Special Rate Variation Community Engagement Report - Shoalhaven City Council

a strategy designed to raise rates very quickly and to proceed to expend those revenues under these
current sourcing models.
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Until these concerns can be allayed, and until the wider options for delivering sustainable
service delivery and funding running forwards have been thoroughly explored, moving too
rapidly to raise rates and expend the revenues through traditional sourcing approaches
appears very high risk from a ratepayer perspective.
This adds an extra dimension to the risk that ratepayers could be forced to pay more than
is necessary to ensure viable delivery of an appropriate range of services.
Thoughts on a way forward
Against this background, the CCBs are proposing an approach that addresses all three potential instruments
for achieving a viable and sustainable solution in a way that best meets ratepayer needs. This is stated as a
basis for discussion only – but does include measures that address many of the concerns while maintaining
a focus on sound funding. Key elements in this approach include:
1. Council to proceed to rates revision in a much less aggressive form than any of its formal proposals,
recognising that this could imply a delay in acting on some of the proposed projects and may bring
with it some higher costs in the future, if alternative efficiencies are not found
o Our proposal is that, for the next round of rates, these be held to the peg, creating time for
consideration of alternatives in some depth, and hence guarding against the real risk of
getting it badly wrong, to the detriment of ratepayers
o Effectively, this implies a 12 month delay in any aggressive move to use higher rates to
address Council concerns, with the reduced revenues partially covered by delaying some
major expenditures, with this approach in turn delivering scope for greatly reducing the
risks of imposing rate increases that are in fact excessive to need, or locking in
expenditures that are not cost effective after taking into account their implications for
ratepayer charges
2. Utilising this period of delay, Council to work with the CCBs in building trust in the process and the
underlying numbers. We believe this is likely to require, as one ingredient, an independent and
professional review of the projections on which the proposals are based, including consideration of
better approaches to managing the risks inherent in forward cost uncertainties. In the first
instance, we would seek to work with Council in building our understanding of the accounts and
the associated cost drivers; to consider whether there are any errors or distortions in the reporting,
accounting and forward projections where a better understanding may point to opportunities to
better address forward needs; and to explore opportunities for tapping into greater efficiencies as
a contributor to forward funding needs:
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What has been driving the above trend increases in staff costs and are there any lessons?
Do the asset valuations and treatment of depreciation build a balanced view of the
associated costs?
Are there opportunities to test the efficiency of the delivery models through selective
additional outsourcing of some services?
How confident is Council of the efficiency of its contracting and project management
activities in relation to major new projects and capital renewal – are there lessons to be
learnt ahead of committing to major capital renewal in relation to roads etc?
Recognising the possibility that the proposed rate increases could be excessive to need,
what are the implications of taking a more adaptive approach to bridging the uncertain
gap? What of a less aggressive approach to initial rate rises while working to increase
procurement and wider efficiencies and using the growing information on costs and needs
to fine-tune the rates strategy over time? What if this is also tied into the next element in