Securing our Future - important information about your Council rates and services

Lake Macquarie City Council phone: 02 4921 0333 fax: 02 4958 7257

web: www.lakemac.com.au email: [email protected] post: Box 1906 HRMC NSW 2310Designed by Lakemac Print.

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We’ve listened. Now it’s time for you to tell us your preferred funding option.

Important information about your Council rates and services.

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RECENT ACHIEVEMENTSLake Macquarie City Council achieved 83% of its Operational Plan targets last fi nancial year (2010/2011), with major highlights being environmental works on 26 sites around the City, completion of the Fernleigh Track to Belmont, and receiving a national award for climate change adaptation programs.The fi nal stages of the Fernleigh Track offi cially opened in April, and the 15km route now links Adamstown to Belmont. It has become one of the region’s most popular shared pathways.

Council was named 1 of 6 Climate Change Adaptation Champions from around Australia for the steps we have taken to prepare for the impact of climate change. Since 2007, Council has actively researched and taken action to adapt to predicted changes, with a priority on the effects of sea level rise and increased fl ooding.

Families are taking advantage of the now complete Lake Macquarie Variety Playground, which boasts a fl ying fox, climbing structure, amenities building, and cafe. The playground has special features for children with disabilities, and continues to be one of the most loved attractions in our City.

Lake Macquarie’s biggest and best skate park is also proving very popular. The new park in Chapman Oval, Swansea, was offi cially opened in March. The 60m long skate park was designed in collaboration with local users.

Council’s inaugural Living Smart Festival attracted a crowd of 8,000 to Speers Point Park last year. The event is an educational and inspirational celebration of sustainable living through music, dance, performance, workshops, art, fashion, and food. This year’s event will be held on Saturday 19 November and will feature the Hunter Valley Electric Vehicle Show.

MAYOR’SINTRODUCTION

Council is considering making an application to the Independent Pricing and Regulatory Tribunal (IPART) for a special rate variation to secure the funding our City and community will need for future works and services.

Our aim is to provide the best possible services to our community while remaining fi nancially sustainable into the future.

Council has managed to balance its budget for many years, but with each passing year this has become increasingly diffi cult. It is clear that ‘business as usual’ is no longer an option and that we need to change the way we fund our assets and services, or go down the path of making some serious cuts.

Council undertakes extensive community consultation each year as we develop our operational plans and delivery programs. We have undertaken more consultation in 2011 as we look to confi rm which services you value the most, and try to strike the right balance between the services you want and those you are willing to pay for through your rates.

Many people attended the series of Securing our Future community workshops held in July, joined our online forum, and used our budget allocator tool over recent months. Most participants were reluctant to see cuts to services or the sale of Council assets to fund budget shortfalls. Indeed, many indicated they would be happy to see an increase in rates to maintain or improve the services and assets they value, so long as the increase was reasonable.

Based on this feedback, Council has developed three funding options to present to the community for consideration.

These options, explained on pages 6-13, have been based on community priorities identifi ed through the Securing our Future consultation. The options also respond to the community’s vision as refl ected in our 10 Year Community Plan.

We are asking you to tell us which of these three options you prefer. We will use the results of feedback from the community to determine the level of rate increase we will seek from IPART. The fi nal decision on whether Council can increase its rate income will be made by IPART in June next year.

I urge you to take the time to read the information contained in this brochure and tell us your preferred option. Your feedback will have an effect on the future of Council and the City of Lake Macquarie.

Councillor Greg PiperMayor of Lake Macquarie

Lake Macquarie City Council recently won a Local Government Award for Excellence in Financial Reporting for the presentation of our 2009/2010 Financial Statements.

Important information about your Council rates and services 3

People who live in Lake Macquarie value a quality lifestyle, based around our beautiful lake, coastline, and bushland.

For Council, delivering this quality of life comes down to maintaining and improving our assets – our natural environment, as well as our community infrastructure – our roads and cycleways, sporting and cultural facilities, parks and playgrounds, and vibrant town centres.

This vision is captured in our 10 Year Community Plan, which sets out our shared goals and aspirations for the future.

While we are committed to this vision, like many other councils in NSW we face fi nancial pressures. Rising costs and limits to our income mean that without securing additional funds, Council can no longer deliver the services and infrastructure our community needs and expects.

This booklet explains three funding options Council has developed in consultation with the community.

Option 1: Reduce Services – Maintain Rates

Option 2: Maintain Services – Increase Rates

Option 3: Improve Services – Increase Rates

We’re inviting you to fi nd out about each option, and tell us which one you prefer.

WHAT WE ARE ASKING YOU TO DO

Find out why Council is looking to increase rates see page 4

Find out about the fi nancial challenges facing Lake Macquarie, and why Council is seeking feedback on a rate increase now. Read about what Council has been doing to improve our fi nancial situation and reduce the burden on ratepayers.

We explain how our rates and other fees and charges work, and how they compare to those of similar NSW councils.

Understand the three funding options see page 6

Read about the three options and what they mean for you. You can use our calculation tables to understand how each option will impact on your rates.

Tell us your preferred option see page 16

Once you’ve decided which option you think is best, tell us!

See the back page of this booklet for details of how to register your choice by post, online, or at one of our community forums in November.

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WHAT YOU NEED TO KNOW

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OUR CURRENT SITUATIONIn past years, Council has consistently delivered balanced budgets. However, cost increases have meant we have had to draw on the City’s asset replacement reserves to achieve this result. The reality is, our operating defi cit will continue to increase in years to come unless changes can be made. If things stay the same, a $132M budget defi cit is projected over the next 7 years.

Current economic and legislative conditions – rate pegging, cost shifting from other levels of government, and increasing costs – have all restricted our ability to meet existing and emerging community priorities from current income.

Council has an extensive asset base, valued at over $2 billion. Most of this is infrastructure used for the delivery of services for the community, including roads, bridges, drains, buildings, and parks. These assets deteriorate over time and eventually require replacement. As Council has not had suffi cient funds to maintain and replace its infrastructure, a backlog of works has built up. The current estimated cost to bring the infrastructure up to a satisfactory standard is $67M.

