Rates income pressure eased

Berrigan Shire chief executive Karina Ewer and Mayor Matt Hannan. Photo by Contributed

Special rate variations that will better enable both local councils to deal with increasing costs and inflation have been approved.

The Independent Pricing and Regulatory Tribunal this week granted applications from both Berrigan Shire and Murrumbidgee Council to increase rates above their state imposed rate caps.

The cap sets the maximum amount by which a council can increase its overall rates revenue.

Murrumbidgee was initially given a 0.7 per cent rate cap, and applied for and was granted the ability to increase the cap to 2.5 per cent.

The proposed increase was already written into council’s draft budget and operational plan, which has been on public exhibition.

It means proposed rate increases in that document will remain unchanged.

In Berrigan Shire however, rates are expected to increase on what is outlined in its draft budget and operational plan.

The documents were developed using the state imposed rate cap of 0.9 per cent.

The shire has now been given permission to increase its overall rates revenue by two per cent.

“The cost of everything is going up and inflation is having an impact, and this will help us keep our rates at a level to ensure we will not have to increase rates revenue by a larger percentage later on,” Berrigan Mayor Matt Hannan said.

“We all understand the things we need and want are different, but we need to continue to provide services at a level the community is used to.

“We also need to be able to meet CPI and wage increases.”

Cr Hannan said the 0.9 per cent increase imposed on Berrigan was “ridiculous in the first place”, and would have impeded council’s ability to “provide for the community”.

“The original rate peg was based on our past, not our present or our future,” he said.

Berrigan Shire and Murrumbidgee Council were two of 86 NSW councils to apply for an additional special rates variation this year.

It stems from a calculation methodology being used by IPART, which saw the majority of those council’s dealt a rate cap of less than one per cent.

IPART admitted the figures were determined in the “low inflation environment at the beginning of the COVID-19 pandemic”.

Applications were assessed against guidelines provided by the Office of Local Government.

The guidelines required councils to show that they had budgeted for higher income than that provided by the rate peg, and that they need the additional money to deliver on the projects they have already planned and included in their budgets.

IPART is now reviewing the rate peg methodology to deal with volatility in economic conditions.

The review will also look at the timing of the calculations in a “fast-changing economic climate”.