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NSW Local Government Minister  Wendy Tuckerman

Local Government Minister Wendy Tuckerman.

One-off Move Prevents Financial Disaster For Councils

NSW councils have welcomed a temporary reprieve from financial disaster after Local Government Minister Wendy Tuckerman cleared the way for a special one-off rate variation for planned infrastructure and community services.

The councils – struggling to recover from bushfires, floods and the pandemic - were left reeling late last year when IPART handed down a historic low 0.7% baseline rate peg despite surging inflation, soaring fuel and other commodity prices and a mandated wage rise for staff.

Local Government NSW (LGNSW) President Cr Darriea Turley AM said the unexpectedly low 0.7% baseline rate peg had forced councils to look at recasting their budgets, scrapping planned infrastructure projects and forced to consider service and job cuts just to stay afloat.

“The announcement came as a massive kick in the guts to councils already working so hard to help their communities recover from the events of the past two years,” Cr Turley said.

“The financial hit was particularly tough news for councils in regional and rural areas, which are often the largest employer in town and inextricably linked to the health of their  local economies.

“Choosing between cuts to jobs or roads maintenance, parks, libraries and other community services would put these local economies at significant risk at the worst possible time.”

Minister Tuckerman told an Estimates Committee of the NSW Parliament that councils would have almost two months to apply to IPART for a special one-off rate variation if they could show the funding was critical to undertake planned work identified in last year’s financial planning process.

The one-off variation could exceed the 0.7% rate peg, but would still be capped at a maximum of 2.5%, the Minister said.

“Our councils recognise that individual families and small businesses are also doing it tough and there is certainly no appetite to exacerbate the pressures they face,” Cr Turley said.

“The opportunity to increase rates by up to 2.5% is still less than inflation, but it is in line with what councils expected when they finalised their budget, work planning and community consultation process last year.

“That process was undertaken very soberly and responsibly, to allow councils to continue to help drive a locally led economic recovery while minimising the impact of rates rises on individuals.

“We are really grateful to Minster Tuckerman for recognising the seriousness of the situation and responding to LGNSW’s urgent advocacy on council’s behalf.

“The road to recovery will be incredibly tough, particularly when you consider the devastation caused by current widespread flooding across the state.

“The last thing we want as we emerge from the pandemic is to send our regional and rural communities into a downward spiral from which they cannot recover.

“So, on behalf of NSW councils, I thank not only the Local Government Minister, but also Treasurer Matt Kean and Premier Dominic Perrottet for responding quickly to what could have been a death blow.”

Minister Tuckerman said IPART had also been tasked with undertaking a broader review of its rate peg methodology, including the Local Government Cost Index, to prevent a reoccurrence of the 2022-23 anomaly.

Council applications for the special one-off variation will close on 29 April, with decisions expected from IPART by 21 June 2022.