Proposed new waste service charge
Friday 14 April 2017
The proposed Waste Service Charge seeks to meet the rising cost of waste services and improve Council’s financial sustainability.
The proposal involves a new flat service fee for all properties based on bin size. It would see Yarra join 73 other Victorian councils that already apply a separate waste service charge in some form in addition to their general rates.
Council Meeting for final adoption
Council is expected to adopt the Draft Council Plan 2017–21 incorporating the Health Plan; Draft Annual Budget 2017-18 - including Proposed Waste Service Charge; and Draft Long Term Financial Strategy 2017-18 to 2026-27 – with or without changes – at an Ordinary Council Meeting at 7pm on Tuesday 6 June 2017 at Richmond Town Hall. At this meeting, Council will also be presented with an alternate budget for consideration that does not include the proposed waste service charge.
Council is considering the proposed Waste Service Charge because of a number of factors:
- The cost to deliver waste services is expected to increase 6.5% per year (triple the State Government’s 2% rate cap), leading to a projected $20m shortfall over the next decade.
- Council has significant budgetary challenges associated with a growing population, ageing infrastructure, rate capping, reduced grants, cost shifting and the need to repay debt and build cash reserves in the short to medium term.
The proposal would enable Council to reallocate the $8.5 million previously collected for waste services from within general rates, to improving Council’s finances so it is better placed to respond to emerging community priorities and external constraints. Among the options open to Council when it finalises its budget (after community consultation) would be to allocate this money to reducing debt and/or growing cash reserves which would improve Council’s liquidity immediately and provide opportunities in the future to be innovative and responsive. If however Council chooses not to implement the waste service charge it will need to look at other ways to address the financial challenges. This could result in Council having to reduce services, service levels and/or capital expenditure.
To read the full Proposed Waste Service Charge, visit www.yoursayyarra.com.au
Statement from the Mayor
Read a statement from the Mayor, Cr Amanda Stone on Council’s Proposed Waste Service Charge.
State Government to receive advice on Council’s proposal
Yarra Council has written to the Minister for Local Government and the Essential Services Commission (ESC) to formally advise of Council’s proposal to introduce a waste service charge as part of its 2017/18 budget.
Council’s letter was aimed at providing the Minister and the ESC with details of, and reasons for, the proposal as well as information about council’s comprehensive communication and engagement with the community on the proposal.
The consultation period for Council’s draft budget, which includes proposed waste service charge, runs from April 6 to May 4 after which time Council will consider all submissions before making a decision on June 6 about the budget, including whether to proceed with a waste charge or not.
Council was advised on Friday April 20 that the Minister has formally requested that the ESC provide advice on Council’s proposal. This is something Council anticipated would occur as a part of the process for considering a waste service charge.
Important Questions and Answers for Ratepayers
These questions and answers have been provided to help you better understand what’s proposed. We will be updating these questions regularly. If you have a questions you think we should add, email us at firstname.lastname@example.org
How much would the waste service charge cost?
The proposal is for a flat charge of $165 per year for households with standard 80 litre bins and $247.50 for households that currently have a 120 litre bin.
This would be over and above the existing rates and ratepayers would see this increase on their rates notice in 2017-18.
Commercial properties using Council’s domestic bin collection services would pay $165 for an 80 litre bin, $247.50 for a 120 litre bin and $800 for a 240 litre bin. GST may be added to the commercial property charge.
Under this new system, commercial properties would be charged at the same level as residential properties for standard 80 litre bins, but retain the ability to obtain larger bins from us at commercial prices or to seek the service from private providers.
Council can provide advice and assistance to households and businesses who want to reduce their levels of waste and at the same time reduce their waste service charge costs.
Ratepayers who do not use Council’s bin service (including many owners of businesses or multi-unit dwellings) would not have to pay the waste service charge under this proposal.
Council is proposing a 50% rebate on the proposed waste service charge for pensioners and health care card holders in 2017-18, subject to annual review. Further details of how pensioners and health care card holders could receive the rebate would be provided with rate notices.
The waste service charge is payable by the property owner who receives rate notices.
The waste service charge will be listed separately on rates notices.
