Business

Rate cap meets increased costs – but that’s it

The 2.7% cap on council rates for 2019-20 reflects some of the rising costs faced by councils – but it’s still just a political sleight of hand, Local Government NSW (LGNSW) said.

LGNSW President Linda Scott was speaking after the Independent Pricing and Regulatory Tribunal (IPART) announced rate rises in 2019 would be capped at 2.7%, reflecting an equal rise in a range of costs borne by local government.

Clr Scott said the 2.7% cap was determined by the identical rise in the Local Government Cost Index, which measures the cost of inputs used to deliver council services just as the Consumer Price Index measures the cost of goods and services to the household budget.

But she said the decision left no scope for councils to address infrastructure maintenance backlogs, or to build a more sustainable financial future.

“It is absolutely critical that councils be able to meet the rise in the costs of labour, energy and the construction of roads, drains, footpaths, kerbing and bridges, and IPART’s announcement does that” Clr Scott said.

“That’s the good news – but the bad news is that the rate cap as a savings measure for ratepayers is largely illusionary.

“Families still pay in other hidden ways such as deteriorating local roads and reduced services, or in direct ways such as the imposition of new charges and levies.

“Each one of these potential outcomes has a very real impact, not just on individual household budgets but on local economies as a whole.

“That’s just one of the reasons why the local government sector has opposed the principle of rate capping for more than 40 years.”

Clr Scott said the rate peg forced many councils to seek special rate variations – often a time-limited rate increase allowing them to provide new infrastructure and services necessary for their local community.

“In metropolitan areas that might be an urgent need to develop the infrastructure necessary to cope with a booming population and a tidal wave of housing development.” She said.

“In rural and regional areas there are other stressors, including the need to provide additional services in remote NSW and the challenges of regional economic development.

“LGNSW has consistently argued that local communities are best placed to determine the trade-off between individual council rates and the level of services and infrastructure they are prepared to pay for.”

Source: LGNSW

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