|Fees and Charges Council Policy
||27 April 2020
||30 April - Annually
|Responsible Officer: Chief Financial Officer
||Chief Executive Officer
ensure the City sets fees and charges in accordance with a standard methodology
providing transparency to the community in the decision-making process.
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
Council must consider the application of this policy when:
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.
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.
The City of Greater Geelong organisation led by the CEO.
The City of Greater Geelong Council comprised of elected councillors and led by the Mayor.
Costs, captured at an activity level, which can be
readily attributed to the service because they are incurred exclusively for the
Departmental costs that support the service (e.g.
Manager and department administration costs).
The Executive Leadership Team of the City, as
constituted from time to time.
Costs that support the service at an organisational
level such as payroll, risk management, information technology, payables,
receivables and insurance.
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:
To increase revenue available to the City to support the cost of service delivery;
To support the City's medium to long term service delivery objectives; and
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:
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.
identifying the level of rate contribution provided to individual services to ensure transparency in decision making.
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.
| User Fee Decision Matrix
|Target Rate Contribution
(% Rate Contribution)
||Fees and Charge Setting Criteria
|100% Rate contribution
||No Cost recovery
||No Fee or Charge Levied
|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
- 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:
||Identification of services which Council provides.
||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.
||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.
||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.
|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.
||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.
||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:
- 100% rate contribution (no cost recovery);
- Partial rate contribution; or
- 0% rate contribution (full cost recovery).
||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.
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
||Chief Financial Officer
||Electronic Document Records Management System; Financial Management Publications.
The Fees and Charges Policy will be reviewed annually during budget development, with consideration given to service levels and productivity.
- 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.