Deteriorating infrastructure is a major issue for local government across Australia. In 2006, the total infrastructure backlog for all NSW councils was estimated at $6.3 billion.

Faced with these challenges, Council has fi rst looked at ways to save money and increase income.

How do we know Council is effi cient?Council commenced a comprehensive Service Review in 2009, which demonstrated that our operations are already lean. This analysis is supported by the Division of Local Government’s comparative data, which shows that our expenses per capita from continuing operations are below the average for NSW councils.

Council made approximately $4M in savings and improvements across the organisation as a result of the review. By changing our purchasing practices we saved $2.4M. The total benefi t of the service review is estimated to be $10M to $14M, achieved through effi ciencies, savings, and additional income.

What is being done to develop new income streams?Council is developing a range of entrepreneurial activities to generate additional revenue and reduce the burden on

ratepayers. This includes establishing LakeMac Enterprises, which has a strong focus on providing services to other NSW councils. It is anticipated that LakeMac Enterprises can generate in excess of $1M for Lake Macquarie City Council within 5 years.

Why is Council looking to increase rates now?To achieve fi nancial sustainability and manage the community’s infrastructure, we either need to increase our income by increasing rates, or reduce our expenditure by decreasing the level of services we provide to our community.

If NSW councils want to increase rates beyond the rate peg amount they have to apply to IPART for a special rate variation, and in doing so must demonstrate extensive consultation and signifi cant support from the community.

Securing our Future is a 6-month consultation process Council is conducting with a view to making an application to IPART in 2012. Applications close on 24 February 2012 for rate increases commencing in the 2012/13 fi nancial year.

You can fi nd out more about Council’s fi nancial management by visiting www.haveyoursaylakemac.com.au/securingourfuture and downloading our information sheets on Services, Revenue and Expenditure, Sustainability, Effi ciency and Enterprise, and Assets.

HOW OUR RATES COMPAREOur rate revenue per capita is low in comparison to similar NSW councils. This is despite having a larger population to service than most of our comparable councils except for Wollongong, whose rates are much higher.

WHAT IS RATE PEGGING?Rate pegging is the percentage limit by which all councils in NSW may increase the total income they will receive from rates. The rate peg is set annually by the Independent Pricing and Regulatory Tribunal of NSW (IPART). The rate peg amount for the 2011/12 fi nancial year is 2.8%.

$473 $527 $642

$540 $438

$384

$0

$100

$200

$300

$400

$500

$600

$700

2009/2010 AVERAGE EMPLOYEE COST PER CAPITA

Group 5 Councils

$473 $527$642

$540$438 $384

Lake

Macquarie

WollongongTweed

Shoalhaven

NewcastleCoffs

Harbour

2009/2010 TOTAL RATE REVENUE PER CAPITA

$383 $534

$451 $441 $531

$371

$0

$100

$200

$300

$400

$500

$600

Group 5 Councils

$383$534 $451 $441

$531$371

Lake

Macquarie

WollongongTweed

Shoalhaven

NewcastleCoffs

Harbour

Source for tables above and left: Division of Local Government, Comparative Information on NSW Local Government Councils 09/10 - DLG Snapshot of NSW Councils.

Australian Bureau of Statistics, Population Estimates by Local Government Area, 2001 to 2010.

*Note: Group 5 is a collection of councils throughout NSW – they are deemed comparable as regional councils, part of an urban centre with a population over 70,000, and predominantly urban in nature, as determined by the Division of Local Government.


Some properties not on mains sewerage may also pay an effl uent removal charge. For more information about our rates and charges, and how they are calculated, visit www.lakemac.com.au/council/rates

RATE CATEGORIES

ORDINARY RATE (includes Sustainability Levy) Residential Business Farmland Mining

Base Amount A fl at rate that applies to all rateable properties. In 2011/12 this is $475.06 per residential property.

✓ ✓ ✓ ✓

Ad Valorem (land value) A variable rate based on the value of your land. In 2011/12 for a residential property with a land value of $210,500, this is $474.90.

✓ ✓ ✓ ✓

ANNUAL CHARGES Residential Business Farmland Mining

Domestic Waste Management Charge

A fl at rate calculated annually on a cost recovery basis. In 2011/12 this is $349.50 per property. In 2012/13 this will be $370.50.

✓ ✗ ✓ ✗

Commercial Waste Charge A fl at rate calculated annually. In 2011/12 this is $320.00 per property. In 2012/13 this will be $362.00.

✗ ✓ ✗ ✓

HOW OUR RATES WORKCouncil rates are determined in accordance with the provisions of the Local Government Act 1993. This legislation provides the mechanisms to calculate rates and limits the income councils can derive from rates.

Each property in Lake Macquarie falls into 1 of 4 categories for rating purposes depending on the land use of the property.

These categories are residential, business, farmland, and mining. Council decides which category your property should be in based on its land use.

Rates are calculated annually, and include the ordinary rate and annual charges. The ordinary rate includes a fl at base amount, plus an ad valorem amount, which is based on the value of your land. The ordinary rate also includes the Sustainability Levy.

Land valuation is conducted every 3 years by the NSW Valuer General. The land value does not include the value of your house, buildings, or other improvements to the land. Council uses this fi gure to calculate the ad valorem amount to refl ect any changes in the value of your land.

Sustainability LevyCurrently the ordinary rate includes a special variation known as the Sustainability Levy. This Levy was introduced in July 2009 to fund environmental projects, including continuation of lake water quality improvement works. The Levy fi nishes in 2014. See page 14 for further detail.

Domestic Waste Management ChargeThe domestic waste management charge is an annual charge for waste services that is listed as a separate amount on your residential or farmland rates notice.

It includes a levy charged by the state government. Most NSW councils have to pay the levy, which they then have to pass on to ratepayers on a fee for service basis. Councils are not permitted to make a profi t or loss.

