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16.2.1 Recovery of Costs at Time of Benefit

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  6. 16.2 Step 1 - Who benefits from the activity, what is the extent of that benefit and who contributes to the cost of the activity »
  7. 16.2.1 Recovery of Costs at Time of Benefit

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LGAA section 122F(a) requires Council to recover the cost of any expenditure at the time the benefits of that expenditure accrue. The principle is concerned with the spread of costs and benefits across time. Ratepayers should not be required to meet costs until they enjoy the associated benefits.

Project Watershed has capital assets in excess of $100 million and further capital expenditure of approximately $25 million is planned over the next 15 years. This expenditure relates to the maintenance and replacement of existing assets, and the construction of new assets that the community requires. Council has determined a level of annual expenditure that provides for the funding of ongoing maintenance and operating costs, recovery of deficits in recent years for work relating to Project Watershed and funding of capital expenditure requirements over an appropriate time frame.

Project Watershed has a deficit resulting from a considerable shortfall in funding while this rating system has been put in place. Taken at face value, LGAA section 122F(a) could mean that Council would be unable to fund past deficits. However Council has statutory responsibilities under the Soil Conservation and River Control Act “to minimise and prevent damage within its district by floods and erosion”. Under the LGAA Council also has the “obligation to act in the interests of its residents and ratepayers”. Having regard to the purpose of the legislation and giving words their normal and natural meaning, Council believes that rates can include provision for deficits which have accumulated as a result of expenditure from past works and services.

Council considered that the proposed level of annual expenditure, and how it has been determined, meets the requirements of S122F(a).