From the Newsroom

New rate peg methodology includes population growth

Geoff Helisma

An October 5 Office of Local Government (OLG) circular states that the “Independent Pricing and Regulatory Tribunal (IPART) has completed its review of the local government rate peg methodology to include population growth”.

NSW Minister for Local Government Shelley Hancock has “endorsed the new rate peg methodology and has asked IPART to give effect to it in setting the rate peg from the 2022-23 financial year”.

In simple terms this means that “councils with growing residential populations will be able to raise notional general income by an additional population factor, as part of the rate peg from 2022-23”.

“This will increase revenue for many councils serving growing communities,” the circular states, “no council will be worse off under the new methodology.”

Previously, the Minister set an annual rate peg that applied to NSW local governments.

“IPART proposes that a different rate peg apply to each council to permit that council to increase its notional general income by a population factor,” the circular states.

“IPART has advised that this option will maintain total general income on a per capita basis over time [for] all councils and [it] recognises that councils have different service levels and costs.

“This new population factor will be different for each council” and will be applied by “adding any increase to [a local government’s] residential population, as published by the Australian Bureau of Statistics [ABS]”.

“IPART will also correct the population factor for all councils to reflect the difference between estimated and actual population growth when data from the recent census is released,” the circular states.

“Going forwards, [IPART] will correct the population factor after each census if the difference [between the] estimated [growth, when] compared to actual population growth … is greater than five per cent.”

Clarence Valley Council’s (CVC) general manager, Ashley Lindsay, said he didn’t foresee any “significant increase in its revenue”, because of the changes.

The LGA’s 2020 population was 51,730, according to CVC data at and the ABS.

The forecasted population for 2021, which is set at five-yearly intervals aligned with the census, is 53,110, and the current estimated population for 2026 is 55,523.

However, the recently conducted census data will not be released by the ABS until June 2022.

“The population is not increasing significantly,” Mr Lindsay said.

“It might in the future, but I don’t see this change, to include the population factor, as something that will significantly increase the revenue for Clarence Valley Council.”

What about staff from the new prison and, presumedly, inmate family members moving to the valley; and there’s a bit of a building boom going on?

Mr Lindsay said our population’s “not growing significantly”.

“As I said, I don’t think that the changes proposed will provide [CVC] with a significant increase in its revenue.”

The currently available figures rate the valley’s growth, from 2020 to 2021, at 2.66 per cent.

Meanwhile, Local Government NSW (LGNSW) lodged a longlist of questions in its submission to the process in May 2021 – presumedly, these issues will be addressed before the initiative is rolled out.

LGNSW, however, “maintains the view that the best solution to the problems of rate pegging is to unconditionally remove rate pegging”.

“States that do not impose rate pegging have avoided the problems identified by the Productivity Commission,” its submission states.