In 2011/12 this charge is $349.00 for Lake Macquarie. For this, residents get a weekly kerbside collection, a fortnightly recycling collection, bi-annual bulk waste collections, eWaste drop offs, and clean-out services for the disposal of chemicals, sharps and oils. Awaba Waste Management Facility is also partly funded through this charge. In 2012/13 the charge will be $370.50.

Division of Local Government analysis shows that while our residential rates are below average in comparison with the fi ve councils we are grouped with, our business rates are much lower. In fact, they fall well below the NSW State average.

Keeping our business rates at an affordable level is an important way that Council supports local enterprise and encourages employment close to the places we live. However, this analysis indicates an argument for a reasonable increase to bring Lake Macquarie’s business rates in line with the average business rates for our comparable councils.

2009/2010 RESIDENTIAL - AVERAGE RATE PER ASSESSMENT

2009/2010 BUSINESS - AVERAGE RATE PER ASSESSMENT

HOW OUR RATES COMPARE

Source: Division of Local Government, Comparative Information on NSW Local Government Councils 09/10 - DLG Snapshot of NSW Councils.

Australian Bureau of Statistics, Population Estimates by Local Government Area, 2001 to 2010.

Group 5 CouncilsGroup 5 Councils

Lake

Macquarie

WollongongTweed

Shoalhaven

NewcastleLake

Macquarie

WollongongTweed

Shoalhaven

NewcastleCoffs

Harbour

Coffs

Harbour

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Option 1: Reduce Services – Maintain Rates Average residential and business rate increase each year over 7 years: 3% rate cap only. 3% is the expected rate cap to be set annually by IPART. If the actual percentage set by IPART is lower in the 7 years, then further reductions in spending will be required.

This option will see a dramatic difference in community infrastructure and services over the next 7 years. With income restricted by the rate peg, Council will need to make some big changes to meet rising costs and achieve a balanced budget.

Reduction in maintenance of our City’s assets and infrastructure$20.8M will be saved over 7 years through a major reduction in city infrastructure maintenance. Without regular maintenance, the quality of our infrastructure and environment will decline over time, and more expensive reactive and emergency work may be needed.

Consequences could include:

• Longer response times for requests for graffi ti removal, tree lopping, and vandalism repairs.

• Less frequent mowing, weed removal and spraying, gutter cleaning, and litter collection. This would result in a reduction in standards for users. For example, the grass in our parks and playing fi elds could be longer. Our wetlands could also become choked with weeds and litter.

• Safety and environmental hazards may increase, for example trip hazards, unsafe trees, bushfi re hazards, and soil erosion.

Roads and drainage works reduced

With $24.1M less budgeted for roadworks, such as kerb and guttering and resealing, the quality of our roads will decline to a ‘fair’ condition within 10 years.

The budget for replacement of failed drainage systems and fl ood mitigation measures will reduce by $3.9M over 7 years. This will make it harder for our drainage system to cope with major fl ooding events.

Reduction in environmental programs and worksThe Sustainability Levy will not be extended beyond 2014. As a result there could be a decline in the quality of our lake, coastline, and bushland. Vegetation maintenance programs for our foreshore reserves and for bushfi re management will be affected. Environmental works and programs, such as lake water quality programs, will reduce signifi cantly, as will programs to minimise pollution, waste generation, and resource consumption.

Closure of major community facilities To save money, Council will need to close a number of major facilities. In 2012/13 the Lake Macquarie Performing Arts Centre and 2 pools will close. One pool will be put out to contract for management. Libraries will be open for reduced hours initially, then 5 libraries will close between 2013/14 and 2014/15. This will save $24M over 7 years.

Reduced construction and maintenance of footpaths, cycleways, and traffi c facilitiesOur construction program for new footpaths, cycleways, and traffi c facilities will reduce by $4M over the 7 years. In addition, no new boat ramps or jetties will be constructed, saving $2.3M over 7 years.

Reductions in service levels across the City and loss of 123 Council staffStaffi ng reductions across all areas of Council will occur, saving $42.6M over 7 years. With reduced staffi ng, response times for service requests and turnaround times for processing development applications will be longer.


Option 2: Maintain Services – Increase Rates 7.7% average residential rate increase each year (including 3% rate cap)9.9% average business rate increase each year (including 3% rate cap)

This option will see Council services stay largely the same as they are now, with minimal improvements or upgrades. However, the increase in income will not be enough to maintain the condition of all our City assets and infrastructure, and the quality of our roads will continue to decline, then hold in the ‘good’ range.

Funding maintained for maintenance of our City’s assets and infrastructureUnder this option, the maintenance of the City’s infrastructure will continue to be funded at current levels for the next 3 years.

In 2015/16 the annual maintenance program will increase by approximately $1.5M per year until 2018/19. This will add a total of $6M to infrastructure maintenance over the next 7 years. This increased spending will only keep pace with infl ation and an increase in the number of assets we have to maintain. Requests for footpath repairs, road patching, weed removal, plumbing repairs, and signage replacement can continue to be responded to in a timely manner.

Road condition declinesOption 2 does not provide funds to stop the declining quality of our roads. Although an additional $16M will be allocated over 7 years, this funding will only keep pace with rising cost increases. This means that the average condition of our roads will continue to decline for the next few years, but will then hold in the ‘good’ range.

Drainage maintainedCurrent funding for replacement of failed drainage will be maintained, enabling Council to replace approximately 30% of drainage that fails.

Environmental programs and works maintained

Sustainability works and programs will continue beyond 2014/15, when the Sustainability Levy fi nishes. Continuing programs include bushland and foreshore rehabilitation projects, and lake water quality improvement programs. See page 14 for details.

The Economic Development Department would be disbanded, including closure of the Visitor Information Centre at Swansea. One staff position would be created to assist employment generating development proponents with site identifi cation and approval processes, with a second position created to assist in facilitating events that attract visitors to the City. This would effectively reduce staffi ng for Economic Development from 7.4 to 2 full time equivalent staff.

