[Matthew Saunders]

Hi everyone,

I have been asked to see if any Councils have ever opted to not take up the rate peg in recent times (in the last decade or so) and had a 0% increase?

Thank you,

Matthew Saunders

[Andrew Butcher]

Hi Matt

No chance. Something that should also be noted is the compund effect in not taking the full percentage reduces your starting point in year two so you continue in perpetuity to underlevy rates that can never be caught up unless you apply for an SV. You can catch up (over 10-years) the shortfall amount but not the % increase on the shortfall.

I know you know this just thought it should be noted.

Regards,
Andrew

[Robert Hay]

Hi Matt

I would also counsel heavily against it, for the reasons Andrew provided, it would be pretty hard to get and SV if you had to advise IPART you didnt take the full peg. It also goes against

8B Principles of sound financial management in the Act.

(d) Councils should have regard to achieving intergenerational equity, including ensuring the following—
(i) policy decisions are made after considering their financial effects on future generations,
(ii) the current generation funds the cost of its services.

Cheers
Robert

[Suzi Flynn]

Hi Matt,
I agree with Andrew and Robert. You might like to speak with Sarah Gubb from OLG as well because OLG has advice on the matter.
Showing the impact of such a proposal on the LTFP should be a key factor to decision making.
Suzi

[Trevor Holland]

G’day Matt

Totally agree that Andrew and Robert. Not taking up the rate peg is unwise. Any income lost will never be caught up once foregone.

Can remember this happening once back in the 1980’s when I was at Bathurst City Council.

I can’t recall any other Council’s going down this path.

Regards
Trevor

[Anthony Egan]

Hi Matt

Likewise, totally agree with what has been mentioned above.

However, as advised in IPARTs Rate pegs for NSW councils for 2025-26 Information Paper, “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.”

Note, the catch-up provision is specified in section 511 of the Local Government Act 1993.

The Information Paper also states, “We understand some stakeholders do not agree with councils increasing their income, for various reasons. However, not allowing income to increase in line with changes to their business-as-usual costs could have negative impacts on communities through trade-offs in the services ratepayers rely on.”

A very recent example of a Council not taking up its approved rate peg increase is Port Macquarie-Hastings Council which approved a 0.0 percent rate peg for the 2024/25 Operational Plan, rejecting a council staff recommendation of a 4.6 percent rate increase, despite “concern” from the Office of Local Government.

Suggest that you make contact with Port Macquarie-Hastings Council to see how they are dealing with this reduced income and its impact.

Regards
Anthony

[Darryl Telfer]

Wyong Council did this some years ago, against staff recommendations, increased rates by 2.5% when rate peg was 3.5%. The next year (possibly after a Council election, not sure?), the Council took up the extra 1% from the previous year’s catchup. True story!

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