Rate peg set for NSW councils

THE Independent Pricing and Regulatory Tribunal (IPART) has set the 2012/13 rate peg for NSW councils at 3.6% in 2012/13.

The limit means any council wanting to increase its rates, the main source of income for councils, by more than 3.6% will have to seek permission from the tribunal.

IPART chief executive officer and full time tribunal member Jim Cox said a 3.6% rate rise would translate to an extra $30 per year for most NSW households.

The average annual rate bill across the state was $830 in 2011/12.

"The Tribunal has determined a council rate peg of 3.6% for the coming financial year. In setting the rate peg, we have sought to strike a balance between ensuring that councils can meet the increased costs of delivering services and ensuring that councils share efficiency gains with ratepayers," he said.

"The rate peg applies to a council's income, not to an individual's rates, but if we assume that a council increases residential rates in line with the rate peg, the decision implies a rate increase in 2012/13 of around $30 for the year, or less than $1 per week."

Mr Cox said the tribunal had, as it did last year, considered the local government cost index and a productivity factor when setting the rate peg.

"The (Local Government Cost) index increased by 3.4% in the year to September 2011," he said. "We have then subtracted a productivity factor of 0.2% from the index. In addition, this year, we have added an advance to help councils meet increases in their costs as a result of the introduction of the carbon price. This advance adds 0.4% to the rate peg.

"The use of the index and a productivity factor provide a clear basis for determining the size of the annual rate peg. This approach allows council general income to increase in line with an index that reflects council costs, as well as encouraging local councils to continue to improve the efficiency of their operations."

Councils, particularly regional councils such as those on the North Coast, have argued rate pegging does not account for their higher infrastructure costs as they struggle to meet the needs of rising and widely spread populations

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