Rodney Stevens
The Independent Pricing and Regulatory Tribunal IPART set Clarence Valley Council’s (CVC) Final Rate Peg using new methodology for the 2025-2026 financial year last week at 4.3 per-cent, slightly less than the previous financial year’s 4.7 per-cent.
The rate peg is the maximum percentage amount by which a council may increase its general income for the year.
For most councils, general income is rates income, which on average represents around one third of NSW councils combined total income.
Councils can increase their general income by up to the rate peg.
They may decide to increase their general income by less than the rate peg (or reduce their income) and consult with their communities on rates and service trade-offs that may be needed.
If a council increases its rates income by less than the rate peg, it has up to 10 years to catch up this shortfall.
A council can only increase its general income by more than the rate peg, if it has an approved special variation (SV) or is catching up on previously foregone increases.
The Rate Peg for the 2025-2026 financial year, which was calculated using new methodology, can be broken down into the following components, a Base cost change BCC, an Emergency Services Levy ESL, the costs of the 2024 Local Government Election, and Population growth to calculate Rate Pegs for the 128 NSW Councils.
The rate pegs for 2025-26 range from 3.6% to 5.1% before adjusting for each council area’s population growth.
When this adjustment is made, the total rate pegs range from 3.7% to 7.6%
To calculate CVC’s Rate Peg, IPART used a BCC of 3.6 per-cent, an ESL factor of -0.3 per-cent, an ELS subsidy catch-up adjustment of 0.5 per-cent, and Election cost adjustment of 0.2 per-cent to reach a Core Rate Peg of 4.0 per-cent, to which a Population and factor adjustment of 0.3 per-cent was added to equal the Final Rate Peg of 4.3 per-cent.
By comparison with CVC, Burwood Council in Sydney’s inner west has a Final Rate Peg of 7.6 per-cent, while nearby Inner West Council has a Final Rate Peg of 3.7per-cent, while Coffs Harbour City Council’s Final Rate Peg is 4.6 per-cent, Lismore City Council is 3.9 per-cent, Ballina is 3.8 per-cent, Byron is 5.0 per-cent, and Richmond Valley is 3.9 per-cent.
Although the Final Rate Peg is the maximum amount by which Council can increase its general income, it does not limit all of Council’s income.
The rate peg does not limit increases to income from rates and charges for water supply, wastewater, domestic waste management and some other services.
Councils must keep income from these rates and charges separate to ensure they are used for the purpose of which they are collected.
It also does not limit income from grants from State and Federal governments and infrastructure contributions.
Cr Darriea Turley AM, President of Local Government NSW said the latest rate peg determination reflects further improvements to the new forward-looking methodology introduced for the 2024-25 financial year.
“We thank IPART for actively engaging with local government in reviewing and refining the new methodology, particularly through the establishment of the Council Reference Group” she said.
“We acknowledge that times are tough for everyone right across our community, but the reality is that costs increase for councils just as they do for other businesses and services – the cost of bitumen increases, construction costs only go up and salaries quite rightly increase every year.
“Councils need to be able to lift their rates fairly and in accordance with the wishes – and needs – of their community; otherwise, they go without, especially since we know councils continue to have more than $1.3 billion of state and federal government costs shifted onto our communities each year amounting to about $460 per ratepayer across the state.”