Clarence Valley Council building on Prince Street, Grafton.
Clarence Valley Council building on Prince Street, Grafton. x

1.5% rate peg 'financial noose' for councils

LOCAL Government NSW president Keith Rhoades said the 1.5% rate peg announced by the Independent Pricing and Regulatory Tribunal (IPART) yesterday was part of a financial noose which continued to tighten, effectively preventing councils from ever becoming financially sustainable.

IPART stated that continuing low inflation and minimal growth in council costs meant the increase for 2017/18 would be less than this year's 1.8%.

The chair of IPART, Peter Boxall, said ratepayers would benefit from the modest rate of public sector wages growth in recent years, as well as the continuing low inflationary environment.

It will be bad news for councils across the state, however, including Clarence Valley Council that had factored in a 2.5% increase into its plans to ask for a 9% rate rise for the next financial year.

The council will meet today to discuss its latest Fit For The Future submission and a special rate variation will be discussed at December's monthly meeting.

Cr Rhoades hit out at yesterday's decision, saying it failed to allow councils to address the infrastructure renewal backlog.

"IPART has come to the 1.5% figure despite an increase of 2.3% in employee benefits and on-costs, and an increase of 2.7% in non-residential building construction costs, saying those price rises were partly offset by decreases in gas and fuel prices," he said.

"But that just fails to recognise the ongoing squeeze on councils that comes from the combination of rate-pegging and cost-shifting, and deteriorating infrastructure.

"The whole system is set up to make councils look inefficient and financially profligate, when the opposite is true."

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