's information requirements and desired level of accuracy.

Data collection was conducted following an information package

containing a letter and fact sheet being mailed out to all resident rate

payers explaining Council’s proposal of an application for a continuation

to the current special variation to rates. The questionnaire was only



administered to those rate payers that have received and read the

information package.

The questionnaire was administered using IRIS’s CATI facility. CATI

facilitates strategies to combat non response using time shifted retries for

non contacts and a callback facility for the convenience of respondents.

Adult decision makers were randomly selected across the local

government area in proportion to population densities ensuring a

geographic spread, an approximate 50:50 sex split of decision makers was

achieved and a spread of age groups together combine to deliver a

representative sample.

1.4 SURVEY RESPONSE

Interviews were conducted over four evenings commencing the 3rd of

December 2012 between 4.00 and 8.30 p.m. An overall compliance rate

of 82% was achieved which is considered a very good result. Given the

level of response to the survey and the fact that it represents a very good

cross-section of the area the findings presented in this report provide a

very good basis for gauging community opinion.

A final sample of 401 adult rate paying decision makers was achieved.

The maximum error on proportion for the total sample is +/- 4.9%.

The following tables indicate the key survey findings.



SURVEY RESULTS



2 SUPPORT FOR PROPOSED SPECIAL VARIATION

2.1 ASSESSING PREFERENCE

Residents were given a summary of the background to Council’s proposal

and the need for the continuation of the special variation to rates and

then asked the following;

Considering the proposal, would you prefer to continue the current special variation to rates or not continue it and reduce rates and the level of service and facilities the council provides to the community?

Table 2.1 Support for Special Variation to Rates

76.1

23.9

Continue the current special variation to rates

Not continue it and reduce rates and the level of service and facilities the Councilprovides to the community

Key finding;

o 76% of rate payers would prefer to continue the current special

variation to rates rather than a reduction in services and facilities.



o We can be 95% confident the true population proportion lies

between 71.9% and 80.3% in terms of preference for an increase in

rates.

o No significant difference was found between age or sex.



2.2 EVALUATING OPINION FOR NON SUPPORT Section 2.2 explores the opinions of those rate payers (23.9%) not

supporting a continuation of the special variation to rates. Question

topics include why this group would not support a rates rise, which

services and facilities should be reduced, circumstances where they

would support a rates increase and what proportion would support a

proposal of a lesser amount.

Given you would prefer a reduction in services and facilities over maintaining rates at their current level, what is your main reason why you prefer this? Residents were given the opportunity to explain the reasoning behind their

preference for a reduction in services and facilities over a special rate

variation (SRV) continuation. Table 2.1 below summarises the findings.

Table 2.1 – Preference Service reduction

Reason

% of comments

n = 94* Not getting value for rate dollars now 29.8

Unaffordable / Too expensive / already high 25.5

Council needs to be better managed 13.8

Spending improvements target some areas not all 8.5

Council wastes money 7.4

Council should become more efficient 4.3

Other 10.6 Not all respondents provided a reason for their preference Counts less than 5 appear in other

The most popular reasons for preferring a reduction in services were that

rate payers felt they were not getting value for money from their rates at

the moment (30%), the rate rise was unaffordable (26%) or that rather than

a rate rise Council should become better managed (14%).



What services and facilities do you think should be reduced?

Further questions were asked of rate payers preferring for a reduction in

services and facilities over a rate continuation. The first question sought

the services and facilities that rate payers believed should be reduced.

Table 2.2 below summarises the findings.

Table 2.2 – Services and facilities to be reduced

Suggested Reduction

% of comments

n = 50* Council functions / activities 22.0

Sporting facilities / Parks 12.0

Roads / footpaths 10.0

Cultural centre 8.0

Other 48.0 Not all respondents provided a reason for their preference percentages being calculated based on the total number of responses provided Counts less than 3 appear in other

Overseas trips for Councilors, wage reductions, sister city program and

expenses relating to Council meetings were some of the themes

mentioned within the ‘Council functions / activities’ category (22%). The

next most popular category was sporting facilities and parks (12%),

followed by roads and footpaths (10%).



Can you identify any circumstances where you would support the continuation of the current special variation?

Again rate payers not supporting the proposed rate increase were asked

if there were any circumstances or conditions where they would accept a

continuation of a special variation to rates to generate additional

revenue. Table 2.3 below summarises the findings.

Table 2.3 – Circumstances for supporting proposal

Circumstances / Conditions

% of comments

n = 96* If Council was accountable / demonstrate improvements 12.5

If ensure improvements were made in local area 6.3

If speed up road up grade / kerb / guttering 4.2

Other 17.7

None 59.4 Not all respondents provided a reason for their preference Counts less than 5 appear in other

A proportion of those rate payers preferring a reduction in services and

facilities over a rates rise gave some conditions where they would support

a continuation to the special variation to rates and these included; if

Council was accountable and able to demonstrate improvements (13%),

if improvements were made across the LGA or within local areas where

revenue was collected (6%) and if money raised would speed up the

road, kerb and guttering upgrade (4%).

The other category contains a wide range of varying conditions all with

counts less than five mentions.



Would you support a proposal for a rates variation of a lesser amount? If so, what would you be prepared to pay on a yearly basis?

Again rate payers not supporting the proposed rate continuation were

asked if there were any circumstances or conditions where they would

accept a rates continuation of a lesser amount. It was found that 27.1%

of these residents would consider a lesser amount. Table 2.4 below

summarises the amount or percentage that the 27.1% of residents would

support. The upper part of table 2.4 displays the answers where

respondents gave a dollar amount whilst the lower part displays answers

when a percentage increase was given.

