Fees and Charges Policy

Fees and Charges Council Policy Document No:  
Approval Date: 27 April 2020
Approved By: Council
Review Date: 30 April - Annually
Responsible Officer: Chief Financial Officer Version No 01
Authorising Officer:  Chief Executive Officer

Purpose

To ensure the City sets fees and charges in accordance with a standard methodology providing transparency to the community in the decision-making process.

Scope

This policy applies to all fees and charges listed in the annual Budget, in addition to any new fees or charges that the City is able to levy which has not previously been included in the schedule of fees and charges.

Council must consider the application of this policy when:

  • Setting fees and charges (excluding rates); and

  • Reviewing fees and charges.

The City provides a wide range of services to its community. In undertaking this role, the City assesses community needs through its planning process and determines which services Council will support. Of those identified services, the City can advocate for the service, facilitate the service or actively participate and deliver the service.

Some of these services are required due to statutory or legislative obligations, whilst for other services the City has discretion whether or not to provide the service and at what level and quality.

In planning for a service, the City must decide on the level of rate contribution it will allocate to support the service. Once the rate contribution to the service has been determined, the balance of the cost of service, which is unfunded, will need to be recovered from the users as a fee or charge or other revenue stream, such as grant income.

The setting of fees and charges requires a standard methodology which is applied consistently across the organisation in order to enhance accountability and provide transparency to the community in the decision-making process.
 

Definitions

City

The City of Greater Geelong organisation led by the CEO.

Council
The City of Greater Geelong Council comprised of elected councillors and led by the Mayor.

Direct costs 

 Costs, captured at an activity level, which can be readily attributed to the service because they are incurred exclusively for the particular service.

Indirect costs

 Departmental costs that support the service (e.g. Manager and department administration costs).

ELT

The Executive Leadership Team of the City, as constituted from time to time.  

Overhead costs

Costs that support the service at an organisational level such as payroll, risk management, information technology, payables, receivables and insurance.

Council Policy

Fees and charges are a component of the City's revenue raising strategy and represent 19% of Councils’ budgeted recurrent revenue.

Fees and charges are raised for several reasons:

  1. To increase revenue available to the City to support the cost of service delivery;

  2. To support the City's medium to long term service delivery objectives; and

  3. To help users of the City's services understand the value and benefits they obtain when accessing those services.

In setting Fees and Charges Council is committed to:

  1. ensuring resources are used efficiently and effectively to finance the service delivery objectives outlined in Greater Geelong: A Clever and Creative Future and Council Plan 2018-21.

  2. identifying the level of rate contribution provided to individual services to ensure transparency in decision making.

  3. ensuring the City's long term financial sustainability by considering user pays principles as part of determining the most appropriate way to fund services.

1.Fees and Charges Framework

1.1 This policy is underpinned by the User Fee Decision Matrix, which provides a standardised approach in determining the target rate contribution to be provided to a service.

1.2

 User Fee Decision Matrix
Target Rate Contribution
(% Rate Contribution)
Cost Recovery Fees and Charge Setting Criteria Impediments/ Constraints
100% Rate contribution No Cost recovery No Fee or Charge Levied N/A
Partial Rate Contribution Partial Cost recovery Fee set by Council (Discretionary) Impediments may prevent targeted cost recovery (e.g. set by statute)
0% Rate contribution Full Cost Recovery Options
  • Fee Set by Statute
  • Fee Set by Local Law
  • Fee set by Funding Agreement
  • Fee set by Council (Discretionary)
Impediments may prevent full cost recovery (e.g. set by statute)
0% Rate contribution Market Driven (must be Full Cost Recovery plus Margin) Fee set by Council (Discretionary) This service is a significant business activity and subject to National Competition Policy

1.3 All City services will be subject to the User Fee Decision matrix.
1.4 Council will review and endorse the User Fee Decision Matrix annually as part of the budget process.

