Budget 2021-2022

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Watch Mayor Kerry Hayes address the Central Highlands community regarding the 2021-2022 budget.

Q: What percentage are general rates increasing by and why?

• General rates have increased by:
  • 3% Residential and commercial properties
  • 4% Mining properties
  • 5% Rural properties
• Operational costs to deliver our 60-plus core services across 13 different communities have mostly gone up.
• If rates do not increase to cover rising costs, council will be unable to maintain services at their current levels.
• Small increases in rates each year reduces the potential for future ‘rate shock’ where large one-off increases are needed to get council’s budget back in balance.
• COVID-19 had an impact on our revenue last financial, and to some extent this financial year, which we need to recover in future years.
• To ensure that we retain an equitable contribution from our key sectors, rural rates will increase by 5%.
• The mining sector continues to contribute the largest share of revenue from general rates. Valuations for this sector increased in line with the rural sector.

Q: What were the valuation increases across the region?

• Overall valuations increased by 71.12% overall
• Valuations in the rural sector increased by 96.05% overall
• Valuations in the non-rural section increased by 3.59% overall

Q: Does council determine the valuations in the region? When was the last valuation?

• No – valuations are determined and issued by the Department of Resources.
• The latest valuations were issued in March by the Department of Resources and are not effective for rating purposes until 1 July 2021.
• The new valuations were used to determine the rates in the 2021-2022 budget.
• The previous valuations were performed in 2018-2019 and were used to determine general rates for the last three financial years (2018-2019 to 2020-2021).

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

No – to limit the increases in valuations, council has implemented a cap of 15% on general rates. This means that you will pay no more than 15% on the general rate amount that you paid on your last bill.

Q: How are rates calculated?

The budget process identifies the total 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. Refer to infographic on ‘How Are Rates Calculated’ in the tabs to the left.

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

• Water charges have increased by:
  • Water access charges have increased by 4.6%
  • Water consumption charges have increased by 5.6%
  • Increase in the multiplier charge for larger meter connections greater than 25mm which will impact commercial/industrial properties
• These increases are necessary because the supply of essential water services continues to have a significant impact on council’s cost base.
• 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.
• Council has a pricing model that it introduced a few years ago to ensure that vital water services can be provided to all communities in the region and to comply with competitive neutrality principles. Providing this essential service to the smaller townships would not be economically viable without this robust pricing model.
• It is important that council continues to implement the increases each year determined under the pricing model until sufficient revenue is generated to guarantee a secure delivery of water services on a user pays basis that is not reliant on revenue being raised from general rates.
• For the 2021-2022 budget, adherence to this pricing model results in an average residential property paying an additional $26 per annum in water access charges and $29 per annum in consumption charges (360kl per annum).

Q: What percentage are sewerage charges increasing by and why?

• Sewerage charges have increased by:
  • 4%
• This increase is required as the supply of essential sewerage services continues to have a significant impact on council’s cost base.
• Council has made a significant investment in sewerage infrastructure in recent years with the construction of the Black Gully Sewerage Treatment Plant.
• Council has a pricing model that it introduced a few years ago to ensure that vital sewerage services can be provided to all communities in the region and to comply with competitive neutrality principles. . Providing this essential service to the smaller townships would not be economically viable without this robust pricing model.
• It is important that council continues to implement the increases each year determined under the pricing model until sufficient revenue is generated to guarantee a secure delivery of sewerage services that is not reliant on revenue being raised from general rates.
• For the 2021-2022 budget adherence to this pricing model results in an average residential property paying an additional $44 per annum in sewerage charges.

 Q: What percentage are waste charges increasing by and why?

• Waste charges have increased by:
  • 3%
• 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 Government drive to reduce waste to landfill and 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.
• For the 2021-2022 budget waste charges for an average residential property will increase by $15 per annum.

Q: How do our rates compare to other local government regions?

• It is very difficult to make any meaningful comparison between rates levied by different councils.
• Although we all provide the same basic services, the level and type of service can vary greatly which will impact the amount of general rates each council charges.
• All councils operate in different geographical areas with different demographics – some have several smaller communities that require the same essential services as the larger communities which can be costly.
• CHRC has 13 separate communities to service and provides 60-plus core services.
• Councils also 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 and this is a combination of rates, user fees and charges, commercial activities and government grants and assistance.
• Councils with a greater level of income from government grants can charge lower rates.

Q: What assistance does council offer for ratepayers facing financial difficultly?

Council provides several concessions which include:

• 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, adopted in 2020-21 in response to the COVID-19 pandemic.

Q: What are some of the big-ticket OPERATING items in the budget?

• Regional Economic Development Incentive (REDI) – $250,000
• Evacuation planning – $150,000
• Town beautification planning – $100,000
• Planning Scheme amendments – $305,000

 Q: What are some of the big-ticket CAPITAL items in the budget?

