Media release: Rate cap improved, but it’s still a sleight of hand says sector

A decision by the Independent Pricing and Regulatory Tribunal (IPART) to change the methodology used to set the annual rate cap has been welcomed by the local government sector – even if councils still oppose the cap itself.

“For more than 40 years, local government has opposed the rate peg because it is a political sleight of hand,” Local Government NSW President Keith Rhoades said.

“The cap doesn’t protect family budgets, because families are often forced to pay in other ways – deteriorating local roads, reduced services or new charges and levies.

“The reality is that budgets only stretch so far, and rate-pegging just disguises the financial impact on communities and local economies.

Clr Rhoades said the rate peg – calculated by IPART on the basis of the Local Government Cost Index, similar to the Consumer Price Index – had been set at 2.3% for 2018-19.

This is an increase on the 1.5% peg this year, and 1.8% the year before – an increase IPART has attributed to the rising costs faced by councils.

“IPART has attributed the increase to increases in labour costs, electricity and street lighting charges, and higher constructions costs for roads, drains, footpaths, kerbing and bridges,” he said.

“They have heard us about the pressures on local budgets.”

Clr Rhoades also commended IPART for dropping the productivity factor from the rate peg calculation

“The sector has lobbied for many years for IPART to drop the so-called “productivity factor” from its calculation,” he said.

“Council outcomes such as the provision of parks, public libraries, inclusive communities, urban planning and regional development are not easily translated into the economic theory behind the productivity factor.

“A great deal of the work councils do involves creating healthy, resilient and inclusive communities and neighbourhoods with the amenity, infrastructure and open space that contributes to the quality of life.”

The peak body for local government also welcomed a proposal to bring the annual rate peg announcement forward from late November to early September, possibly from next year.

“This is a sensible move that provides the information councils need for their budget processes in a much more timely way,” Clr Rhoades said.

IPART is expected to confirm a decision on the future timing of rates cap announcements in May next year.

Media Enquiries
LGNSW President, Cr Keith Rhoades AFSM: 0408 256 405
Media Toni Allan: 0412 774 441