Throughout the development of Council’s Community Strategic Plan, and reinforced through the community satisfaction survey in 2025, a key theme has been the community’s desire to remain an independent and stand-alone Council.
One of the key aspects of being an independent Council is to have the ability to ensure we can maintain and renew our assets to meet targeted service levels and that we are financially sustainable into the future.
Council currently has a large gap between the revenue we receive and the funds we require to maintain our assets and services to the targeted service levels.
While Council seeks to keep the rate payer costs associated with providing services as low as possible, with the rising costs associated with maintaining infrastructure, Council is looking at all options to ensure we are financially sustainable into the future.
In addition to seeking funds through state and federal government grants and implementing improvements to the efficiency of Council’s operations, Council is also having to look at a potential rate rise to be financially sustainable and to maintain our assets to the targeted service levels.
The information provided below is for the potential for Lockhart Shire Council to make an application to the Independent Pricing and Regulatory Tribunal of NSW (IPART) for a permanent 44% cumulative Special Rate Variation (SRV) to be implemented over two financial years from 1 July 2027 to 30 June 2029 with a 20% increase in total rates revenue in 2027/28, and a further 20% increase in total rates revenue 2028/29 to be implemented by rating category.
It is important to note that should the application proceed and be approved, Council would work with the community to have the impact of the SRV kept as low as possible in any single year.
There are four key stages to making an application of a Special Rate Variation and these are outlined below:
At Council’s ordinary meeting on 18 May 2026, Council endorsed a report to start a conversation with the community about a potential SRV.
Enquiries on the proposed SRV can be directed to Council’s customer service team on (02) 6920 5305 or mail@lockhart.nsw.gov.au
Financial sustainability for local governments is critical because they are responsible for directly providing the community with a wide range of public services and community infrastructure and facilities. This requires local governments to control and maintain a significant base of infrastructure assets. This requires not only significant up-front expenditure and investment but also on-going expenditure to maintain and renew assets as required during their useful lives.
Council has recognised that financial sustainability requires the following to comply with Chapter 3 of the NSW Local Government Act 1993:
The NSW Treasury Corporation defines financial sustainability as a local government will be financially sustainable over the long term when it is able to generate sufficient funds to provide the levels of service and infrastructure agreed with its community.
Council has recognised that there are significant financial sustainability challenges in the General Fund. These challenges focus on the shortfall of available funding to appropriately address the asset renewal and maintenance requirements.
To address these challenges Council is applying for an SRV and will use the additional rate revenue to partially address the current infrastructure asset renewal gap.
The rate peg is a value set by the State Government that is the maximum increase that Council can increase its general rate income by for the applicable year (general rate income increases excludes water, sewer and domestic waste charges). For any increases above this value, Council needs to undertake an SRV process.
It is critical that Council closely monitors and manages its unrestricted cash position.
If Council was to continue operating in a business-as-usual manner, the General Fund would move into a negative unrestricted cash position within two years. This is the equivalent of running insolvent for a council and cannot be allowed to occur.
The proposed SRV will provide Council the funds to better maintain the infrastructure networks and assets funded from the General Fund in a manner that is closer to community expectations and maintain a positive unrestricted cash position.
Council would need to defer necessary capital works and revise the basic range and levels of services provided to the community to avoid a deteriorating cash position, which is not sustainable in the long term. Service levels would need to reduce in the absence of additional funding being available.
Council is proposing that the SRV funding be used to improve Council’s financial sustainability by addressing the current General Fund operating deficit, as well as creating capacity to commence addressing the backlog of works required to bring Council’s assets back closer to the targeted service levels.
Council is also required under the NSW Local Government Act 1993 to achieve a fully funded operating position.
Whilst this may occur when viewing Council’s consolidated position (i.e. General Fund and Sewer Fund), Council must ensure it can operate appropriately across all funds. The General Fund is forecasting an ongoing Net Result (including Depreciation and Other non-cash items) of approximate $5.9 million deficit annually. This means that the rates received are not adequately covering the expenditure required to provide services and renew assets as and when required.
Council is preparing a Capacity to Pay report to assess the level of advantage and disadvantage within the Lockhart Shire Council Local Government Area. This report will provide an analysis and evaluation of relative wealth and financial capacity whilst also looking at the financial vulnerability and exposure of different community groups within the local government area.
While this report is being prepared Council has also reviewed and taken the below into consideration.
Council recognises the community has been doing it tough and has held off as long as possible to implement a Special Rate Variation (10 NSW councils made applications for 2026/27, 6 in 2025/26, 9 for 2024/25, and 17 in 2023/24).
Unfortunately, additional money is required to keep infrastructure adequately maintained so we can continue to deliver the same level of service the community expects.
For ratepayers experiencing financial hardship, Council has a “Hardship Policy” that is currently on exhibition and will be updated as part of this process to ensure we work with the most vulnerable in our community to support them as best we can during these challenging times.
Council recognises that in asking the community to make a greater contribution to the rates revenue, it needs to ensure it is operating as efficiently as possible and only seeking to increase rates by the smallest amount possible.
Council has made significant efforts to improve operations and deliver services to the community without increasing rates over several years. Council is constantly seeking ways to drive improvements through innovation and efficiency gains, as well as working hard to keep operating costs under control.
Through this process, Council will strive to achieve $200,000 through efficiency gains and operational savings over the 2-year period 2027 to 2029.
