The regulator responsible for restricting how much local governments raise rates has caved to pressure from councils, announcing it will change how it makes its decision on yearly rate increases.
The Independent Pricing and Regulatory Tribunal (IPART) has released a draft report proposing changes to how it sets the annual rate peg, the maximum amount by which a council can increase its total rates income in a year.
"We propose more forward-looking measures of councils' base costs, and our changes also better capture the diversity of councils across the State," IPART Chair Carmel Donnelly said.
Local councils have long described IPART's rate judgements as 'unfair' and out of touch with the needs of regional areas.
"The rate peg we have each year is just not enough to cover inflation. Inflation this year is just a tick under seven percent and the rate peg is capped at 3.7 per cent. You don't have to be Einstein to work out too many years of that will send you backwards," Liverpool Plains Shire mayor Doug Hawkins said.
Years of criticism of the system by councils crescendoed into a roar last year after IPART capped rate rises at 0.7 per cent for 2022/23, the lowest rate rise in 20 years.
As a result, in August 2022 IPART began reviewing the rate cap system it operates across NSW, which has culminated in the draft report released on Tuesday.
"IPART thanks ratepayers and councils who have given feedback so far in our review of the rate peg methodology. The consultation has been very helpful and we propose changes to IPART's rate peg methodology as a result," Ms Donnelly said.
Cr Hawkins said the proposed changes "sound positive," but he's not optimistic given the extraordinary attack the local government minister hurled at NSW councils during last week's Question Time.
He said the language coming from IPART sounds "totally different" from the minister it reports to, but that he'll reserve further comments "until I read all they've put out."
Ratepayers also have a bone to pick with IPART's rate pegging system, arguing that the state regulator has made it too easy for councils to apply for special rate variations.
Ms Donnelly said she's confident the draft changes will reflect the issues raised by each side of the taxman's coin.
"Our review has shown the current rate peg methodology can be improved to better reflect changes in council costs to maintain services, while continuing to help ratepayers by limiting increases in total rates revenue to what is needed," Ms Donnelly said.
But with ratepayers arguing for stricter pegs on one side, and councils arguing for more flexibility on the other, even IPART says it's unlikely its proposed changes will please everyone.
"Our proposed new rate peg methodology is designed to respond to many of the issues raised in the consultation. But it cannot address all the issues people have highlighted during the consultation," the organisation said in its media release.
The draft report also says the state Government should conduct a broader independent review of how councils are funded across NSW.
The draft report is now available on IPART's website and is taking public submissions until July 4.
IPART says it will consider all feedback before submitting its final report to the NSW Government in August 2023.
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