Low rate peg throws out Council’s numbers

Rik HartRik Hart - Council Administrator. Image CCN, June 2021

Central Coast Council Administrator Rik Hart has joined the chorus of councils criticising the Independent Pricing and Regulatory Tribunal’s rate pegging.

IPART has infuriated Councils across NSW with its latest, complicated and individualised rate peg.

It takes in a council’s population growth and other factors to decide on a percentage rate by which each council can increase its rates in the coming financial year.

Central Coast Council can add one per cent to its 13 per cent current special rate variation when it was expecting the peg to be two per cent.

The announcement from IPART last week added to Council’s flurry of last-minute changes to draft reports including its operational plan for next year.

Local Government NSW (LGNSW) has called on the new Minister for Local Government, Wendy Tuckerman. to review the decision, which it said had severe financial implications for councils, with several already advising that they will be forced to cut services.

Earlier this year, IPART granted Central Coast Council a special rate variation of 13 per cent for three years plus the annually assessed rate peg.

It was routinely spoken about as a 15 per cent rate rise when it took effect this financial year as the rate peg was expected to remain at 2 per cent.

The one per cent rate peg meant Council had to reduce its forecast income for the next financial year by one per cent.

Hart said Council’s costs have increased substantially more than one per cent.

That included wages which have gone up by two per cent plus another half a per cent for super contributions; a huge increase in fuel costs and supply chain costs.

“There are well-documented shortages in supply management; timber for example has gone up,” he said.

He said the one per cent rate peg was made up of 0.7 per cent for inflationary factors and 0.3 per cent for the population growth on the Central Coast.

“What we are experiencing is considerably more than that inflationary figure,” he said.

“I don’t know where they are getting their figures.”

LG NSW said IPART failed to recognise real wage cost increases, as represented by the Local Government Award increases.

Abnormally low increases in the Local Government Cost Index during 2020-21 were a result of the COVID induced slump in economic activity in Australia and globally.

“2020-21 was an aberration and the 2020-21 cost data does not provide a reliable basis for determining the peg for 2022-23,” LG NSW said last week.

“We already know that there has been a significant uptick in inflation during the first six months of 2021-22, most noticeably fuel costs have nearly doubled and building and construction materials are rapidly escalating as the result of increased activity and major shortages.

“It is certain that councils will face much higher costs across the board in 2022-23.”

Administrator Rik Hart spoke about the issue after Council’s extraordinary meeting on December 20 where he adopted a suite of reports to go on public exhibition from December 22 until January 21 (see story page ?) and to then return to Hart for adoption on February 3 before Council makes its next submission to IPART to keep the current rate variation of 13 per cent for another seven years.

Hart was at pains to make sure residents understood Council was not applying for a rate increase, only for a continuation of the current rates which had already been increased by 13 per cent once and to remain there for three years – or 10 years if Council can convince IPART to allow it to keep the SRV for another seven years.

Merilyn Vale