• Emerald Community Kindergarten redevelopment – $2.7m
• Emerald Saleyards – spelling yard construction – $1.4m
• Road Network resheeting program – $4.0m
• Willies Creek Royles Road Upgrade – $3.75m
• Lilyvale Road reconstruction – $3.0m
• Plant replacement program – $3.5m
• Regional radio network – $1.7m

 Q: What does the budget look like from a regional perspective?

Central (includes Emerald, Comet, Bogantungan, Gemfields areas):

• Central represents $12.68 million or 21% of capex budget
• Specific operating and capital community projects include:
  • Art Gallery maintenance
  • Nogoa November community event
  • Community facilities electrical upgrades Emerald
  • Anakie Tennis Court resurface
  • Willows Hall upgrade stage 1
  • Airport Master Plan works program $728k
  • Emerald Showgrounds – Electrical and Lighting – $550k
  • Emerald Community Kindergarten redevelopment – $2.7m

East (includes Blackwater, Bluff, Dingo, Duaringa, Bauhinia, Blackdown tablelands):

• East represents $4.50 million or 8% of capex budget
• Specific operating and capital community projects include:
  • Facilities electrical upgrades Bauhinia, Blackwater, Dingo and Duaringa
  • Bauhinia Sport Hard Shade renewal
  • Bluff land rehabilitation – $156k
  • Memorial Garden Blackwater $200k
  • Blackwater aquatic surfaces – $243k
  • Blackwater Road rehabilitation program – $1.2m

North (includes Capella and Tieri):

• North represents $4.22 million or 7% of capex budget
• Specific operating and capital community projects include:
  • Capella Rubyvale Road reconstruction phase 1 – $110k
  • Water network upgrade and renewal – $564k
  • Capella skatepark – $230k

South (includes Springsure and Rolleston areas):

• South represents $10.17 million or 17% of capex budget
• Specific operating and capital community projects include:
  • Rolleston Tennis club upgrades
  • Rolleston Beazley Park improvements – $250k
  • Springsure Showgrounds electrical upgrade – $280k
  • Springsure Hospital Museum – heritage renewal – $216k
  • Beautification of Eclipse Street, Springsure – $400k

Council-wide:

• Represents $28.29 million or 47% of capex budget
• Specific operating and capital community projects include:
  • Plant replacement programs – $3.5m
  • Regional radio network – $1.7m
  • Wearing surface renewal – $2.4m
  • Road rehabilitation – $2.75m
  • Re-sheeting program – $4m

Q: Has the Covid-19 pandemic had an impact on the 2022 budget?

• In the 2020 and 2021 financial years council was impacted by the pandemic and incurred revenue losses and increases in expenditure.
• In the 2020 financial year this impact was quantified in council’s audited financial statements as a $2.1m hit to the bottom line.
• Reductions in revenue from the Emerald Airport operations and investment returns on invested funds accounted for a significant portion of the losses incurred which continued into the 2021 financial year.
• Council will seek to recover these losses over the forward years.
• In 2020 and 2021 council also provided relief to ratepayers by extending the due date of the first and second half rate and water notices which had an impact on council’s cashflow and investment returns.
• It is difficult to forecast the potential future impacts of the pandemic which is why council has conservatively estimated revenue from the airport and investment returns in this year’s budget.

Q: Why does council need to increase rates if we have a surplus?

Council aims to generate a surplus of revenue each year that will provide funding for both the repayment of debt (which is forecast at $6.2 million in 2021-2022) and funding for important capital projects, such as critical water and sewerage infrastructure upgrades that will be required in future years.

Achieving a surplus each financial year ensures council can respond to emerging issues and bolster its long-term sustainability. It is prudent that council is not reliant on external funding– there is significant variability and uncertainty associated with debt, contract works and grants, which reinforces the importance of council raising sufficient revenue from rates and charges for both the current and future generations.

Council also has a legislative requirement 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 2021-2022 budget reflects a modest operating surplus ratio of 1.5% 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.

It is also important that there is a buffer in place for any future ‘shocks’ that may occur that are outside council’s control – the current unfolding lockdown situation across the nation reinforces the potential impact that the pandemic is still having on the economy. In 2019-2020 council reported a significant deficit which was partly attributed to the COVID-19 pandemic – these losses will need to be recovered in future years.

Q: What is council’s local buy policy?

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, it is clear that 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.

 Q: What will a combined sample residential rate and water notice look like for an average ratepayer based on the increases in rates and utility charges?

This simplified infographic may help explain how land valuations are used in a formula to calculate rates.

Head to our Agendas & Minutes page to view the special budget meeting agenda, which contains the budget papers.

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