Fees & Charges Pricing Policy

Background

Fees and Charges are levied by the Latrobe City Council to enable the provision and upkeep of facilities owned and managed by the Council enabling services to be provided to the community.

Objectives

This policy provides guidance for Latrobe City Council in setting fees and charges for its facilities and services, which are consistent, fair and equitable and comply with all relevant statutory requirements. It needs to take into account community benefit, user groups and corporate objectives, and to provide for regular reviews of fees and charges within the overall service and financial planning process. It encourages pricing that is simple to administer, easily understood, provides value for money, and optimises utilisation of Council’s assets. It will reflect Council’s continuing commitment to support, encourage and promote the use of the facilities by the citizens of Latrobe City with an emphasis on the provision of subsidised venues and sporting facilities to community groups and schools. The policy establishes the types of pricing methods available for fees and charges, and encourages Council to move over time to a position where all fees and charges can be readily classified and the cost of providing the service is understood.

Scope

This policy applies to all facilities and services directly managed by Council for which a fee or charge is applicable. This policy does not apply to reserves, pavilions and meeting facilities managed directly by Committees of Management. This policy also does not apply to Council facilities leased to external parties.

Principles of Management

This policy applies to all Latrobe City Council employees who are responsible for determining fees and charges for services (excluding rates) provided by Council.

It is the responsibility of Managers who charge fees and charges to ensure that their budgetary responsibilities are met. This includes ensuring that all goods and / or services provided by Council are charged for at the level of fees and charges adopted during the Annual Budget.

It is the responsibility of each Manager to review their fees and charges, at a minimum, on an annual basis with reference to:

user capacity to pay;
community service obligations;
cost recovery principles;
benchmarking of similar services;
statutory principles;
expected utilisation of the service; and
compliance with other Council Policies affecting the service in question.

Council’s role is to determine the extent of cost recovery for particular services consistent with the level of individual and community benefit that the services provide and taking into consideration the community’s expectations.

Council’s services are very diverse and there are widely differing levels of need and ability to pay among the various user groups. Council’s role in pricing varies accordingly.

Council’s services are provided on the basis of one of the following pricing methods:

Statutory Pricing;
Council Subsidy Pricing;
Full Cost Recovery Pricing;
Market Pricing, and
Concessional Fees

Pricing Methods

Statutory Pricing

These prices are set by legislation. For some fees and charges Council's role is to administer services and apply fees set or controlled under statute or funding agreement. These fees may only provide a partial recovery of the cost of providing the service. Council will set prices as per the relevant legislative instrument. Council will set statutory prices at the maximum available.

Council Subsidy Pricing

Council subsidy pricing is currently not fully applied. This method has been adopted in principle but there is acknowledgement that the complete view of the cost to provide all services is not known at this time, however will be transitioned over time.

Full Council Subsidy Pricing Services provided under Council’s community service obligations are funded from Council’s rate revenue, and therefore receive a Full Council Subsidy and have a zero cost to the ratepayer.

A situation where Full Council Subsidy pricing is appropriate is where the consumption is applicable to the community as a whole, rather than having an exclusive benefit to individual users.

Partial Council Subsidy Pricing Services provided by Council as part of a policy objective are often priced using a Partial Council Subsidy. In this case, less than the full cost of providing a service is recovered from the price charged for that service. The subsidy is funded from Council’s rate revenue and in some cases from external sources, such as government grant funding.

Situations where Partial Council Subsidy pricing is appropriate include: • where the service benefits the community as whole as well as the individual customer as a short-term approach to stimulate demand for a service; • where charging prices at full price may result in widespread evasion or inappropriate adoption; • where the service is targeted at low income earners (for example, Pensioners and Health Care Card holders); and • fees and charges are set at a level to encourage certain behaviours.

Partial cost pricing will always be based on knowledge of the full cost of providing a service. Where the full cost is not known the default position will be a continuance of the historical pricing structure.

Subsidies will be based on a percentage of the cost of the service, and therefore, prices will move in accordance with the changes in the cost of providing the service each year. Volume and type of customers will also be monitored to ensure the objective of providing the service at a subsidised price is still relevant.

Full Cost Recovery Pricing

Services provided by Council that benefit individual customers specifically, rather than the community as whole, will be priced on a full cost recovery basis. Full Cost Recovery pricing will aim to recover all direct and indirect costs involved in providing a service or as much as reasonably practicable.

The Cost Recovery Principles are designed to promote efficiency and equity. This will enable Council’s fees and charges to be transparent and be calculated on a consistent basis. Cost recovery means the recuperation of all costs associated with those services or products. In addition to the costs directly associated with the service, full cost includes an appropriate allocation of indirect costs or overheads.

The method used to allocate these expenses is based on the Municipal Association of Victoria Overhead Model. This is to be done in conjunction with the Financial Services unit.

The overheads that Council will be apportioning include:

Buildings and Equipment
Finance
Human Resources / Payroll / OHS & Training
Information Systems
Insurance
Utilities
Advertising
Management

Market Pricing

The setting of market pricing will be undertaken in accordance with Competitive Neutrality Policy, National Competition Policy principles and the Trade Practices Act.

If a market price, less than full cost recovery is contemplated, Council should review whether it should provide the service, or reconsider whether there is a community service obligation.

