A hole of $100,000 has been put into Inverell Council’s forward estimates, thanks to the State-wide peg announced for next year’s local government rates.
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General manager Paul Henry said council’s general income would be down $100,000 at the end of the process if the council’s special rate variation goes ahead.
The council had factored in a special rate rise of 14.25 per cent on top of a rate peg of 1.8 per cent.
Mr Henry said the 1.8 per cent had been factored in on advice from IPART itself last year.
But the Independent Pricing and Regulatory Tribunal this week set the rate rise to 1.5 per cent for next financial year.
Asked if council would consider increasing the special rate variation it might ask for, Mr Henry said that would be speculation. The councillors had voted clearly on 14.25 plus the rate peg.
Local Government NSW said the rate peg would put all NSW councils further behind the financial eight-ball.
LGNSW president Keith Rhoades said it was part of a financial noose which continued to tighten, effectively preventing councils from ever becoming financially sustainable.
“The 2017/18 rate peg of 1.5 per cent is down on last year’s cap of 1.8 per cent, which was less than 2014’s cap of 2.3 per cent, which in turn was less than 2013’s peg of 3.4 per cent,” Cr Rhoades said. “In the five years to 2014/15, it averaged 2.9 per cent per annum – yet the cap for 2017/18 is half that.
“That means every year councils slip further and further behind,” he said, in addressing the infrastructure renewal backlog.
“IPART has come to the 1.5 per cent figure despite an increase of 2.3 per cent in employee benefits and on-costs, and an increase of 2.7 per cent in non-residential building construction costs, saying those price rises were partly offset by decreases in gas and fuel prices.
“But that fails to recognise the ongoing squeeze on councils that comes from the combination of rate-pegging and cost-shifting, and deteriorating infrastructure.
“The latest figures show cost shifting by the NSW Government and the Australian Government in the financial year 2013/14 totalled around $670 million – almost 7 per cent of local government’s total income before capital amounts.’’
Clr Rhoades said the rate peg forced many councils to seek special rates variations.