The decision to allow 86 NSW councils to increase their rates by 2.5%, against an inflation rate expected to reach 7% by December, has been welcomed by the state’s local government sector.
Local Government NSW (LGNSW) President Darriea Turley said the special rate variations announced today by the Independent Pricing and Regulatory Tribunal (IPART) acknowledged the dire financial situation created by its initial decision to cap rate rises at 0.7%.
The 0.7% cap – the lowest baseline rate cap in more than two decades – was handed down despite surging inflation, soaring fuel and commodity prices, and the need to repair extensive damage caused by the Black Summer bushfires and the recent floods.
“It is important to recognise that councils would have been held to this historic low rate cap without the intervention and insistence of Local Government Minister Wendy Tuckerman” Cr Turley said.
“Without this, many councils would have been forced to choose between cuts to jobs or roads maintenance, parks, libraries and other community infrastructure and services.
“So while we strongly welcome today’s announcement, we remain deeply concerned that such an anomaly can be produced by IPART in the first place.”
Cr Turley said this special rate variations announced today were still extremely modest, coming in at around half the current inflation rate and one third of the Reserve Bank’s predictions of 7% inflation by December.
“Councils are the closest level of government to the community, and we know firsthand that individuals and local businesses in our communities are doing it tough,” Cr Turley said.
“That’s the very reason why we all agreed to share that burden and keep rate rises as low as possible.
“Responsible budgeting meant we were and are prepared to share the burden on our communities – but that burden should not include the prospect of cutting jobs, services and spending on infrastructure critical for our local economies.
“The simple fact that more than three-quarters of the state’s councils were forced to seek a special rate variation shows the methodology used by the Tribunal to calculate the rate cap is irretrievably broken.
“It is clearly no longer fit for purpose, so I would urge the State Government and the IPART to make sure the upcoming review comes back with a system that works.”
IPART has confirmed it will review its own rate cap methodology following a reference from the State Government.
“Today’s rate variation approvals mean that councils can get back to the core business of delivering the services and critical infrastructure communities and economies need,” Cr Turley said.
“IPART needs to do the same, and that means reviewing and replacing the current defective methodology with something better.”