Council to apply for 1.8 per cent rate rise after IPART formula 'shocked local government'

Council was one of 78 councils told their rate peg would be just 0.7 per cent under new guidelines from IPART (Independent Pricing and Regulatory Tribunal).

Some councils were given higher rate pegs due to their population growth. For Bega Valley Shire Council, IPART modelling for the population growth factor was negligible providing no further increase to the 0.7 per cent traditional cost component.

When announced the guidelines caused an outcry by Local Government NSW who said in a submission on the NSW state budget in January 2022, that while demands upon councils continued to grow, an unanticipated and historically low rate peg determination for 2022-23, had dealt a major blow.

"IPART shocked local government with a baseline rate peg of only 0.7 per cent - the lowest in two decades and half the previous record low of 1.5 per cent in 2017-18," LGNSW said.

Bega Valley Shire Council said it was devastating news for councils already struggling with financial sustainability issues in the wake of drought, bushfire, floods and the COVID-19 pandemic.

READ ALSO:

Acting CEO Anthony McMahon said there was significant advocacy across the Local Government sector with the Minister for Local Government and relevant state government agencies.

Not only did it pose immediate problems but because the long-term financial plan had been modelled on a 2.5 per cent rise, planning for future years was thrown into chaos.

READ MORE

The outcry from LGNSW and individual councils was such that on March 7 the Office of Local Government issued a circular advising that IPART would accept and process an additional round of 2022-23 special variation applications (ASV) from councils.

"In essence this process allows council to apply for a variation to the rate-peg determination of 0.7 per cent for FY2022-23 to be commensurate with the 2.5 per cent increase modelled in our adopted long-term financial plan for FY2022-23.

Council unanimously agreed Mr McMahon should make an immediate application for the 2022/23 increase to ensure the percentage increase in rating revenue is 2.5 per cent, applied permanently to the rate base as specified in the modelling and adopted in the long-term financial plan.

IPART said it would accept applications until April 29, publish applications to enable community consultation for a period of at least three weeks and notify councils of its decision no later than June 21.

IPART has agreed to undertake a broader review of its rate peg methodology, including the Local Government Cost Index, with outcomes from the review expected to shape rate peg determinations in future years.