A new method of calculating the annual rate peg may mean ratepayers will pay more.
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Councils across NSW have complained the existing method of calculating the rate peg is flawed leaving them short of money to carry out their basic functions.
Bega Valley Shire Council said this was one of the reasons for its recent special rate variation. It was one of 17 councils who asked to increase rates above the rate peg.
Now IPART (Independent Pricing and Regulatory Tribunal) has come up with what it calls a simpler model to calculate the annual rate peg, this is the maximum amount general rates may increase unless a special rate variation has been approved.
What IPART is going to consider
It looks at potential increases for employee costs using the local government state award, the cost of keeping the shire's assets such as roads and bridges, in good shape and other operating costs as measured through CPI by the Reserve Bank of Australia.
However, IPART will separately take into account the emergency services levy (ESL) which is paid by councils.
Councils in NSW pay 11.7 per cent of the costs of the NSW State Emergency Service, NSW Fire and Rescue and NSW Rural Fire Service.
The NSW government pays 14.6 per cent but those with insurance cough up 73.7 per cent (check out the ESL premium tucked away at the bottom of the insurance paperwork for your home).
Concern about the Emergency Services Levy
IPART has said it wants to ensure councils can pay the ESL "without needing to reduce other council services or erode their financial sustainability".
Council's were particularly concerned about the ESL which had been subject to a government subsidy which has been discontinued.
Including the impact of the (Emergency Services Levy) subsidy will likely increase the rate peg by a significant amount for some councils.
- IPART
IPART said it recognised this as a problem for councils which might place pressure on councils' budgets for 2023-24 and going forward.
"Therefore, we have decided to capture the impact of the discontinuation of the ESL subsidy in the rate peg through a specific adjustment factor. Including the impact of the subsidy will likely increase the rate peg by a significant amount for some councils," IPART said.
IPART said it would limit the impact on ratepayer affordability by phasing the increase over several years.
IN OTHER NEWS:
Bega Valley ratepayers have been hit with an extra 24 per cent on general rates for 2023/24. This will be followed by a further 19.6 per cent increase in 2024/25, a total of 48.3 per cent spread over two years.
The approved increases are the maximum increases that can be applied according to IPART but all bets will be off for 2025/26 and onwards.
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