Under Option 1 only about 77% (8,500 of the 11,000) service requests we receive each year will be completed. Requests that will be delayed or not carried out include footpath repairs, road patching, and graffi ti removal.

Limited new capital projectsNew capital expenditure over the 7 years will be limited to $240M. While Glendale Transport Interchange and the Lake Macquarie Waste Strategy will be funded, town centre upgrades for Cardiff, Charlestown, Belmont, Toronto Morisset, Warners Bay, Glendale, Swansea and Mount Hutton will not go ahead under Option 1.

Financial OutcomesCouncil will continue to experience an operating defi cit over the 7-year period. The current $15.8M operating defi cit would reduce to $8.5M by 2018/19. Council’s maintenance and infrastructure backlog will increase signifi cantly.

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Community facilities remain openRate increases under Option 2 will allow Council to keep the Lake Macquarie Performing Arts Centre and pools open.

Libraries will remain open in the short term; however, funding levels have been set at the same amount as 2011/2012 budget. This means that as costs increase over time, levels of service and stock will need to decrease to ensure the service can be provided within the budget available. Consequently, reductions in opening hours, staff, book stock, and service points will be considered.

Lake Macquarie Art Gallery will have all internal lights changed to meet new environmental legislation at a cost of $82,150.

Sporting and recreation facilities – minimal improvementsOur pools will not be upgraded to standards refl ected in Council’s Pool Service Delivery Model. For example, the proposed water play zone at Speers Point will not be delivered under Option 2.

Our pools will have resuscitation equipment and disability hoists upgraded at a cost of $140,200 over 7 years.

Current staffi ng levels maintained and frontline staff increasedWhile Council will continue to fi nd effi ciencies in the way we operate, current levels of staff will be maintained across all areas of Council. Maintaining staff levels means we can continue to respond in a timely manner to the 11,000 maintenance requests we receive each year.

Current Economic Development staffi ng will be retained.

With the right levels of staff, we intend to maintain our current turnaround times for processing development applications.

In addition, Ranger staffi ng will be increased, including weekend shifts and after hours services. Additional Ranger patrols on weekends will improve response times to requests, and patrols and enforcement activities will be increased during normal hours. The community will benefi t from increased monitoring and enforcement of public health and environmental standards.

New capital projectsTotal new capital expenditure over the 7 years will be $269M. Town centres will not be upgraded under Option 2.

The Glendale Transport Interchange and the Lake Macquarie Waste Strategy will be funded.

FinancialCouncil will continue to experience an operating defi cit until 2016/17, with an expected surplus of up to $5M in 2018/19. The City’s infrastructure backlog of $67M will only be partially addressed. Increased funding for roads, for example, only maintains roads at a ‘good’ condition in the future due to increasing costs.

1. Excellent conditionNo surface defects, smooth surface.

2. Very goodMinor cracking.Minor maintenance required.

3. GoodNoticeable cracking, surface defects.Planned maintenance required.

4. FairRough surface, major cracking.Signifi cant renewal/upgrade required.

5. PoorExtensive surface and structural failure.Requires replacement or removal.

Information about each of Council’s roads is stored in a pavement management system, which allows us to track the history of each road’s condition, any treatments, and predict future condition.

RATING THE CONDITION OF OUR ROADS

The following index is provided to assist in describing the condition of our roads:


Improvements in maintenance of our City’s assets and infrastructureFunds will be injected into infrastructure renewal and maintenance across the City, with an additional $15M over the 7-year period.

This will signifi cantly improve the standard of maintenance and overall appearance of the City. Response times for maintenance requests will be reduced including vandalism repairs, pothole patching, and drainage clearing.

Regular services such as litter removal, street sweeping, and toilet cleaning will be conducted more frequently.

This amount allows for an increase in the number of assets in the City over 7 years and recognises that maintenance costs and community expectations change over time.

Roads and drainage improved

Under Option 3, the condition of our roads is expected to reach the ‘very good’ range within the next 10 years through a program of targeted renewal. This will be achieved through a $42M investment over the next 7 years in programs for road reconstruction and resurfacing.

Funding will be available to upgrade drainage infrastructure and replace drainage that fails.

Environmental programs and works maintainedSustainability works and programs will continue beyond 2014/15, when the Sustainability Levy fi nishes. See page 14 for more detail.

Existing community facilities upgraded and new facilities built

Rate increases under Option 3 will allow Council to keep the Lake Macquarie Performing Arts Centre and pools open. Council will also implement recommendations from the Library Service Delivery Model, which proposes 2 new libraries at Morisset and Glendale, costing $7.4M.

Lake Macquarie Art Gallery will be extended to incorporate seminar rooms and the sculpture park will be extended in the gallery grounds.

The community will also benefi t from:

• Rathmines Community Hall kitchen upgrade

• Renovation of Lambton Colliery, Redhead Community Buildings

• Refurbishment of the Sugar Valley Neighbourhood Centre

• A new amenity block at Warners Bay foreshore

Option 3: Improve Services – Increase Rates 9.8% average residential rate increase (including 3% rate cap)12.8% average business rate increase each year (including 3% rate cap)

Under this option the community will see much of their vision as outlined in the 10 Year Community Plan come to life. Option 3 is designed to deliver on priorities identifi ed through community consultation, and is based on what people have said they want to see more of, or wish to see maintained or improved. The increased funding will allow Council to improve levels of service to the community and support an additional program of works for roads, pools, libraries, sports centres, parks and playgrounds, and upgrades to town centres.

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The funding options were developed based on our 10 Year Community Plan, as well as input gathered through the Securing our Future consultation. Securing our Future is a 6-month community engagement process to raise awareness and consult the community about Council’s fi nancial sustainability. Between July and September this year, more than 400 people attended forums held across the City. Council’s consultation website www.haveyoursaylakemac.com.au was also used to gather community feedback through an online forum. Input was also sought from a community working group of 24 randomly selected yet demographically representative residents across all wards.