Council has actively sought additional revenue opportunities through State and Federal Government grants, reviewing service pricing and maximising the investment portfolio and will continue to do so. Should the SRV application be successful, Council will also seek to:
As previously mentioned, Council seeks to keep the burden on rate payers as low as possible and in recent years, has continued to make efficiency gains and absorb newly added costs without seeking to raise rates. There have been:
Residents across Lockhart Shire Council received new Notices of Valuation from the NSW Valuer General from January 2026. This is provided every 2 to 3 years and reflects the unimproved value of land of a property.
New valuations will apply from 1 July 2026 for calculating general rates.
It’s important to note an increase in land value does not necessarily mean an increase in rates. Council does not receive any more money because land values increase – some people may pay more or less on their rates depending on the change in value of their land relative to changes in land values across the Shire.
Council will be receiving new land valuations from the Valuer General effective 1 July 2026.
An increase in land valuations does not result in any additional general income for councils.
The total income that Council can source from land rates is capped at the approved rate pegged amount or the SRV variation.
It simply means it changes the way rates are distributed within each rate category/subcategory. Some people will pay more rates, some less, some the same.
An increase in your land valuation does not necessarily mean your rates will increase. The difference is how the rates revenue is shared across ratepayers, based on the change in their property value. Some people may pay more or less on their rates depending on the change in value of their land relative to changes in land values across the Shire.
Generally, properties whose land valuation increase is lower than the average increase for that rates category (residential, business, farmland or mining) will see a reduction in rates. However, properties whose valuation increase is higher than the average for the rating category may see a rise in rates.
Like many councils across NSW, Lockhart Shire Council is facing the difficulty of maintaining its infrastructure and services within our existing income levels. The cost to deliver services and maintain community assets to current service levels has been increasing well above the rate peg amount each year. Combined with reduced financial assistance and ongoing cost shifting to Local Government by other levels of government, as shown in the image below, councils are under constant financial pressure to deliver the same services for less, which is not sustainable.
With 2,550 rateable assessments, the impact of recent cost shifting on Lockhart Shire Council equates to $1.4m , which is close to the value of the proposed SRV.
Council’s long term financial plan shows that we are currently operating with a large operating deficit in the General Fund.
This essentially means that we are spending well less each year than we should be to maintain our assets and services to our current targeted service levels. As an example, Council’s transport assets, which includes roads, bridges, footpaths and related assets currently has an annual gap of approximately $2.3m.
Without addressing this gap, the residents and visitors of the Shire will see a deterioration in service levels and each year we fall behind, the cost of renewing infrastructure rises, and we will eventually have to catch up, often at a higher cost.
Current forecasts show that without action, either through additional income or reduced expenditure, Council’s unrestricted cash balance will move to a negative value within two financial years.
A negative unrestricted cash balance is akin to being insolvent for a council and cannot be allowed to occur.
While Council will continue to review and pursue operational efficiencies wherever possible, its ability to generate additional revenue from other sources remains limited. As a result, Council is considering an SRV to secure the funding required to sustainably maintain, renew and improve community assets into the future.
Council will be using a variety of methods and tools to engage with the community including a letter to ratepayers, face to face sessions throughout the Shire, social media, Council’s website, Council’s operational plans, and internal staff briefings.
Throughout the engagement process, we are aiming to reach as many people as possible and ensure all residents and ratepayers are aware and have the opportunity to provide feedback to this process.
A process like an SRV impacts everyone in a different manner and Council is keen to provide opportunities for one-on-one conversations where we can discuss the impacts with ratepayers on a case-by-case basis.
The dates and times for the drop in sessions to facilitate face to face sessions are listed below:
The Rock | The Rock Community Centre (Recreation Ground) | 16 June | 3pm-7pm |
Lockhart | Council Chambers | 17 June | 3pm-7pm |
Yerong Creek | Yerong Creek Community Hall | 18 June | 3pm-7pm |
Pleasant Hills | Pleasant Hills Community Hall | 19 June | 3pm-7pm |
Council is proposing a Special Rate Variation (SRV) up to a cumulative value of 44% on Council’s total General Rates base to be implemented over two years – from 1 July 2027 to 30 June 2029 as per the below breakdown.
The increase consists of 8.7% in Rate Peg values and 31.30% in SRV values, which together and including the compounding effect equates to a 44% increase over the proposed two year implementation cycle with the proposed split by category shown in the table below.
It is proposed the SRV will result in a $1.5m annual improvement in Council’s annual financial position and will be realised through a combination of:
The impact on individual ratepayers varies according to the rate category their property is in. Indicative information on the impact on the average ratepayer in each main category can be seen in the table below.
The tables below show the differential between the proposed SRV and no SRV by rating category.
It is very important to note that the SRV does not apply to all components of a rates notice. SRVs apply only to the general rate components. An example is shown the sample rates notice below, outlined in red. It does not apply to sewer or domestic waste management charges.
As with many local governments, a major challenge for Council is the management of ageing assets in need of renewal and replacement.
Without useable assets, the quality of life and potentially the safety of our community is negatively impacted.
The SRV funding would be used to:
Any additional revenue and/or operational savings would be used for purposes including but not limited to:
Lockhart Shire has a very low rate base compared to nearby similar councils and other than Coolamon Shire, the other councils’ total rate revenue values are significantly higher than Lockhart Shire’s.