Income from the waste service charge accounts for the weekly collection of rubbish and recycling, as well as Yarra’s green and hard waste services. It would also cover the increase in costs for delivering this service each year. As mentioned above, this increase is expected to be 6.5% a year - triple the State Government’s 2% rate cap for Victorian Councils which unless addressed would lead to a projected $20m shortfall over the next decade.
In Yarra’s most recent customer satisfaction survey, the community identified waste and recycling services as Council’s most important and best performing services. A waste service charge would ensure that these services could be maintained at a high level into the future.
The waste service charge would also free up $8.5 million of general rate revenue so that Council can continue to fund services at the high levels the Yarra community currently values, and remain financially sustainable into the future.
Among the options open to Council when it finalises its budget (after community consultation) would be to allocate money to reducing debt and/or growing cash reserves which would improve Council’s liquidity immediately and provide opportunities in the future to be innovative and responsive. For example it could mean that Council is better placed to introduce innovative waste collection and recovery projects such as the proposal in the 2017-18 draft budget to trial an innovative for food waste recycling.
The State Government’s 2% cap on general rates does not apply to separate service charges, which are permitted under the Local Government Act 1989. This is standard practice amongst 73 other Victorian Councils.
The State Government monitors any increases in service charges to ensure that no money is being made over and above the cost of service delivery.
As mentioned above, if, after community consultation, Council chooses not to implement the waste service charge it will need to look at other ways to address the financial challenges. This could result in Council having to reduce services, service levels and/or capital expenditure.
You may not be aware, but your rates provide so many vital Council services that touch almost every aspect of our lives across a lifetime - from newborns through to older residents and everyone in between. Rates also contribute to things we take for granted such as street trees, footpaths, traffic management, ensuring construction companies are compliant and much more. We should be aware that combined these services and the improvements that they allow Council to make to your neighbourhood, help to create a cohesive, caring, vibrant and connected society – all the things that makes Yarra a place people want to live in.
Here’s a snapshot of what rates in Yarra provide:
- Capital Works (buildings, roads, footpaths, drains, tree roots, etc)
- Engineering Operations (waste management, road and footpath maintenance, etc)
- Family, Youth and Children’s Services
- Leisure, Arts, Culture and Venues
- Compliance, Parking, Traffic and Engineering
- Parks and Recreation
- Construction Management
- Aged and Disability Services
- Buildings, Property and Asset Management
- City Strategy, Sustainability and Strategic Transport
- Library Services
- Statutory Planning
How many other Councils have a separate waste service charge and why has Yarra never had one?
In Victoria, 73 other Councils already have a separate waste charge in some form, some dating back to the 1990s and others more recently. It is true that in the past Yarra has not had a waste service charge, having instead managed its finances and the rising cost of waste services through flexibility in rates and other income as well as continuous improvement. With increased costs of providing services (for example waste costs), cost shifting from other levels of government, reduced grants and other funding, as well as a growing population and ageing infrastructure, Council must look at the best ways to balance the budget into the medium and long term in the interests of the community. For this reason Council is proposing a waste service charge.
It’s difficult to compare Councils because each Council has its own approach to delivering services. Yarra has long supported delivering services “in house” by our own staff as opposed to outsourcing some services as some councils do. For example some councils outsource leisure services or parking services whereas Yarra continues to provide this in house.
Council consistently receives high levels of satisfaction for the core services it provides to the community, many of which are labour intensive. These services don’t just happen, they need to be delivered by staff or contractors and they need to be paid for.
This is not to say Council cannot and should not be looking at ways to improve what it does, be more efficient and reduce the need to increase staffing levels where possible. Staffing levels are carefully monitored by Council to ensure they are no more than what is needed to deliver services. But the reality is every time the community aspires to an extra service, program or event, staff need to deliver these. Unless we reduce what we are currently doing, adding more simply adds more cost. Council is also wanting to hear community views on the current service mix via the budget and Council plan consultation process.
The headings in the budget may be confusing to some readers so hopefully this explains it better:
- The CEO’s office as it appears in the budget includes a whole range services delivered by staff at all levels. For example it includes customer service (four customer service counters and a call centre which answers some 170,000+ community calls a year), governance, records management, community consultations and engagement, strategic advocacy, digital media, publications, civic events and communications, property services, Council meetings, freedom of information, Mayor and Councillor support, place naming, public registers, human resources and organisational development.