Forum participants were asked to identify which Council assets and services they valued most and would prioritise for future funding. Our roads and cycleways, domestic and commercial waste collection, environmental programs – especially lake and foreshore management, libraries, and park facilities were shown to be highly valued.

Results of the community engagement informed development of the three options Council is now presenting to the community for consideration.

HOW WERE THESE OPTIONS DEVELOPED?

Sporting and recreation facilities improved

Under Option 3, $20.4M will be provided over 7 years to redevelop our pools according to recommendations in Council’s Pool Service Delivery Model. This includes redevelopment of Charlestown Pool and a new water play zone at Speers Point.

Our sport and recreation facilities will be improved and extended across the City:

• Sportsground improvements to playing surfaces, lighting, amenities, and car parks across the City ($6M over 7 years)

• Additional sporting fi elds at Edgeworth (funded in part by developer contributions) ($5.3M)

• Continued implementation of:- Cameron Park Master Plan – Sports Fields and Parks

(funded in part by developer contributions) ($7.6M over 5 years)

- Speers Point Park Master Plan ($1.1M over 4 years)

- Toronto Foreshore Master Plan including new play equipment

New Youth and Aboriginal ProgramsAdditional youth and Aboriginal programs will be delivered in partnership with relevant organisations.

Current staffi ng maintained and frontline staffi ng increasedCurrent staffi ng levels will be maintained and in addition, Ranger staffi ng will be increased as per Option 2.

New capital projectsNew capital expenditure over the 7 years will increase to $326M, and includes the works detailed above.

In addition a program to upgrade town centres will be developed. $7M will be allocated over 7 years for upgrades in 9 locations: Cardiff, Charlestown, Belmont, Toronto Morisset, Warners Bay, Glendale, Swansea and Mount Hutton.

The Glendale Transport Interchange and the Lake Macquarie Waste Strategy will be funded.

FinancialCouncil will continue to experience a small operating defi cit until 2016/17, with a surplus of up to $7M in 2018/19 projected. Option 3 addresses the $67M infrastructure backlog with roads ($30M backlog) improved and funding for future drainage renewals are provided.


THE THREE OPTIONS AT A GLANCEOption 1 Option 2 Option 3

KEY FEATURES • Services signifi cantly reduced • Condition of our assets declines• Rates increase only by rate peg amount set

annually by IPART• Average residential rates increase 3% pa • Average business rates increase 3% pa

• Services largely maintained• Condition of our assets maintained at current

rates of decline initially, then will hold• Average residential rates increase 7.7% pa • Average business rates increase 9.9% pa

• Services improved• Delivers on 10 Year Community Plan • Condition of our assets improves• Program of infrastructure renewal• Average residential rates increase 9.8% pa • Average business rates increase 12.8% pa

INFRASTRUCTURE MAINTENANCE

A reduction of $20.8M over 7 years for maintenance of City infrastructure

Increased by $6M over 7 years to maintain maintenance standards and response times

Increased by $15M over 7 years to ensure Council assets are well maintained and useful over their predicted life

BOAT RAMPS & JETTIES

No new boat ramps or jetties constructed, saving $2.3M over 7 years

Current levels maintained Current levels maintained

DRAINAGE $3.9M reduction over 7 years for replacement of failed drainage infrastructure and construction of fl ood mitigation measures

Current funding levels maintained, enabling approximately 30% of drainage infrastructure that fails to be replaced

Funding available to replace drainage that fails

ROADWORKS $20.4M reduction over 7 years for sealing gravel roads, new kerb and gutter, resealing and reconstruction of paved roadsAverage road condition falls from ‘good’ to ‘fair’ within 10 years

An additional $16M over 7 years for reconstructing and resurfacing roadsAverage road condition continues to decline for the next few years but then remains in the ‘good’ range

An additional $42M over 7 years for reconstruction and resurfacingRoad condition increases to ‘very good’ range in 10 years

ENVIRONMENT & SUSTAINABILITY

Reduced maintenance program for natural vegetated areas including foreshore reserves and bushfi re protection. From 2014/15 reduced environmental works including lake water quality programs and foreshore rehabilitation projects, saving $14.4M over 7 years

Sustainability Levy becomes part of rate baseContinuing projects include bushland rehabilitation projects, lake water quality programs, foreshore rehabilitation projects

Sustainability Levy becomes part of rate base Continuing projects include bushland rehabilitation projects, lake water quality programs, foreshore rehabilitation projects

LIBRARIES & CULTURAL ACTIVITIES

Reduced opening hours for all libraries. 2 library closures in 2013, saving $713,000, and 3 further libraries close in 2014, saving $750,000Total saving over 7 years of $8.6M

Maintain budget at current level, which will result in a gradual reduction in stock and service points

$7.4M over 7 years to implement the Library Service Delivery Model including new libraries at Morisset and GlendaleArt Gallery extension

POOLS 1 pool will close in 2012, saving $3M over 7 years, and 1 pool will be put under contract management, saving $3.9M over 7 yearsIn 2013 a further pool will close, saving $2.4M over 6 years

Upgraded CPR and other equipmentPools not upgraded

$20.4M over 7 years to upgrade poolsRedevelopment of Charlestown Pool and water play zone at Speers Point

PARKS & PLAYGROUNDS

Reduction of $536K over 7 years Funding and level of service maintained $0.8M over 7 years to improve park furniture across CityNew play equipment at Toronto foreshore at $750K

FOOTWAYS & CYCLEWAYS

$4M reduction over 7 years for construction of new footpaths, cycleways, and traffi c facilities

Current levels maintained $3.5M over 7 years for construction of new footpaths and cycleways

COUNCIL STAFF Reduction of 123 Council staff across all areas, saving $42.6M per year

The Economic Development Department would be disbanded

Increase in Ranger staff - increased patrols, improved response times, improved public health, and environmental monitoring and enforcement

Increase in Ranger staff - increased patrols, improved response times, improved public health, and environmental monitoring and enforcement

DEVELOPMENT APPROVALS

Longer turnaround times for DAs, reduced number of planning studies, master plans, and area plans, saving $0.4M per year


