Budget 2022-2023

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Download the Special Budget Meeting 28 June 2022 Agenda 

Watch the livestream of the meeting below, including the Mayor’s address and comments from councillors about their project highlights.

What are some of the important facts about this year’s budget?

• Operating surplus = $3.2M (operating revenue less operating expenditure)
• Total budget = $237.6M which comprises:
  • Operating expenditure budget = $166.3M
  • Capital works program = $64.5M
  • Annual debt repayment = $5.8M
  • Other capital expenditure = $1.0M

What percentage are general rates increasing by and why?

• General rates have increased by:
  • 3% – Residential and commercial properties
  • 3% – Rural properties
  • 4% – Mining properties
• To deliver our 60-plus core services across 13 different communities’ operational costs have increased.
• If rates do not increase to cover rising costs, council will be unable to maintain services at their current levels.
• Inflation, supply chain disruptions and increases in goods and services have been considered when determining the required rate increases.
• The mining sector continues to contribute the largest share of revenue from general rates.
• These rate increases are below CPI – the Brisbane March quarter 2022 was 6%.

How do CHRC rates compare to other local government areas?

• Most rate increase announcements to date have ranged from 2.5% to 10% across various councils.
• It is very difficult to make any meaningful comparison between rates levied by different councils.
• Although most councils provide the same basic services, the cost, level, and type of service can vary greatly which will impact the amount of rates and charges that each council levy.
• All councils operate in different geographical areas with different demographics and industries – some have smaller communities that require the same essential services as the larger communities which can be very costly.
• All councils have different financial goals, levels of debt, plans and visions for their communities which need to be considered when setting budgets and rates.
• Another factor is the mix of revenue types available to councils – this comes from a combination of rates, user fees and charges, commercial activities and government grants and assistance.
• Councils who receive a greater level of their income from government grants don’t need to raise as much income from rates.

Does council determine the valuations in the region for rating purposes?

• No, valuations are determined and issued by the Valuer- General through the State Valuation Service.
• A whole of region revaluation is generally performed annually except where the Valuer-General determines that there has been insufficient movement in the local government area to warrant an annual valuation.
• Where an annual valuation is not made, the existing valuation will stand until the next annual valuation is conducted.

Did council receive new valuations that will be used for rating in 2022-23?

• No, a new whole of region revaluation was not performed so the valuations that council will use for rating in 2022-23 will be the same as those for the previous financial year (2021-22).
• The last revaluation increases were significant with a 71.12% overall increase across the region.
• The rural sector (which includes mining) valuations increased by 96.05% overall.
• The non-rural sector valuations increased by 3.59% overall.

If my valuation increased by 100% does this mean my rates bill has increased by the same amount?

• It could if council did not apply levers to limit the impact of the valuation increase.
• One type of mechanism is using a cap to limit increases from the previous year.
• For 2022-23, council has implemented a cap of 30% on general rates.
• This means that you will pay no more than 30% on the general rate amount that you paid on your last bill.
• Last year (2021-22) council implemented a cap of 15% to limit the impact of the valuations.

How are general rates calculated?

• The budget process identifies the total residual revenue required to be funded from general rates for the coming 12-month period and this amount is divided across all properties in the region in accordance with their individual valuations.
• The first step is for council to determine how much revenue is required from general rates after maximising revenue from all other sources. Once council has determined the required amount of revenue to raise from general rates, the ‘rate’ or rate in the dollar (RID) is calculated (Step 2). The RID is then multiplied by the individual valuation for each property (Step 3) to determine the annual general rate bill for each ratepayer.
• View more in the ‘how rates are calculated’ section of this webpage.

How does capping work?

• Capping works to limit the increase in rates from your previous bill.
• It is a mechanism available to council under section 116 of the Local Government Regulation 2012.
  • A Simplified Example:
  • In the 2022 financial year, a property owner’s land value increased from $13m to $26m (a 100% increase in value). Without capping, the rate bill in the 2022 financial year would have increased from $100,000 to $200,00 (an increase of $100,000 or 100%).
  • To limit the impact of the 100% valuation increase, council applies a 15% cap in the 2022 financial year and a 30% cap from the 2023 financial year onwards.
  • As shown in the graph and table below, capping limits the increase in the rate bill to $115,000 in the 2022 financial year, $149,500 in 2023 and $194,350 in 2024. Instead of receiving a rate bill upfront for $200,000 in the 2022 financial year, the property owner sees a gradual increase in their bill until they come off the cap in FY2025 and their rate bill reaches $200,000.
  • 

What percentage are water access and consumption charges increasing by and why?

