Tamworth council still seeking 36.3 per cent rate rise despite IPART changes

The NSW Independent Pricing and Regulatory Tribunal (IPART) has announced a raft of changes to how it sets the state's annual rate peg - the maximum amount a local government can increase rates each year.

Tamworth Regional Council (TRC) General Manager Paul Bennett told the Leader he welcomes the changes to IPART's rate pegging methodology which have been a bone of contention between regional councils and the state for years.

"The methodology has always been flawed and I think this will have a positive impact for every council, not just Tamworth," Mr Bennett said.

Among other changes, IPART will lay down separate rate pegs for metro, regional, and rural councils, and the regulator's new methodology will use "forward-looking indicators" to better match rate increases to local governments' rising costs.

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Mr Bennett said the forward-looking methodology will prevent cumulative impacts of consistent revenue shortfalls year-on-year, and reduce the need for special rate variations (SRVs) to balance the budget.

"Say the peg is one per cent behind in the first year, that's about $1 million for Tamworth. If it's another one per cent under in the second year, we're now short $2 million. But not only that, we still haven't made up that first million from the previous year, so by the end of the second year we're $3 million behind," he said.

Despite the promise of a fix from 2024 onwards, the General Manager said TRC's proposal for a 36.3 per cent rate rise is still "absolutely necessary" to continue delivering the same level of services.

The Tamworth Regional Residents and Ratepayers Association (TRRRA) said it "disagrees completely" with the General Manager's assessment.

"They haven't even tried to make ends meet under the new methodology yet, instead they've just gone for the big lump sum," TRRRA vice president David McKinnon said.

"It's madness, absolute madness."

Mr McKinnon said he has an alternate proposal for council: abandon the 36.3 per cent SRV and make do with future rate rises, which he believes will stick close to inflation - around seven per cent.

"Give us the 36 per cent and we'll forgive you for the seven per cent," he said.

"That should be enough. They should not need a special rate variation on top of it, and the fact that they're still going for it burns. We're burning with anger."

Though IPART's changes are meant to reduce regional councils' reliance on SRVs, Tamworth council's General Manager said they'll likely have the opposite effect in the short term.

"I think there will be more councils going for an SRV in the very near future, knowing that will give them a base for these future rate pegs. You're better off to get in now, do the adjustment you need to get back to a stable financial position, and then build on that with the future rate pegs," Mr Bennett said.

"That's why it doesn't impact our SRV, because ours is about getting enough money to maintain our current level of services. With the changes they're making to the peg, councils shouldn't have to apply for an SRV in the future unless there's some major impact to the city, the economy, the region."

But, he said, the good news for ratepayers is this could be the last big rate hike for a long time, restoring the rate peg's original purpose of providing a stable expectation for ratepayers.

"I got asked a few times during community consultation whether I could guarantee there won't be another SRV in the future, and I couldn't do that ... but with the rate peg becoming realistic, and revenues increasing in line with expenses, there will be much less need to do an SRV going forward," Mr Bennett said.

In response, the TRRRA told the Leader they're sceptical of both the prediction that more councils will seek a higher rate rise, and the idea that TRC will hold off on another rate rise "for more than five years".

"The idea that councils all over the place will be after an SRV in light of the new methodology being accepted just isn't true. At every council people will be angry at the fact their council is already getting a boost from the state government, why would they need another SRV on top of that?" Mr McKinnon said.

Community consultation on the proposed 36.3 per cent rate rise ended at the end of October, and councillors will have to vote whether to go through with an application to IPART at their next meeting on November 28.

Council's General Manager said he expects councillors will take the public's feedback very seriously when they vote, as their re-election in 2024 may depend on it.

But Mr Bennett also said he's confident that his professional opinion is correct, that the SRV is needed to maintain services, and he's even willing to stake his own job on it.

"Last [council] election, 38 general managers lost their jobs across 128 councils, and that's where new councillors have come in and said the attitude of the previous GM doesn't align with what we want to do, so they terminate their contract," he said.

Lastly, Mr Bennett said TRC knows many residents are doing it tough and that council "won't go crazy" on rate increases.

"There is still a rate cap. IPART is still saying you can't go ridiculous. They're still setting a limit but hopefully that limit will be better-aligned with wage increases - which we don't manage, we get told how much we have to put up salaries - inflationary pressures, and construction costs."

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