TOURISM Changes to tourism funding including closure of the Visitor Information Centre at Swansea, saving $3.8M over 7 years


TOWN CENTRE UPGRADES

Funding not included Funding not included $7M over 7 years to implement a program to upgrade town centres

NEW YOUTH AND ABORIGINAL PROGRAMS

Funding not included Funding not included New programs in partnership with relevant organisations

IMPROVED COMMUNITY FACILITIES

Funding not included Funding not included $4.9M over 7 years for renovations, extensions, and construction works across the City

FINANCIAL • Maintenance and infrastructure backlog signifi cantly increases

• Operating defi cit continues with estimate of $8.5M in 2018/19

• New capital expenditure of $240M over 7 years• Replacement capital expenditure of $268M over

7 years

• Maintenance and infrastructure backlog will be partially addressed

• Operating defi cit until 2016/17 then expected surplus of up to $5M in 2018/19

• New capital expenditure of $269M over 7 years• Replacement capital expenditure of $308M

over 7 years

• Maintenance and infrastructure backlog addressed

• Operating defi cit until 2016/17 then expected surplus of up to $7M in 2018/19

• New capital expenditure of $326M over 7 years• Replacement capital expenditure of $344M

over 7 years

12

RESIDENTIAL RATES CALCULATOR

Option 1: Reduce Services – Maintain Rates 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Cumulative

Increase on Previous Year

3.00% 3.00% 0.34%* 3.00% 3.00% 3.00% 3.00%

Rateable Value Number of Properties

Land Value For Rates Calc

$0 to $99,999 6,803 $50,000 $587.87 $17.64 $18.17 $2.18 $18.77 $19.34 $19.92 $20.51 $116.53

$100,000 to $149,999 14,602 $125,000 $757.07 $22.71 $23.39 $2.81 $24.18 $24.90 $25.65 $26.42 $150.07

$150,000 to $199,999 22,367 $175,000 $869.88 $26.10 $26.88 $3.23 $27.78 $28.61 $29.47 $30.36 $172.43

$200,000 to $299,999 21,589 $250,000 $1,039.09 $31.17 $32.11 $3.86 $33.18 $34.18 $35.20 $36.26 $205.97

$300,000 to $499,999 6,909 $400,000 $1,377.50 $41.33 $42.56 $5.12 $43.99 $45.31 $46.67 $48.07 $273.05

$500,000 to $999,999 2,267 $750,000 $2,167.14 $65.01 $66.96 $8.05 $69.21 $71.28 $73.42 $75.63 $429.57

$1,000,000 to $1,999,999

254 $1,500,000 $3,859.21 $115.78 $119.25 $14.34 $123.24 $126.94 $130.75 $134.67 $764.97

$2,000,000 and greater

27 $2,000,000 $4,987.26 $149.62 $154.11 $18.53 $159.27 $164.05 $168.97 $174.04 $988.58

Option 2: Maintain Services – Increase Rates 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Cumulative


9.75% 9.50% 6.00%* 5.50% 5.25% 4.75% 4.75%



$0 to $99,999 6,803 $50,000 $587.87 $57.32 $61.29 $23.03 $40.12 $40.41 $38.48 $40.30 $300.95

$100,000 to $149,999 14,602 $125,000 $757.07 $73.81 $78.93 $29.66 $51.67 $52.04 $49.55 $51.91 $387.57

$150,000 to $199,999 22,367 $175,000 $869.88 $84.81 $90.70 $34.08 $59.37 $59.79 $56.93 $59.64 $445.32

$200,000 to $299,999 21,589 $250,000 $1,039.09 $101.31 $108.34 $40.71 $70.92 $71.42 $68.01 $71.24 $531.94

$300,000 to $499,999 6,909 $400,000 $1,377.50 $134.31 $143.62 $53.97 $94.02 $94.68 $90.16 $94.44 $705.19

$500,000 to $999,999 2,267 $750,000 $2,167.14 $211.30 $225.95 $84.90 $147.91 $148.95 $141.84 $148.58 $1,109.43

$1,000,000 to $1,999,999

254 $1,500,000 $3,859.21 $376.27 $402.37 $151.19 $263.40 $265.25 $252.59 $264.59 $1,975.67


27 $2,000,000 $4,987.26 $486.26 $519.98 $195.39 $340.39 $342.79 $326.42 $341.93 $2,553.16

Option 3: Improve Services – Increase Rates 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Cumulative


9.80% 9.70% 9.00%* 7.75% 7.25% 6.75% 4.75%



$0 to $99,999 6,803 $50,000 $587.87 $57.61 $62.61 $43.76 $58.27 $58.73 $58.65 $44.06 $383.69

$100,000 to $149,999 14,602 $125,000 $757.07 $74.19 $80.63 $56.36 $75.04 $75.64 $75.53 $56.74 $494.12

$150,000 to $199,999 22,367 $175,000 $869.88 $85.25 $92.65 $64.75 $86.22 $86.91 $86.78 $65.19 $567.75

$200,000 to $299,999 21,589 $250,000 $1,039.09 $101.83 $110.67 $77.35 $102.99 $103.81 $103.66 $77.87 $678.19

$300,000 to $499,999 6,909 $400,000 $1,377.50 $135.00 $146.71 $102.54 $136.54 $137.63 $137.42 $103.23 $899.06

$500,000 to $999,999 2,267 $750,000 $2,167.14 $212.38 $230.81 $161.32 $214.80 $216.52 $216.20 $162.41 $1,414.44

$1,000,000 to $1,999,999

254 $1,500,000 $3,859.21 $378.20 $411.03 $287.27 $382.52 $385.57 $385.01 $289.22 $2,518.82


27 $2,000,000 $4,987.26 $488.75 $531.17 $371.24 $494.33 $498.27 $497.54 $373.76 $3,255.07

Business and farmland rates calculations for each option are also available. Visit www.haveyoursaylakemac.com.au/securingourfuture or contact Council on 4921 0333. The Cumulative column represents the total increase in rates payable over the 7-year period from 2011/12 to 2018/19.


