IPART media release - Special rate variations determined for six Sydney councils

This is a media release issued by IPART on 13 May 2019. Read their original media release and visit their website for further details.

The Independent Pricing and Regulatory Tribunal (IPART) has approved applications from five Sydney councils, and partially approved another, to increase general income above the 2.7% rate peg from 1 July 2019.

Applications made by Burwood, Hunters Hill, Ku-ring-gai, Randwick and Sutherland councils have been approved in full.

North Sydney Council’s application has been partially approved, with rates to increase by 22.5% over three years, instead of the 40.3% increase over five years requested by the Council.

If adopted in 2019-20, the increases in the average residential rates across these six NSW metropolitan councils would range from $40 in the case of Ku-ring-gai, up to $170 in Hunter’s Hill.

These increases include the 2.7% rate peg, which can be applied by all councils from 1 July 2019. Minimum rates for those living in Sutherland will increase from $602.30 to $900 from 1 July 2019.

This represents around 25% of the ratepayers in Sutherland and brings their rates closer to the average residential rate charged across the council area.

IPART Chair Dr Paul Paterson said special variations give councils flexibility to generate additional income above the rate peg to meet specific needs.

Council applications are independently assessed by IPART against the NSW Government’s published criteria. Submissions received directly from stakeholders are also considered.

“In making these assessments, we have considered whether there is a genuine financial need for additional revenue to allow a council to be financially sustainable, and fund infrastructure projects or asset renewal requirements of their regions,” Dr Paterson said.

“We also look at efforts made by the various councils to reduce their costs and identify other sources of revenue, as well as the capacity and willingness of ratepayers to pay the requested increase. Through the rate peg and special variation process, IPART determines the allowable increases to councils’ general income.

Councils decide whether to implement the increase and how it is allocated among different ratepayer categories, such as residential or business rates.

The six Sydney councils are among 13 councils across NSW (of a total of 128) to apply for special rate variations for 2019-20.

Of the 13 applications, eight have been approved in full, three have been partially approved, and two (Port Stephens and Tamworth) were declined.

IPART has attached conditions to the approvals, requiring the additional income to be used for the purposes outlined in the application, and that councils report to their communities about how their additional revenue is spent.

The full reports on all of the councils’ applications are available on IPART’s website.

Randwick City Council

IPART has approved Randwick Council’s application to amend its existing special variation by temporarily increasing its general income by an additional 5.90% in 2019-20 for five years.

The increase must be removed from the rate base on 1 July 2024. The additional revenue will be used to continue funding the environmental services and projects outlined as part of the Council’s Sustaining our City program.

The approval follows an application made by the Council last year for a 19.85% cumulative increase over three years from 2018-19 to 2020-21 to be retained permanently in the rate base.

This application was approved by IPART in 2018 and the first year’s increase of 7.64% was applied in 2018-19.

This year’s decision means that the Council may increase its rates by a combined 11.42% in 2019-20 and 5.52% in 2020-21, and that the temporary 5.9% component will be removed from the rate base on 1 July 2024.

Twelve submissions were received opposing the application, with concerns expressed about affordability and consultation.

IPART found that the Council largely demonstrated a financial need for the additional revenue above the rate peg to implement its proposed projects while remaining financially sustainable.

Despite the concerns raised, IPART determined that although the impact on ratepayers of the proposed rate increase would be considerable, it was largely reasonable when considering the community’s willingness to pay, and that the Council demonstrated that the community was aware of the purpose of, and need for, the proposed special variation.

Requested special variation: An amendment to an existing special variation to increase general income by an additional 5.9% in 2019-20 and retain this increase in the rate base for five years.

Outcome: Approved in full

Estimated increase in the average residential rate (including rate peg): $70 in 2019-20

Summary of purpose: To continue funding the environmental services and projects outlined as part of the Council’s Sustaining our City program.