Councils charge rates to raise revenue so they can provide services and infrastructure to their communities. Each year, as part of the budget process, Councils decide the rates and charges for the financial year.

General rates

General rates are levied on all properties which are not exempt under legislation and contribute towards all Council services other than waste, water and wastewater. A rate is levied based on the unimproved value of the land.

The unimproved value of the land is determined by the State Government and valuations are typically updated every two years.

Differential general rate

Particular land uses can contribute to an increased cost of providing services and facilities. Accordingly, Council may determine different categories of rateable land based on land use, access or consumption of Council services.

Council may levy a different rate in the dollar for each category in calculating the rate amount.

Rate-in-the-dollar

Council’s budget determines how much money it needs to deliver its services to the community. Council then calculates how much each category of ratepayers should contribute to these services.

The unimproved land values of properties in these categories are then assessed against the total to determine the rate-in-the dollar that will apply to that category.

Minimum general rate

The minimum amount of general rates payable, irrespective of valuation, which reflects the principle that all ratepayers make a meaningful contribution.

Utility charge

A charge for the provision of water, wastewater or waste collection services for properties that are within declared service areas. Council water charges have a two-part charge for infrastructure and consumption.

There is no consumption included with the infrastructure charge - that is you pay for all the water you use.

Debt or deficit?

A debt is borrowed money that must be repaid.

A deficit is the amount by which expenditure exceeds income.

For example, if Council has an operational deficit, this is not a debt. It is the amount by which the cost to deliver services exceeds the revenue it will receive in that financial year.

Surplus

A surplus is the amount by which income exceeds expenditure. It is Council’s objective to have a surplus each financial year.

Depreciation

Council’s care for a wide range of community assets from water treatment plants to bridges. Just like your car, the value of those assets declines over time as the asset experiences wear and tear.

Depreciation expense is the cost of this wear and tear. This cost is quarantined in the financial accounts and used to fund replacement and repair of these assets at some point in the future.

Councils should ensure these funds are available for future investment and not use them to fund new assets as the funds may not be available if and when existing assets fail.

Given the significant asset base that Bundaberg Regional Council has (around $3 billion), depreciation expense reflects a significant cost and accounts for 28 per cent of Council’s operating budget.