NOTES FOR TABLES: *In 2014/15 Council has an expiring special variation to general income that was granted for the years 2010/11 to 2013/14 inclusive, for costs associated with environmental works as defi ned by Council in its special variation 5 year works program. This special variation has come to be known as the Sustainability Levy.

The amount Council will be required to reduce its general income is $2,103,708 plus the equivalent cumulative proportion of this increase from any general variation increases or special variation increases approved for the 2011/12 to 2013/14 rating years inclusive. The reduced rate increase (0.34%) in 2014/15 for Option 1 refl ects a reduction in environmental programs and works after the Levy ceases. The estimated reduction in Council’s general income for each option in 2014/15 is as follows: Option 1: $2,293,869; Option 2: $2,629,142; Option 3: $2,634,213.

As Council intends to continue with its environmental program, it is proposed to increase rate income in Options 2 and 3 for 2014/15 to enable these works to be funded. This increase in rate income is incorporated in percentage increases for Options 2 and 3. The proposed percentage increase in rate income in 2014/15 that relates to the extension of the environmental program is as follows: Option 2: 2.59% (which equates to an average of $29.05 per residential rate assessment); Option 3: 2.59% (which equates to an average of $29.12 per residential rate assessment). See page 14 for more information on the Levy.

SUMMARY OF RATE INCREASESResidential Option 1 Option 2 Option 3

2012/2013 3.00% 9.75% 9.80%

2013/2014 3.00% 9.50% 9.70%

2014/2015 0.34%* 6.00%* 9.00%*

2015/2016 3.00% 5.50% 7.75%

2016/2017 3.00% 5.25% 7.25%

2017/2018 3.00% 4.75% 6.75%

2018/2019 3.00% 4.75% 4.75%

Business Option 1 Option 2 Option 3

2012/2013 3.00% 14.00% 14.00%

2013/2014 3.00% 14.00% 14.00%

2014/2015 0.34%* 7.50%* 12.50%*

2015/2016 3.00% 6.00% 9.00%

2016/2017 3.00% 5.25% 7.50%

2017/2018 3.00% 4.75% 6.75%

2018/2019 3.00% 4.75% 4.75%

HOW WILL A RATE INCREASE AFFECT ME FINANCIALLY?For residential ratepayers, with an average land value of $175,000, your average yearly increase will be:

Option 1: $24.63 per year or $0.47 per week



Residents can use the Residential Rates Calculator on the opposite page to work out what a potential rate increase will mean in terms of dollars. Residents and business owners can use the tables below to understand the year-to-year increases on a percentage basis.

Council offers a number of options for ratepayers to tailor their payments to manageable amounts. For example, you can arrange to pay in quarterly or monthly instalments, and by direct debit. Contact Council on 4921 0333 if you wish to discuss payment plans for your rates.

If IPART sets the rate peg higher than any approved rate increases for any year, then Council will adjust rates accordingly for each option.

14

The local environment consistently rates as one of the most important features of the City for residents. Access to the lake, coastline, and bushland provides people with an opportunity to enhance health and wellbeing through outdoor activity and enjoyment of our wildlife and natural places.

During development of the 10 Year Community Plan in 2008, community feedback rated Caring for the Environment as the most important of Council’s focus areas. The need for additional funds to deliver environmental programs was identifi ed, as the previous Lake Levy which had been in place for 10 years was due to expire.

Council sought and was granted a special variation, which has come to be known as the Sustainability Levy. It was introduced in 2009 to fund environmental projects, including continuation of lake water quality improvement works. The Levy expires in 2014.

What happens under each funding option when the Levy fi nishes in 2014?All three funding options include the Sustainability Levy in 2012-2014. As Council intends to continue with its Caring for the Environment programs, it proposes to increase rate income across the 7-year period to enable these works to continue beyond 2014. This increase in rate income is incorporated in Options 2 and 3, but not in Option 1.

Under Option 1, the Levy funding for environmental works and programs stops in 2014/15. This will also be the case if Council’s application for a rate increase is not approved by IPART.

Under Options 2 and 3, rate increases for the 7-year period will provide additional income to continue Council’s current environmental programs beyond 2014. The expiring variation becomes part of the general rate base beyond 2014/15.

What has been achieved with the Levy?Key achievements include:

• 26 on-ground works projects completed to improve lake water quality

• Clean Up Lake Macquarie collected 28 tonnes of rubbish over 86 sites with 7,146 volunteers

• Residents were assisted in saving money, including a 3.9% reduction in citywide electricity use in 2009-2010, and an overall saving to the community of $6M through access to rebates and other programs

• Award winning climate change adaptation program delivered, including the E-shorance web tool to assess the response of the lake foreshore to predicted sea level rise

• Inaugural Living Smart Festival attracted 8,000 people

• Waste to landfi ll reduced by 23% per capita, and commercial recycling increased by 38%

• 18 sustainable neighbourhood groups established

What is planned for the next 7 years?In the next 7 years we intend to continue work to:

• Maintain and improve lake water quality through construction and maintenance of over 70 on-ground works projects

• Complete over 20 works projects to reduce energy and water consumption in Council and community facilities.

• Develop local area adaptation plans for all foreshore areas affected by fl ooding and sea level rise

• Expand our sustainable neighbourhoods program to provide an opportunity for neighbourhoods in the City to work with Council to improve their local environment

• Continue to support residents and businesses to save money at home and at work through programs to reduce waste generation and resource consumption

SUSTAINABILITY LEVY

HOW DO WE KNOW COUNCIL IS DOING A GOOD JOB?The Local Government Act 1993 requires local councils to demonstrate they are meeting the needs of their communities in an effective and effi cient way.

Our 10 Year Community Plan outlines targets and other measures by which actual levels of service provision can be assessed.

Council currently reports on its performance quarterly, as well as in our annual report, which is provided to the community. Council’s performance reporting will be increased to ensure that the community can easily track Council’s delivery of programs identifi ed as part of any special rate variation.