• Water charges have increased by:
  • 9% – for Water access charges or $54 per annum (residential)
  • 10% – for Water consumption charges or $57 per annum (residential using 360kl per annum)
  • The multiplier charge for larger meter connections greater than 25mm for commercial/industrial properties continues to apply
• Utility charges, particularly for water supply and sewerage services, are subject to higher increases as council works to ensure the provision of secure water service delivery across the region, particularly to the smaller towns.
• In managing these critical services, council also has an obligation to comply with local government legislation in relation to the National Competition Policy, which guides our annual price increases through a full-cost pricing model.
• Through this model council is able to raise sufficient revenue to limit the reliance on general rates.
• Council has made a significant investment in water and sewerage infrastructure in recent years with the construction of the East Nogoa Water Treatment Plant and significant infrastructure upgrades in Capella and Tieri. Further significant investment is planned for 2022-23 including the Dingo and Duaringa Filter Replacements.

What percentage are sewerage charges increasing by and why?

• 6.35% – Sewerage charges or $46 per annum (residential)
• Utility charges, particularly for water supply and sewerage services, are subject to higher increases as council works to ensure the provision of secure water service delivery across the region, particularly to the smaller towns.
• In managing these critical services, council also has an obligation to comply with local government legislation in relation to the National Competition Policy, which guides our annual price increases through a full-cost pricing model.
• Through this model council is able to raise sufficient revenue to limit the reliance on general rates.
• Council has made a significant investment in sewerage infrastructure in recent years with the construction of the Black Gully Sewerage Treatment Plant.

What percentage are waste charges increasing by and why?

• 3% – for all components of the residential Waste charges or $15 per annum
• Council offers a wide range of waste management activities including general waste collection and disposal, education programs and the provision of waste management facilities.
• The State Governments’ drive to reduce waste to landfill, including the additional compliance requirements being imposed on council, has resulted in significant additional costs.
• Continuing to provide this essential service in line with compliance standards will require future investment in infrastructure.

What concessions and discounts does council offer ratepayers to assist them in meeting their rating commitments?

• A 5% discount is offered for prompt payment by the due date as shown on the rate and water notices (discount does not apply to water consumption and the QLD State Fire levy).
• A 50% concession to all eligible pensioners on all residential rates and charges (except for water consumption and QLD State Fire Levy) which is in addition to the 20% State pensioner rebate (capped at $200 per annum).
• Up to a 100% rebate on general rates for eligible not-for-profit organisations.
• Deferred payment arrangements.
• Suspension of interest when a ratepayer is in a deferred payment arrangement.
• Financial hardship assistance measures approved under the Financial Hardship Policy.

What does council do to support local businesses?

• Council is committed to the principle of the development of competitive local business and industry and encourages the use of suppliers from across the region. All other things being equal, it is council’s preference to purchase locally.
• If overall differences are not substantial, and, the selected local supplier can meet council’s requirements at an acceptably high standard which is generally comparable to that of other offers, the local offer may be selected.
• This is achieved by the application of local preference adjustments during the evaluation process.

Why does council need to increase rates and charges in 2022-23 if the financial statements show that a profit (surplus) has been made?

• Council aims to generate a surplus of revenue each year that will provide funding for both the repayment of debt (which is forecast at $5.8 million in 2022-23) and funding for significant capital projects that are not grant-funded.
• Achieving a surplus each financial year ensures council can respond to emerging issues and ensure long-term sustainability.
• It is prudent that council is not reliant on external funding– there is significant variability and uncertainty associated with contract works and grants, which reinforces the importance of council raising sufficient revenue from rates and charges for both current and future generations.
• The Queensland Local Government Grants Commission has advised that from 2022-23 council will receive a 10% reduction in the financial assistance grant for the next three years – this impact has been estimated at just under $4m for the next three years.
• Council also has legislative requirements in accordance with section 178 of the Local Government Regulation 2012 to report and measure its operating surplus as a key financial sustainability indicator.
• The target range for the operating surplus ratio set by the Department of Local Government, Racing and Multicultural Affairs is between 0% and 10% – the 2022-23 budget reflects a modest operating surplus ratio of 1.9% which is at the lower end of the target range. The Queensland Audit Office and the Queensland Treasury Corporation also audit and monitor this ratio as a key indicator of council’s financial sustainability.

Does Council’s Corporate Plan guide the budget?

• The 2022-23 budget is guided by our seven long term destination goals as outlined in Council’s new Corporate Plan 2022-2027.
•  These goals respond to our opportunities and challenges and represent what we want to achieve and where we want to be in the future.
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This simplified infographic may help explain how land valuations are used in a formula to calculate rates.

Mayor Kerry Hayes answers some questions about this year’s budget below.

Q: What were some of the challenges in setting the 2022-2023 budget?

Q: What are some of the changes for ratepayers in this budget?

For media enquiries, please email media@chrc.qld.gov.au