IPART is reviewing its system for setting rates revenue

IPART Tribunal Member Deborah Cope. CCN Feb 2021

As ratepayers anxiously await a decision from the Independent Pricing and Regulatory Tribunal (IPART) on a requested 15 percent rate rise, the tribunal is reviewing its current system for setting local government rates revenue (the rate pegging system).

The move is in response to a commitment from the NSW Government to allow councils to align their rates revenue with population growth.

“The review is focussed on ensuring that local councils can continue to provide quality services to their communities, including in those areas experiencing population growth,” said Acting IPART Chair, Deborah Cope.

IPART has been asked to recommend a rate peg methodology that allows the general income that councils receive through rates to be varied annually in a way that accounts for population growth.

The review will make recommendations on the adequate levels of revenue required by councils to service growth, with a focus on changes to total rates revenue not individual rates.

IPART is inviting submissions to its Issues Paper on the impact of population growth on council costs.

The rate peg is based on the annual change in the Local Government Cost Index which measures the average costs faced by NSW councils.

“Under the current system, an increase in the population of a council area does not necessarily result in an increase in revenue from rates,” Cope said.

“The costs incurred by councils to service growth are recovered from special variations, developer contributions and supplementary valuations.”

IPART’s review of the rate peg will look at population growth in rural and regional NSW, as well as across Sydney.

Cope said the key issues to be explored include: the different types of income that councils can source to cover the costs of population growth and the role of the rate peg: varying population growth between councils in NSW and how to define population growth; and, the impact of population growth on council costs.

IPART is seeking feedback on the issues to be explored through the review until May 3.

The Issues Paper can be viewed online at ipart.nsw.gov.au

IPART will present a final report to the Minister for Local Government, Shelley Hancock, in September.

Media release, Mar 25