Lake Macquarie City Council has a strong track record of productivity improvements that have been achieved over the last 10 years. We recognise that continuous improvement and innovation is an ongoing process. Council is committed to getting the very best value for money and outcomes for our community. We will continue to explore and adopt best practice and seek out innovative ways of delivering services.


What is a Special Rate Variation?Since 4 June 2010, the Independent Pricing and Regulatory Tribunal (IPART) has been responsible for setting a maximum percentage by which councils can increase rates. This is known as the rate cap or rate peg, and is usually around 3%. Prior to 2010, the rate peg was set by the Minister for Local Government.

Councils can request a special rate variation to increase rates above the rate peg. Councils must undertake extensive community consultation and make an application to IPART if they wish to seek a special rate variation. IPART makes the fi nal decision on whether the rate increase is allowed.

What are the proposed rate increase options?Council has put forward three funding options for the community to consider.




Each of these rate increase options is explained in detail on pages 6-13.

What happens after 7 years?After 7 years, rates will realign with the rate peg amount determined by IPART.

Why is Council looking to increase rates?Council faces some fi nancial challenges and cannot continue to provide existing levels of service to the community with our current funding levels.

Careful fi nancial management has enabled Council to consistently maintain an operating surplus, where our operational income has exceeded our operational expenditure. This surplus has been used to offset infrastructure costs and for principal loan repayments.

Unfortunately, rate pegging continues to affect our ability to achieve a surplus. In fact, we are now forecasting a signifi cant operating defi cit in the 2011/12 fi nancial year and future years.

Other factors affecting our operating result include the impact of cost shifting. This is where the costs of other levels of government are passed on to local government. Cost shifting currently amounts to over $15.5M per year for Lake Macquarie City Council. In addition to the burden of cost shifting, recently there have been signifi cant increases in other government levies such as the Rural Fire Services Levy.

Like all other businesses and households, we also have to budget for increased utility and fuel costs, as well as increases in the costs of materials. Such price increases have a signifi cant impact on our ability to continue to

deliver the same, or improved, levels of service to our community. The rate peg has consistently been set below cost increases.

If funding is not obtained to cover the operating defi cit, there will need to be a signifi cant reduction in expenditure to contain costs, which will result in reduced services to the community.

How has Council sustained a balanced budget without increasing rates up until now?Council has used our asset replacement and other reserves to balance the budget. This practice is not sustainable. Our assets continue to age, and depreciation continues to increase, our reserves are being eroded to meet the budget shortfall.

How much money will Council be spending on upgrading and replacing assets across the City?To ensure suffi cient funds are provided for the replacement and upgrade of assets such as roads, community buildings, boat ramps, and jetties, Council sets aside an amount of money each year. This amount is a percentage of the total money required to ensure specifi c assets reach their full life cycle. This is known as cash funding depreciation.

Each of the three funding options includes different amounts of funds set aside for the replacement and maintenance of assets.

Under Option 1, cash funding of depreciation commences at 53% after year 1 and increases to only 67% after 7 years, while Option 2 commences at 61% after year 1 and increases to 87% after 7 years. Option 3 provides the most satisfactory outcome to ensure appropriate management and replacement of our asset base by commencing at 57% after year 1, and increasing to over 90% cash funding of the annual depreciation charge by year 7.

What happens if Council’s application for a rate increase is unsuccessful?If IPART does not approve Council’s application to increase rates, this will mean that rates will continue to increase by only the rate peg amount (3%). Council will have to consider cuts to services to correct budget shortfalls and ensure fi nancial sustainability, as outlined on pages 6-7.

When will rates rise?If a rate increase application is successful, rates will increase from 1 July 2012.

How can I get more information?Visit www.haveyoursaylakemac.com.au/securingourfuture

FREQUENTLY ASKED QUESTIONS

Which option do you prefer?




There are many ways to tell us your preferred optionYou can either:

• Complete our online poll at www.haveyoursaylakemac.com.au/securingourfuture

• Attend one of our community workshops

or

• Complete the funding option selection form below and drop it off at your local library or post it in an envelope. If addressed as shown on the form, no stamp is required.

Stay up to dateLike us on Facebook www.facebook.com/lakemaccity or follow us on Twitter www.twitter.com/lakemac

Attend a Securing our Future Community Workshop in your area

Find out more online: Visit www.haveyoursaylakemac.com.au/securingourfuture to fi nd out more and:

• Read our information sheets and frequently asked questions

• Take part in online discussions

• Try your hand at setting Council’s budget using our online budget allocator

• Find out what other residents are saying about rates and Council services

HAVE YOUR SAY ON SECURING OUR FUTURE

SECURING OUR FUTURE FUNDING OPTION SELECTION FORM

Wed 9 Nov 12pm – 2pm

Belmont 16 FootersThe Parade, Belmont

Thur 10 Nov5.30pm – 7.30pm

The PlaceCharlestown Community Centre, Charlestown Square, 81/30 Pearson Street, Charlestown

Sun 13 Nov2pm – 4pm

Toronto Diggers 41 The Boulevarde, Toronto

Tues 15 Nov12pm – 2pm 6pm – 8pm

Council Administrative Centre126-138 Main Road, Speers Point

Sun 20 Nov 2pm – 4pm

Cameron Park Community Centre107 Northlakes Drive, Cameron Park

Tues 22 Nov5.30pm – 7.30pm

Morisset Country ClubDora Street, Morisset

Age: Gender: Male Female Postcode:

Which funding option provides the most appropriate level of service? (please tick)

Option 1: or Option 2: or Option 3:

Any comments?

Which funding option do you prefer? (please tick)

Option 1: or Option 2: or Option 3:

Any comments?

Please post your completed form in an envelope. No postage stamp is required if addressed as follows: Securing Our Future Project

Lake Macquarie City CouncilReply Paid 67121HRMC NSW 2310

Economy & Finance

Securing our Future - important information about your Council rates and services