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Government introduces population growth factor to raise infrastructure funds for growing councils and communities

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Shelley Hancock, NSW Minister for Local Government, Media Release, 5 October 2021

I am delighted to announce that the NSW government will introduce a population growth factor in the annual rate peg from July 2022 to raise much-needed additional revenue for councils to fund key infrastructure in growing communities.

Today I released IPART’s final report following its revenue of the annual rate peg to accommodate population growth.

In its response to the IPART rating review, the Government committed to allow rating incomes to grow in line with population growth to generate additional revenue for councils based on any increase in residents.

This will provide the additional revenue for the key infrastructure growing communities need and expect.

Late last year the Government commissioned IPART to develop methodology for population growth to be taken into account when it sets the annual rate peg.

As part of this review, IPART released an issues paper in March, a draft report in June and held an online public hearing in July. I would like to take this opportunity to acknowledge those councillors and council staff who took the time to provide input to this process.

The Government has now endorsed IPART’s proposed methodology outlined in its final report which was submitted to me last month.

Councils with growing residential populations will be able to raise notional general income by an additional population factor as part of the rate peg from 2022-23.

This new population factor will be different for each council, adding any increase to its residential population, as published by the Australian Bureau of Statistics, and then deducting revenue that council has received from supplementary valuations.

To prepare for this important reform, an amendment was made to the Local Government Act earlier this year to allow multiple rate pegs to be set.

IPART estimates that the population growth factor would have generated an additional $287 million in rates revenue for local government in NSW over the past four years, with individual councils having received up to $86 million in extra income.

This revenue injection will help councils overcome growing pains with a reliable and sustainable revenue stream to provide necessary infrastructure for growing communities into the future including roads, drainage and open space.

Importantly, it’s the new residents moving into these areas who will primarily cover the extra rating incomes.

In addition, no council will receive less income under the new rate peg arrangements including including those not experiencing population growth.

Introducing a population growth factor shows we can keep the annual rate peg in place to continue to protect households from excessive rate raises while allowing councils to generate revenue for new infrastructure for growing communities into the future.

The NSW Government is committed to supporting our local councils to deliver the quality infrastructure, facilities and services local communities need and expect.

IPART ‘s final report including estimated additional incomes for individual councils can be accessed here.



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