Rodney Stevens

Clarence Valley Council will make a submission to the Independent Pricing and Regulatory Tribunal IPART to review its methodology after it was revealed there is currently a three-year lag between the measurement and application of the rate peg limit.

Since 2010, each year IPART has calculated the rate peg limit which is designed to limit the amount by which councils can increase their revenue from rates.

The methodology to calculate the rate peg uses the Local Government Cost Index LGCI, a productivity factor and a population factor.

The LGCI and the productivity factor used are currently the same for all councils in NSW.

When the population factor was being considered by IPART as part of its calculations, the council made a submission in 2021 supporting its inclusion.

Despite Clarence Valley Council’s CVC support of using the population factor, council stated Australian Bureau of Statistics population growth data, which is lagged by three years, was not an appropriate measure of population growth in the current year.

CVC maintained using the population factor wasn’t an appropriate measure for considering rate peg to fund increased services and infrastructure to meet the demands of population growth.

In the 2022-23 rating year the population factor, which varies depending on population growth in each council area, was introduced into the IPART calculations.

The rate peg set by IPART for CVC for 2023-24 of 5.4 per-cent is the third highest in NSW.

This was based on population change in the Clarence Valley that occurred in 2020/2021 during the COVID pandemic, up to three-years ago, despite the impact of increased population on councils being felt immediately.

In a Mayoral Minute moved by Ian Tiley at the October council meeting, councillors unanimously voted “That Council lodge a submission to the IPART rate peg methodology review and convey suggestions for improvement to the present system of establishment of the rate peg limit.” 

“There is currently a two-year lag between the time period when the above factors are measured and when councils can apply the rate peg to their general income,” background to the Mayoral Minute by council staff stated. 

“This caused the recent situation of IPART determining a point seven of one per-cent rate peg when inflation was over five per-cent.”

Mayor Tiley said general rates are council’s largest revenue source, apart from Government Grants and are vital to enabling continuation of the existing range and level of services that our communities expect.