Table 2.4 – Circumstances for supporting proposal

Amount $ / % %

n = 26 $0 30.7

$20-$30 38.4

$35 3.8

$40-$50 7.6

1.5% - 2.5% 11.5

3% - 3.4% 7.6

Around 31% of rate payers not supporting the proposal would not specify

a dollar amount whilst 38% said between $20 and $30 whilst just over 10%

said $35 or more on a yearly basis.

It was also found that some residents (12%) would agree to paying 1.5% to

2.5% on top of their normal rates bill with a further 8% willing to pay 3% to

3.4%.



2.3 SATISFACTION WITH PROPOSED EXPENDITURE FOCUS

Section 2.3 contains an assessment of the level of satisfaction that rate

payers have with the proposed expenditure focus for funds obtained from

the special variation. This section concludes with general comments from

all rate payers.

How satisfied are you with the proposed expenditure focus of the special variation funds obtained being mainly on road maintenance with some funding for storm water facilities, park facilities and sports grounds?

All rate payers were asked to rate their level of satisfaction with how

Council proposes to allocate funding raised from the special variation.

Chart 2.1 below displays the distribution of responses.

Chart 2.1 – Satisfaction with expenditure focus

10.2 9.7

29.9

32.7

17.5

0

5

10

15

20

25

30

35

1. VeryDissatisfied

2 3 4 5. Very Satisfied

%

Mean Score: 3.37

Low Sat - 19.9

Medium Sat - 29.9

High Sat - 50.2

10.2 9.7

29.9

32.7

17.5

0

5

10

15

20

25

30

35

1. VeryDissatisfied

2 3 4 5. Very Satisfied

%

Mean Score: 3.37

Low Sat - 19.9

Medium Sat - 29.9

High Sat - 50.2



A satisfaction mean score of 3.37 out of 5 was given for the proposed

allocation of SRV funds. This score falls in the medium level of agreement

range (3.00 to 3.74). In terms of proportions 50% have a high level of

satisfaction whilst only around 20% had a low level of satisfaction and 30%

gave a medium level satisfaction rating.

No significant differences were found by age or sex of rate payer.

Do you have any other comments on the Council’s proposal to continue the current special rates variation to enable it to continue to maintain and renew the City's assets?

All rate payers were given on opportunity to provide any general

comments. Table 2.5 below summaries the findings.

Table 2.5 – General Comments

Comments %

n = 401* So long as money is used as promised with focus on roads 8.0

It’s ok / go ahead 4.7

Ensure money is spent in area where it's raised / all areas to benefit 3.7

Council needs to better manage money / become more efficient 3.3

More information required on need for SRV & its uses 2.5

Focus on footpaths / kerb and guttering 2.2

Fairer method to levy rates needed especially for elderly and low income 2.0

Not justified / disagree / not happy 1.8

Council wasteful 1.5

Tight controls / overseen carefully / transparency / accountability 1.5

SRV funds should be spent on schools and parks 1.3

Other 16.9

No comment 50.6 Counts less than 5 appear in other



Around 8% of rate payers made the comment that they are happy for

Council to continue the SRV so long as they spent it as was promised. The

next most popular comment (5%) was that rate payers are generally

happy for Council to proceed and that it is ok to go ahead. The third

most popular comment (4%) was that rate payers would like

improvements to be distributed across the whole LGA rather than just

some areas. Alternatively, improvement works should be made in the

communities from which the funds were collected.

Half of all rate payers declined to give a comment whilst around 17%

gave a comment that was grouped into 'other' as they did not fit into one

of the major comment categories.



3 RESPONDENT CHARACTERISTICS

3.1 Sex

Are you a ....

Frequency Percent Valid Percent Cumulative

Percent

Valid

Male 178 44.4 44.4 44.4

Female 223 55.6 55.6 100.0

Total 401 100.0 100.0

3.1 Age

Please stop me when I read out the age group you are in ...


Percent

Valid

25 to 39 40 10.0 10.0 10.0

40 to 54 96 23.9 24.0 34.0

55 to 64 113 28.2 28.2 62.3

65 years plus 151 37.7 37.8 100.0

Total 400 99.8 100.0

Missing Refused 1 .2

Total 401 100.0



3.1 Location

Which town or village do you live in?


Percent

Valid

Blackheath 23 5.7 5.7 5.7

Blaxland 35 8.7 8.7 14.5

Bullaburra 11 2.7 2.7 17.2

Faulconbridge 23 5.7 5.7 22.9

Glenbrook 25 6.2 6.2 29.2

Hawkesbury Heights 2 .5 .5 29.7

Hazelbrook 20 5.0 5.0 34.7

Katoomba 27 6.7 6.7 41.4

Lapstone 8 2.0 2.0 43.4

Lawson 14 3.5 3.5 46.9

Leura 27 6.7 6.7 53.6

Linden 2 .5 .5 54.1

Medlow Bath 4 1.0 1.0 55.1

Mount Riverview 4 1.0 1.0 56.1

Mount Victoria 10 2.5 2.5 58.6

Springwood 44 11.0 11.0 69.6

Valley Heights 11 2.7 2.7 72.3

Warrimoo 15 3.7 3.7 76.1

Wentworth Falls 39 9.7 9.7 85.8

Winmalee 39 9.7 9.7 95.5

Woodford 10 2.5 2.5 98.0

Yellow Rock 4 1.0 1.0 99.0

Other but in Blue Mountains

Council Area 4 1.0 1.0 100.0

Total 401 100.0 100.0


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