 

2. User Fee Decision Matrix

Council’s User Fee Decision Matrix is based on the following:

2.1 Identification of services which Council provides.
2.2 Classification of the services between external services (those that have a direct interface with external customers and internal services (activities that support the provision of the external services). Fees and charges will only apply to external services.
2.3 Determining if the service has general or specific users. Generally, services which are provided for the broader community, such as public open space, will not attract fees and charges.
2.4 Understand the fee setting criteria. The type of fees and/or charges for the service may be subject to statute, local law, and schedule of fees or the discretion of the City. The type of fee and/or charges will determine any restrictions on setting the price.
2.5
Determining if the service is a Significant Business Activity. Under National Competition policy, competitive neutrality adjustments, to ensure full cost reflective pricing, are required if the service is a Significant Business Activity. To comply with National Competition policy, Councils need to identify their Significant Business Activities and adjust their prices, where relevant, to neutralise any competitive advantage when competing with the private sector. Cost reflective pricing includes recognition of private sector equivalent costs such as rate of return, regulatory costs not incurred by Council and taxes.
2.6 Classification of the cost recovery for the service will determine the total revenue from fees and charges. Individual fees and charges will then be set based on fee and charge setting criteria.
2.7   Target rate contribution will be determined by the City based on community needs and policy objectives. Services that are likely to attract a rate contribution are those which provide a broader community benefit as well as benefits to the individual users. The target that is set will be endorsed by Council and used by service managers to calculate required total fee and charge revenue. Service managers will then set individual fees and charges based on expected usage. Each service will initially be assessed under the categories:
  1. 100% rate contribution (no cost recovery);
  2. Partial rate contribution; or
  3. 0% rate contribution (full cost recovery).
2.8 Uniform pricing services which are provided at a similar level or standard will have the same fees across the municipality.

3. Costs excluded in setting fees and charges

Costs which are incurred for the benefit of Council, the Chief Executive, Directors and Legal Services and Governance department will be excluded.  These costs are not considered Indirect Costs but a cost of being a Council.  These costs will be assessed in the calculation for the municipal charge (a fee on all rateable assessments to cover the fixed and unavoidable costs of governance).

4. Ancillary Services

In some instances, a service which has been defined as having ‘general’ users and would not normally set a fee may charge users to access facilities/grounds e.g. weddings.  Cost recovery of these services will be market driven and reflect full cost recovery plus margin.

5. Uniform Pricing

In order for users of a service to be confident that the fee charged will provide them with a similar level of service regardless of their social equity or location, the City will endeavour to adopt uniform pricing for like services.

6. Transition period

The base level of rate contribution for each service will be recognised as the levels approved within the 2019-2020 Budget.  Where there is a material difference between the required level of rate contribution and the base level of rate contribution Council will consider phasing increases over a period of time.  The phase-in period will be determined following consideration of the user’s capacity to pay, commercial implications and the funding pressures on the City.

7. Access

The community will be able to access information about fees and charges from the City’s website and in the annual Budget document.

Implementation of this Policy

Monitoring and Reporting

The Responsible Officer will review this policy annually, during budget development.

Advice and Assistance

The Responsible Officer for this policy manages the provision of advice to the organisation for at least the period shown below

 
Record Retention/Disposal Responsibility Retention Period Location
Adopted Budget Chief Financial Officer 7 years Electronic Document Records Management System; Financial Management Publications.

Review

The Fees and Charges Policy will be reviewed annually during budget development, with consideration given to service levels and productivity.

References

  • Fees and Charges – Cost Recovery by Local Government. Victorian Auditor-General’s Report April 2010.
  • Fair Play Strategy 2017 CPL285.9.
  • Local Government Best Practice Guide Revenue and Rating Strategy Department of Transport, Planning and Local Infrastructure 2014.
  • National Competition Policy (NCP).
  • The Local Government Act 1989.




Page last updated: Thursday, 29 April 2021

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