IPART has approved applications by eighty six NSW councils to increase their rates above the level of the annual rate peg. The modest increases were approved following an additional special variation process.

“The latest rate peg was determined in the low inflation environment at the beginning of the COVID19 pandemic.

“Since then, high inflation and global uncertainty increased councils’ costs. Some councils have demonstrated that without additional funds they will not be able to deliver the projects they have already consulted on and included in their budgets,” says Tribunal member Deborah Cope.

The modest increases for councils are between 1.6% and 2.5% including the rate peg.

Each year we calculate a rate peg which sets how much councils can increase the revenue they collect from rates.

This year the rate peg was set at a minimum of 0.7%, with some further increases allowed in councils with growing populations.

The rate peg was lower than many councils expected.

The additional special variation process gave councils an opportunity to increase this figure.

“We were careful to balance the need of councils to maintain the services and investment they had already committed to against the need to keep rates affordable for the community,” said Ms Cope.

Applications were assessed against guidelines provided by the Office of Local Government.

The guidelines require councils to show that they had budgeted for higher income than that provided by the rate peg and that they need the additional money to deliver on the projects they have already planned and included in their budgets.

IPART is reviewing the rate peg methodology to deal with volatility in economic conditions.

The review will also look at the timing of the calculations in a fast changing economic climate.

“Our review will be looking at how to deal with this challenge in the future,” said Ms Cope.

In the case of Clarence Valley Council the Additional Special Variation (ASV) approved is 2.50% which includes 0.70% rate peg.

This article appeared in the Clarence Valley Independent, 22 June 2022.