Ratepayers weigh-in on Kempsey Shire Council's forecast deficit and proposed rate rise

They agree that an increase of income one way or another for council is necessary, and that council and the community need to work together.

They share a common concern that Kempsey Shire ratepayers are unable to afford the proposed rate rise and if approved will have a negative impact on future viability of the Macleay Valley.

A cumulative deficit of $103 million is a 10-year projection of what council's financial position will be if nothing changes.

Council is looking into whether a special rate variation (SPV) is required and is asking for community engagement throughout October ahead of a recommendation being presented at the November Ordinary Council meeting.

Three proposed rate rises between 51 per cent and 94 per cent over three years are being considered to assist with the unsustainable prediction.

Kempsey Shire Council says the rising interest rates and cost of living that has put many in the Macleay Valley community under financial pressure is also affecting council.

The cost of materials, wages, and maintaining or replacing the $1.5 billion in assets has increased far more than the income council can currently generate, and borrowing money costs significantly more now following the rises in interest rates.

Rising cost of materials and supply chain issues and the Award increases for Local Government have all contributed to the financial forecast and are factors that can't be controlled by councillors.

Representatives of residents and ratepayers have added to the contributing factors of council's deficit, including Federal and State Government's role, Kempsey Shire Council's past spending and borrowing, and depreciation of grant funded projects.

NSW State Government cost shifting of financial responsibilities to local councils is a major contributor.

Previous financial responsibilities of roads, waste or environment that have been reassigned to local councils is a contributing factor to Kempsey Council's need to increase its income.

"The NSW Government recently reneged on a deal to take responsibility for Armidale Road - a significant piece of state infrastructure - leaving a massive cost burden on council," said Secretary of Kempsey Shire Residents Association (KSRA), Dick Pearson.

President of Crescent Head Residents & Ratepayers Association (CHRARA), Fred Andrews, believes the community needs to be fully informed on the reduction in Federal monies.

"Most people feel government expenditure doesn't affect them and they certainly don't believe it will directly affect their hip pocket," he said.

Crescent Head resident Mark Baxter says the State Government cost shifting onto local councils like Kempsey is "unjust".

"The severely financially stressed ratepayers of the Valley having to foot the bill for years of clever State and Federal Government theft is not right," he said.

"We don't have the money to look after these things."

Mr Baxter believes the Kempsey LGA has been "systematically sabotaged" by the State and Federal Governments since "Whitlam's inspired legislation", referring to the Financial Assistance Grant Program.

"The legislation promised two per cent of total tax revenue to LGA's of Australia," Mr Baxter said.

"Since then this has been cut to 0.5 per cent... so we have received a quarter of what was originally promised."

Mr Baxter believes this decrease is a "betrayal" to all LGAs who now receive less revenue, which sees local councils shift costs to ratepayers.

Mr Baxter wants to see the Macleay Valley residents benefit from an improved tax revenue where the State and Federal Government return the taxes that they have "systematically taken from this valley."

"The working class, the hard-working employees and employers of this valley send millions in TAX revenue to Canberra. All we want is our fair share of that tax," he said.

Mr Pearson agrees that the Federal and NSW State Governments should shoulder their share of the load.

"The Federal government must return to spreading one per cent of GDP across local councils nationally; this has slipped over time to about 0.5 per cent," said Mr Pearson.

"Further, the Federal government must make additional untied Financial Assistance Grants to councils."

Mr Andrews is concerned about the ongoing depreciation effect from government grants.

"[Kempsey Shire Council] is constantly boasting about the vast amount of grant money applied for and received but never do we hear about the flow on effect of the costs of these grants which appear, due to the ongoing depreciation effect, to be nothing more than a cash advance," he said.

He believes that more borrowings would be untenable and the community should be made fully aware of the ongoing costs of these grants.

"Even with a rate rise the forecast is not sustainable," he said.

Mr Andrews would like to see council review all upcoming projects and reconsider how necessary they are.

Mr Pearson says council's "diabolical" financial situation was "inevitable."

"It has been coming down the pike for some years," he said.

Mr Pearson believes a rate increase of some form or a reduction in council services is required to deal with the substantial deficit prediction.

"Something has to give."

However, there is a common concern that many current ratepayers throughout the shire could not afford the proposed rate rise and would force current residents and business out of the region and deter potential future ratepayers.

Mr Andrews believes many Crescent Head ratepayers would struggle to afford the proposed rate increases.

"There are many ratepayers in the Crescent Head area who's land value, through no fault of their own, has increased by 300 per cent or more over the last three years and have already received massive increases in their rates this year.

"They may have an increased asset but it is of little value until sold," he said.

Mr Andrews believes council needs to incentivise new business, noting the empty shopfronts throughout the shire.

"This proposed rate increase will have a major negative impact on any possible new business owners and will only deter the financial viability of starting new business within the shire," he said.

Mr Baxter is predicting a "mass exodus" if the proposed rate rise is approved.

"A 90 per cent increase in rates for the ratepayers of the valley will force people out of the area and reduce the incentive for people to come and invest in the valley, something we desperately need," he said.

Mr Pearsons says the current councillors are not to blame.

"This 'dead financial dog' just happens to have been left on the doorstep of the current bunch of recently elected councillors and they have to make some very tough decisions in November," Mr Pearson said.

"We are all in this together."

The (KSRA) is urging residents to make their views known to council regarding the issue by completing the survey on council's website.

"Better still, use the platform to make a submission - a few lines on how the proposed Special Rate Variation will affect you is all that is needed," said Mr Pearson.

"Council has often been justifiably criticised at times for not engaging with the community on issues that affect their lives, however, this time council is effectively begging people to have their say.

"If people don't make their views known to council now, then they can hardly bellyache after the event," he said.

Mr Baxter agrees that fingers should not be pointed at Kempsey Council.

"Our anger should be pointed at the State and Federal Government about the Financial Assistance Grants and Cost Shifting. They are the reasons the rates may go up," he said.

Mr Baxter hopes the proposed rate rise will see a rise in people using their political power.

"We need to be emailing our representatives and get them helping the ratepayers of the Macleay to fight for justice," he said.

Kempsey Shire Council is urging community members to have their say by completing a survey and submission and have provided explainer videos and more resources on their website here: https://yoursay.macleay.nsw.gov.au/our-financial-future.

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