- Corporate Services includes compliance (which itself includes local laws staff and school crossing supervisors), parking management and parking services, finance, corporate performance and planning, risk, audit and procurement, innovations and information technology.
It’s a misbelief that new developments in Yarra result in a windfall for Council. It is true there is a lot of new development in Yarra but with new development comes more people who need access to services and facilities including open space, community centres, footpaths, traffic management, recreation facilities and more. Generally any and all gains from new development go back into providing for the community.
Also Council doesn’t spend more for the sake of it or because we have new income from new development.
Instead we determine each year what resources are needed to fund services and infrastructure across the city, and divide this by the total value of all rateable properties (minus other income from grants, fees and charges) to get a “rate in the dollar”. The rate in the dollar is then applied to the Net Annual Value of a property. This way everyone shares the load, for the benefit of our whole community. In other words, new properties mean more sharing of the load, not increased rate revenue.
Increased property values do not increase the amount of rates collected but redistributes the amount paid between individual properties. For this reason Council does not generate extra revenue as property values increase or are revalued.
The word ‘surplus’ can be confusing if you are not familiar with accounting terms because it’s often mistakenly assumed it means surplus cash in the bank. The term surplus, which we are required to use on our income statement, actually refers to accounting (or ‘book’) entries rather than actual movements or availability of cash. We arrive at this surplus (or ‘book entry’) after accounting for all revenue and expenditure in accordance with Australian Accounting Standards.
The cash flow statement is the best place to see how much money is coming in, and how much money is going out (and where it's being spent).
Remembering that if approved it is proposed that the bulk ($6.5m) of funds freed up by the waste service charge will be utilised to repay Council’s $32.5m loan so that Yarra can be responsive to community needs into the future, and the remaining $2m will be available for community priorities, further debt redemption, or building cash reserves (whatever Council decides it wants to allocate it to). Council is expected to resolve on the budget with or without changes – at an Ordinary Council Meeting at 7pm on Tuesday 6 June 2017 at Richmond Town Hall.
Council’s debt is intergenerational – meaning that it has borrowed to pay for facilities that communities today and in the future will benefit from and thus share in the cost. In other words, ratepayers today will not have to bear the full cost of new infrastructure for which the community benefit will last over generations. For example, Council has borrowed to finance large infrastructure projects which include Bargoonga Nganjin North Fitzroy Library and the strategic investment acquisition of a property at 345 Bridge Road, Richmond which is currently leased to a commercial operator and also provides some accommodation for staff.
While the proposed waste charge is calculated on the size of your waste bin, it ALSO covers your recycling, green waste and at call hard waste collections.
So in other words, you would not be paying extra for recycling, green and hard waste. Here’s a snapshot of the Council services available to you:
- Council provides a weekly on the same day as your waste bin is collected.
- Council offers residents a free collection service for garden waste such as branches, prunings and grass clippings.
- You can have as many green waste collections as needed per year. Collections usually occur on a Tuesday or a Wednesday. Residents also have the option to purchase a green bin although this is not mandatory in order to have green waste collected by Council, and green waste can continue to be bundled or cardboard boxed as usual.
- Council offers two hard waste collections per year to each Yarra household.
- Council provides a Christmas tree collection service at no extra cost to local residents through January. Collected trees will be mulched, with the mulch to be distributed around Yarra’s parks.
- Council provides a recycling drop off point for Yarra residents and commercial properties located in Yarra to use free of charge.
- Council is making it easier for you to recycle clothing, homewares, and small electrical appliances through our colourful community recycling bins across four locations. More than 95% of the goods are recovered, with the best of the clothing going to local charities, the rest being reused or recycled.
If you would like to find out more about any of these services, and others offered by Council visit our website (under waste and recycling) or call Council’s customer service team on 9205 5555.
If your complex is serviced by council bins, apartments will be charged the minimum fee (current estimate $165) per apartment.
No, you will not be required to pay the waste charge or swap to the council service. You can continue with your current arrangements.
So long as the entire body corporate agrees to withdraw from Council’s service you will be able to do so, and you can arrange for a private supplier to collect your waste. You will then not be required to pay the waste charge.
You can listen to a discussion about the proposed waste charge in the following interview between Jon Faine and Rob Spence, CEO of Municipal Association of Victoria, which appeared on 774 ABC radio - 18 April 2017.