Are you ready for an SRV?

June 2022

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If you haven’t included a special rate variation (SRV) in your long-term financial plan or can’t demonstrate that you have worked to improve your council’s productivity, do not pass GO for your SRV application. The Independent Pricing and Regulatory Tribunal (IPART) assesses SRVs against five criteria and it’s not too late for 2023/24:

  • Integrated, Planning and Reporting (IP&R) documents
  • productivity improvement and cost containment
  • financial need
  • reasonable impact of ratepayers
  • community engagement and awareness.

Since 2017, 38 councils have made 47 applications to IPART for an SRV. Of the 47 applications, 32 applications have been approved in full, nine were partly approved and six have been refused. Five of the six refused councils have not resubmitted an SRV application since their refusal. Whereas five of the nine partly approved councils have successfully resubmitted, and there are potentially a further three councils still planning to resubmit.

Four of the six refused applications did not meet the criteria of demonstrating that the SRV was included in their exhibited IP&R documents, four didn’t fully demonstrate the financial need and three didn’t demonstrate adequate community engagement. Demonstrating that you have considered the needs and impact of an SRV in your long-term financial plan is a prerequisite for a successful SRV application.

Interestingly some 46 councils haven’t applied for a special rate variation since 2011/12, noting 13 are merged councils. 37 councils are regional and rural and 9 are metropolitan.   

Demonstrating you have your house in order

All fully approved SRV applications since 2017 have demonstrated a past achievement in delivering productivity and cost containment strategies. If a council can’t show a history of working and improving itself, then it is unlikely to get the full amount of the SRV it needs.

IPART has been willing to approve temporary relief for councils who didn’t meet the productivity criteria. In the last two years, Liverpool Plains and Central Coast did not sufficiently meet the productivity criteria and received approval for temporary SRVs (for three and two years respectively). In 2022, Central Coast Council successfully reapplied for the full amount of the requested SRV, a ten-year temporary SRV. The most significant change between the two applications was that the council was able to demonstrate that they had acted on their documented Business Recovery Plan to get their house back in order. Liverpool Plains, who received a two-year temporary increase from 2020/21, is currently undertaking productivity improvements and yet to reapply for their permanent SRV.

The new IP&R guidelines require councils to undertake a systematic program of service reviews, that are set out in their operating plans and reported against annually and in the state of the council reporting. IPART will no doubt start to look at these for evidence of productivity and cost containment. It is an opportunity to think strategically and innovatively about how critical services and infrastructure can be delivered better into the future. It will be central, not just to making the case for an SRV, but to demonstrating that the council can meet the changing needs of the community in a financially sustainable way.

If your ten-year long-term financial plan shows you have modelled the required SRV and you are executing a clear plan to review services, continuously and systematically for the future needs, the case for the SRV is made much easier.

How should council approach the application process

How to write a successful SRV application? The next instalment in our SRV series is coming to you at the end of June.

For further information and/or a confidential chat about your business improvement needs, please contact Greg Smith (0407 294 765) or Janine McKenzie (0415 444 225).