NSW:Rate peg too low, say NSW councils

AAP General News (Australia)
12-10-2010
NSW:Rate peg too low, say NSW councils

SYDNEY, Dec 10 AAP - Councils in NSW say a new rateS cap of 2.8 per cent won't cover
their escalating costs, and are calling for the state government to scrap rate pegging
altogether.

The rateS increases will be pegged at 2.8 per cent in 2011-12, in the first determination
by the Independent Pricing and Regulatory Tribunal (IPART).

IPART was given responsibility in June for setting rateS increases, which were previously
determined by the state government.

However, local governments say the cap has been set too low and have called for rate
pegging to be scrapped in NSW, the only state in Australia to have it.

"The 2.8 per cent rate cap still falls well short of the real cost increases facing
councils, making it difficult for councils to meet the growing service and infrastructure
needs of local communities," said Keith Rhoades, president of the Local Government Association
of NSW.

President of the Shires Association of NSW, Bruce Miller, said the cap did not take
into account the infrastructure backlog faced by local government.

"The reality is the rate cap is simply not enough to cover our escalating expenses,
let alone address the $6 billion infrastructure renewal backlog we currently face," he
said in a statement.

"Yes, the figure is in line with the current CPI - but councils already have to deal
with an inadequate share of taxation and a bill that totals $440 million every year, for
costs shifted onto us by other levels of government.

"With the state government election looming (in March), there has never been a better
time to get rid of rate pegging."

However, IPART chair Rod Sims said the 2.8 per cent rate peg for 2011-12 would see
councils' revenues increase in line with their increased costs, while also encouraging
them to become more efficient.

"We have based our decision on the increase in the Local Government Cost Index, which
IPART has developed and which is being released with this decision," Mr Sims said in a
statement.

"The index increased by three per cent in the year to September 2010.

"We have then subtracted a productivity adjustment of 0.2 per cent from the increase
in the index to determine a rate peg amount of 2.8 per cent.

"This approach will see council general revenues increase in line with an index that
reflects council costs and will encourage local governments to continue to improve the
efficiency of their operations."

AAP ab/tr/dep

KEYWORD: IPART UPDATE

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