Tribunal pledges changes in council rate peg calculation

But whether it changes several councils' bids for special rate variations remains to be seen.

The Independent Pricing and Regulatory Tribunal (IPART) released its final review of the rate peg methodology on Friday, November 10.

It has also recommended that the state government consider commissioning an independent review of NSW councils' financial model, including the issues it raised in its report.

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The breakthrough followed years of lobbying by the sector. Peak body, Local Government NSW has consistently argued that councils were under-funded, the rate peg was not keeping pace with real costs and that state government cost shifting was placing extreme financial pressure.

Now, IPART has agreed to implement 14 changes in 2024/25, "if feasible to do so."

"The new rate peg methodology is simpler than the old method and will result in rate pegs that more accurately reflect the very real impact that the changing cost of service provision has on councils," LGNSW president Cr Darriea Turley AM said.

"It's a really positive outcome after an enormous amount of work and advocacy, not only by LGNSW but by individual councils who helped the IPART recognise the challenges they face."

Cr Turley said IPART had listened to the sector's "genuine concerns."

Changes include:

Cr Turley said the new indicators were "forward thinking rather than retrospective" and would help rates keep pace with costs.

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In addition, she believed the new base rate calculation would recognise the different financial challenges faced by the various councils.

"IPART has accepted the need for major change in the way the Emergency Services Levy was applied to councils," Cr Turley said."

"It's a clear recognition that the discontinuation of the state government's ESL subsidy has smashed council budgets, and that the continued payment of this levy by councils has a major impact on their financial sustainability."

Review authors stated that the new ESL approach provided for councils to fund the levy "without needing to reduce services or erode financial sustainability."

The changes followed feedback from councils and ratepayers. The latter said they wanted councils to "demonstrate "good financial management and provide services that were "efficient and value for money."

IPART chair, Carmel Donnelly, said the Tribunal had the power to implement the changes. It would work towards applying them in 2024/25 but if this wasn't feasible, they'd take effect in 2025/26.

"Our decisions on the rate peg methodology may address some concerns (about council's performance, financial sustainability and affordability of rates in the current cost of living climate)," the report stated.

"But many of the issues raised cannot be fixed by the rate peg or the special variation process. Therefore we recommend the state government commission an independent review of councils' financial model to identify improvements."

The Post has sought comment from local government minister, Ron Hoenig, on whether he would act on this recommendation.

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Goulburn Mulwaree Council has applied for a 51 per cent special rate variation, under one scenario.

Accountant, Nina Dillon, who has led an opposition campaign against the suggested hike, said IPART's review should address much of the council's rationale for the rate increase.

Council CEO, Aaron Johansson said it was "pleasing" to see IPART's engagement with local government had been reflected in the review and an updated rate peg methodology calculation.

"The differentiation between metropolitan, regional and rural councils for calculating the rate peg is welcome," he said in a statement.

"This should result in more alignment between the peg and the cost pressures facing regional councils in NSW. The inclusion of the Emergency Services Levy factor is also welcome."

ALSO READ: Could it be perimenopause? GP shares her personal story to help othersAsked whether it would change the council's rate increase proposal, Mr Johansson said IPART"s alterations would apply from 2024/25.

"IPART has not yet advised what the 2024-25 rate peg will be," he said.

"With regards to the council's proposed SRV, the new rate peg methodology will not apply should (Goulburn Mulwaree) apply to IPART. This is due to the fact that the council engaged with the community regarding a maximum 51.2pc SRV for the implementation period and, as such, whatever rate peg IPART establishes will not apply."

Councillors will decide whether to proceed with the SRV at their November 21 meeting. Mr Johansson said a report to the meeting would include reference to IPART's review.

Upper Lachlan Shire Council has abandoned its SRV bid, following public backlash.