Councils across NSW are seeking to raise rates by up to 15 per cent a year, well in excess of the 2.7 per cent maximum increase permitted by the pricing regulator.
Burwood, Hunters Hill, Ku-ring-gai, North Sydney, Randwick and Sutherland Shire councils have all applied to the Independent Pricing and Regulatory Tribunal for a special variation to raise rates beyond the rate peg set by the tribunal.
The councils argue additional funds are needed to pay for roads, drains and playgrounds or improve financial stability. They say the NSW government is starving local government of money while shifting the cost of infrastructure to cash-strapped councils.
IPART will decide in May whether to approve applications to increase council rates beyond the peg based on criteria such as financial need and the community’s capacity and willingness to pay.
North Sydney Council has warned ratepayers that playgrounds would only be upgraded once every 48 years if it is not permitted to increase rates by 7 per cent for the next five years.
“Chances of any playground within North Sydney remaining as an effective, valuable and safe play space for 48 years is 0 per cent,” according to Robert Emerson, the council’s director of open space and environmental services.
Sutherland Shire is seeking an 8.8 per cent single-year increase on minimum rates up to $900 in an effort to reduce the gap between council charges paid by apartment owners and homeowners.
The council’s application to IPART said an increase in residential developments had placed “significant strain” on existing infrastructure.
“Whilst they do provide some additional rate income, the majority of these developments are being levied the current minimum rate of $602 per annum, which does not represent the cost of the additional services and facilities required by the increased population,” a council spokeswoman said.
Randwick City Council is seeking a five-year extension of an environmental levy, costing an average of $91 a year, even though its ratepayers are already paying almost 20 per cent higher rates over three years to pay for anti-terrorism measures, upgrading a museum at La Perouse and new sports facilities.
Seven rural councils including Kiama, Port Stephens and Tamworth have also applied to increase rates beyond the rate peg.
Muswellbrook Shire is seeking a 15 per cent rate rise to fund infrastructure projects.
Dungog Shire has asked to raise rates by 97 per cent over seven years – the council’s IPART application notes it is “significantly struggling with asset management, compliance and legislative obligations”.
An IPART spokeswoman said the peg for council rates – set at 2.7 per cent for the next financial year – reflected higher costs for labour, energy and the construction of roads, drains, footpaths and bridges.
“Councils have discretion to increase general income up to the rate peg, by less than the rate peg or not at all, and they also decide how to allocate the rate peg increase between different ratepayer categories,” she said.
There is little public support for the rate rises councils are seeking.
Three North Sydney councillors – Zoe Baker, MaryAnn Beregi and Tony Carr – accused their council of wasting ratepayer funds, failing to explore alternative to raising rates and “misleading” the tribunal about public support for the rate rise.
“Over the past 12 months, Council has not demonstrated efficient or careful use of Council resources,” the councillors wrote in their submission to IPART.
The councillors also initiated an online petition, which has gathered more than 200 signatures, opposing North Sydney’s proposed rate hike.
In contrast, North Sydney mayor Jilly Gibson said: “North Sydney has one of the highest household incomes of any [local government area] in Sydney while rates are among the lowest.”
Average residential rates in NSW were $1057 a year in 2016-17, according to the Office of Local Government – compared to $1864 in Victoria.
But residential rates in Hunters Hill averaged $1743.19 in 2016-17, $1456.63 in the Blue Mountains, $1406.92 in Lithgow, $1325.83 in Ku-ring-gai and $1204.48 in Randwick.
In contrast, ratepayers in the City of Sydney paid an average of $633.79, while those in North Sydney paid $751.17 – their far cheaper council rates are subsidised by business ratepayers.
“The rate-pegging system protects households and property owners from excessive rate rises, yet allows councils to deliver the services and infrastructure communities expect,” an OLG spokesman said.
But it is strongly criticised by councils such as North Sydney and Lithgow, which is seeking an 11.7 per cent increase in rates.
Graeme Faulkner, the council’s general manager, said the financial sustainability of councils were “significantly impacted” by cost shifting from other levels of government.
“Along with rate capping, cost shifting undermines the financial sustainability of the local government sector by forcing councils to assume responsibility for more infrastructure and services, without sufficient corresponding revenue,” he said.
A North Sydney Council spokeswoman also criticised the rate peg, which she said adversely affected councils with a high proportion of apartments.
“Capping rates based on past expenditure does not take into consideration ageing infrastructure and the need for significant additional expenditure as this infrastructure approaches the end of its useful life,” she said.
She said councils are responsible for one-third of public infrastructure, including 75 per cent of roads, yet raise only 3.6 per cent of tax revenue.
Council services will be cut if North Sydney’s proposed rate rise is not approved by IPART, she said. “Cutbacks would include services such as street cleaning, graffiti removal, tree planting, events, economic development, grants to community groups and centres and library opening hours.”
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