Ratepayers tell Bega Valley Shire Council to cut services because they can't afford a 90% rate increase

Mr McMahon said as part of the assessment, the consultants would make a recommendation to council.

The assessment will be used when council debates what general rate increase, if any, above the rate peg of 4.1 per cent for the year 2023/24, will be submitted to IPART (Independent Pricing and Regulatory Tribunal) for approval.

Four options are under consideration, (A) 90 per cent increase, (B) 45 per cent increase in 2024 and 37.2 per cent in 2025, (C) 43 per cent increase and (D) no increase above the 4.1 per cent rate peg. Increases apply to the general rate and would be applied permanently.

Council staff recommended option A but not surprisingly the suggestion of a 90 per cent increase is getting blowback, with ratepayers at the Pambula meeting on November 30 saying there was no capacity to pay and council needed to cut services instead. Ratepayers also expressed concern that any rate increase would put rents up in an extremely difficult rental market.

Mr McMahon was asked what would happen to those unable to afford such increases.

"People would have to make hard decisions about what they're going to do," he said.

READ ALSO:

The meeting was told 43 per cent of ratepayers didn't have a mortgage. Mr McMahon said there were differences in demographics and wide variations in incomes.

While some ratepayers don't have mortgages, they may be on fixed incomes from pensions with little capacity to absorb a $1000 plus/90 per cent increase on their general rate for those with a land value of $199,900.

The increases are over $2500 in the first year for average business land (valued at $340,000) and average farmland (valued at $734,040).

Although the crowd was small, there was no shortage of questions or comments. Council was asked how things had moved from discussion of 35 per cent rate increase in May 2022 to 90 per cent now.

READ MORE: Pay extra rates or lose services says Bega Valley Shire Council as it sets its course for 35% rate rise

Despite Mr McMahon's protest that media reports at the time were misleading, the 35 per cent option was a recommendation of council staff. But he said council didn't have detailed information at that time, of what might fail (in terms of assets).

"The main gap was around capital expenditure," he said.

Council based its long-term financial plan on financial modelling assumptions and estimates from March and April 2022 but rapidly rising inflation, ongoing cost escalations, material and contractor supply issues have had an effect and council undertook further revaluation of its assets.

Council said costs for renewing or rebuilding assets had been based on older figures.

"In the next 10-year period, there is a need to replace a number of large value assets that are at the end of their lives and have not yet been replaced," council said. These include Bega Pool, Merimbula Boardwalk and Cuttagee Bridge.

READ MORE:

Mr McMahon said not replacing them risked unplanned failure and closure or for bridges the imposition of load limits.

There are concerns around Six Mile Bridge on Mount Darragh Road where a load limit could end up restricting trucks from using the road and remove the alternative to Brown Mountain as an east/west route.

Now with the previous long-term financial plan in the bin, a new but incomplete plan has been produced which only shows the ailing general fund rather than a broad view across all of council's finances including the water and sewer funds.

Council has said consolidated scenarios including waste, water and sewer funds are under review and will be included in the revised LTFP prior to adoption in early 2023.

READ ALSO: Prospective Bega Valley councillors warned more work needed on finances

Ratepayers also wanted to know what services would be cut if option C was taken. They wanted examples they could assess but Mr McMahon was not able to provide any.

He did say that if council halved all its asset-based services that aren't road, bridge, drainage or footpath related it would only reduce expenditure by $4.5m a year and the gap between what council would receive from a 90 per cent rate increase and option D, no increase above rate peg, is almost $26m.

Mr McMahon was asked what services could be cut to reduce the need for that amount of money.

"That is the question," he said.

Council says option D is financially unsustainable and ultimately could risk going into administration.

Council said it had developed and adopted multiple LTFPs in the last five years that all indicated the need for an SRV to increase revenue to close the widening gap between income and expenditure.

The need for proper asset management goes back to around 2011 when Professor Percy Allen's report was undertaken to look at the state of council's assets.

At the time there was a recommendation for a regular 2 per cent increase in rates in order to bring asset management under control the mayor Russell Fitzpatrick said but councillors had no appetite for the increase.

Council said it had received over 250 submissions on the rate increase proposals.

So far councillors and staff have attended three market days in Eden, Merimbula and Cobargo, four presentation sessions at the Bega Commemorative Civic Centre on November 28 and another four in Pambula on November 30. Bermagui markets are on December 1, followed by Candelo markets on December 4.

An online meeting open to all is scheduled for Monday, December 5 from 6pm-8pm.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can access our trusted content:

Bookmark www.begadistrictnews.com.au

Make sure you are signed up for our breaking news and regular headlines newsletters

Follow us on Twitter: @Bega_News

Follow us on Instagram: @begadistrictnews