Community Organisation Concessional Fees & Charges for Hall and Venue Hire

To deliver appropriate community outcomes, Council will continue to provide concessional fees for each service. These fees will be determined by taking the following into account:

Type of service being provided;
Balancing individual and community benefit;
Users’ ability to pay;
Market pricing - the pricing of comparable services offered by other providers; and
Competitive neutrality (where relevant).

Council recognises the role that community organisations and in particular schools, play in strengthening and providing benefit within the community. It is appropriate that Council not only provides concessional fees and charges but also has the ability to subsidise fees and charges payable by community organisations.

The standard concessional discount for community groups will apply to all hall and venue hire fees. The discount is 60% off the standard fee as adopted in the Fees and Charges schedule for hall and venue hire. The discount is available to any community groups based within Latrobe City Council municipality or that provide services or benefits to the Latrobe City community such as:

Sporting Clubs
Schools
Not for Profit Organisations
Historical Societies
Senior Citizen Groups

The concessional fee arrangements will apply to all halls and venues including the following:

Newborough Hall
Moe Town Hall
Latrobe Performing Arts Centre, and
Kernot Hall

All halls and venues eligible for the Community Organisation Concessional Fees and Charges will be identified in the adopted Fees and Charges Schedule of Council.

Concessional fee arrangements do not apply to the following due to full subsidy (no charge) arrangements already being in place for community groups:

Senior Citizens Centres
Churchill Hub meeting rooms, and
Moe Place meeting rooms

Ancillary hire costs such as lighting, sound equipment and technicians are not covered by any concessional fees.

Under no circumstances will concessional fees be made available where a grant has been provided by Council for the purpose of subsidising hall and venue hire fees. For instance where an Eisteddfod receives a grant intended to assist with venue or hall hire costs in part, or in full, the Concessional Discounts for Community Groups will not apply.

Accountability and Responsibility

Accountability and responsibility for this policy is outlined below.

Council

Responsibility to ensure this Policy is consistent with Latrobe City Council Strategic Direction and other Latrobe City Council Policy
Responsibility for the decision to approve this Policy by Council Resolution

Chief Executive Officer

Overall responsibility for compliance with this policy
Overall responsibility for enforcing accountability
Overall responsibility for providing resources
Overall responsibility for performance monitoring

General Manager

Responsibility for compliance with this policy
Responsibility for enforcing accountability
Responsibility for providing resources
Responsibility for performance monitoring

Manager

Develop frameworks and procedures in compliance with this policy
Enforce responsibilities to achieve compliance with frameworks and procedures
Provide appropriate resources for the execution of the frameworks and procedures

Employees, Contractors and Volunteers

Participate where required in the development of frameworks and procedures in compliance with this policy.
Comply with frameworks and procedures developed to achieve compliance with this policy.

Evaluation and Review

This policy will be reviewed on request of Council, in the event of significant change in the Executive team, significant changes to legislation applicable to the subject matter of the policy or, in any other case, during each Council term (generally four years).

Definitions

Ancillary Costs – Costs related to Venue Hire such as technicians, lighting, test & tag of electrical items, public liability insurance.

Direct cost - Costs that can be readily attributed to a product or service because they are incurred for that particular service i.e. Labour.

Commercial Use - Regular ongoing hire/use where an entry/participation fee is charged or the hirer is using the facility for personal/commercial gain.

Community Organisation – A formal or informal organisation that relies on volunteer labour to deliver community benefit and does not distribute profits to members or shareholders.

Competitive neutrality - A policy principle that involves achieving fair market environment by removing or offsetting any competitive advantages due to public ownership or government businesses.

Indirect cost - Costs that are not directly attributable to the production to an activity – often referred to as overheads.

National Competition Policy - Federal policy agreed to by the states of Australia. The main aim of the policy is improved economic efficiency through greater competition.

Not-for-Profit Organisation – An organisation which is Incorporated and registered as a not-for-profit organisation and does not fit the definition of a community organisation.

Off-Peak Hire - Hire of halls and venues occurring during Monday to Thursday excluding Public Holidays.

Services - Where the term “services” is used, it also includes any goods Council provides.

Statutory Pricing - These prices are set by legislation. For some fees and charges Council's role is to administer services and apply fees set or controlled under statute or funding agreement. These fees may only provide a partial recovery of the cost of providing the service.

Reference Resources

Local Government Act 1989

Appendices

Applicable scenarios for Council Pricing

Full Council Subsidy Pricing The types of facilities usage that would be included under full subsidy pricing include those that have no fee charged to Community and School groups such as:

Daytime use of Loy Yang Power Latrobe Community Sound Shell and meeting Rooms at Churchill Hub, Moe Place for Community and Not For Profit Groups;
Inter Library Loan Fees with Other Victorian Public Libraries;
Disabled parking permits free of charge for the First Permit;
Spectators to regular competitions at Sports Stadiums;
Boat Launching at Lake Narracan for Latrobe City residents; and
Casual use of the grounds / reserves by schools including bins, toilets & utility costs.

Full Cost Recovery Examples of full cost recovery include the application of Commercial rates on items such as:

Airport Annual Licence Fees
Studio Workshop rental at Latrobe Regional Gallery
Provision of traffic management related to Road Occupations
Commercial hire of venues

Concessional Fees Examples can include:

Sports grounds hire that is based on recovering a proportion of costs associated with maintenance, such as mowing and materials associated with renovation between sports seasons to ensure they are fit for purpose;
School hire of the Performing Arts Centre. Venue hire concessional fee but not any ancillary costs.