IPART has completed our review of the rate peg to include population growth
The Independent Pricing and Regulatory Tribunal (IPART)
The NSW Government asked IPART to recommend a rate peg methodology that allows the general income of councils to vary in a way that accounts for population growth.
The Eurobodalla Council claims that the amount councils currently receive in rates is usually not enough to cover the increased costs associated with population growth. As Council is controlled by IPART of how much they can increase their rates per year the challenge has been to find ways to get around the impost.
One way, adopted in recent times by Eurobodalla Council, was to introduce a Special Rate Variation.
Council’s decision in 2015 to apply for a rate variation is to support its strategic goal of becoming financially sustainable, address community expectations regarding community and transport infrastructure and assist to meet the NSW Government’s Fit for the Future criteria. Council said that the rate variation will enable Council to deliver an additional package of community and transport infrastructure projects to the value of $20.7 million over the next four years.
In Eurobodalla we have Water Rates, Sewer Rates and General Rates. Then there are a series of levies such as the Environment Levy.
Council is limited to how much it can increase the GENERAL Rate by IPART. Usually it is around 2% per year.
The Independent Pricing and Regulatory Tribunal (IPART) caps the income councils can make from rates in a process called rate pegging. Councils must ensure the total income from rates does not grow by above the amount set by IPART.
Land values for rating purposes are supplied by the Valuer General’s Office every 3 to 4 years. A Notice of Valuation shows the UNIMPROVED land value of a property, based on property market conditions. It gives landholders the opportunity to consider their land value before it is used by Council.
The value of your property is based on property market conditions. Even if you don't sell your house, that was valued at $800,000 just a year ago, for $1.5 million the fact that your neighbours, the folks around the corner and down the street have all sold at huge prices forces up the value of your place. Next time there is a Notice of Valuation you might well get a surprise.
The next surprise after that will be when you realise that Council bases its General Fund rate on your newly inflated valuation.
With minimum lot sizes going down to just 450m2 you might also find your valuation reflects that you live in a single dwelling on land that could be subdivided or developed. If that is the case then the rateable value of your land may be greater than the average for a single dwelling.
Eurobodalla Council have, for more than a decade, overcharged on our Water and Sewer rates so that they can, legally, pay themselves a "dividend" into the otherwise controlled General Fund. This is a loophole that they insist is required because we don't have enough income in the General Fund to provide for all the maintenance, renewals and provision for new assets that the community demands.
IPARTS's analysis shows the costs of growth are not being fully met for NSW councils in general, with faster growing councils tending to be unable to recover additional revenue through general income in proportion to their growth.
IPART say "We expect under-recovery of the costs of growth will mean growing councils will be unable to maintain their service levels. This may result in councils relying on special variations to fund growth or exploring other forms of revenue raising".
It will be interesting to see how Council moves on this, especially given that the Eurobodalla has one of the oldest demographics in the State, one of the highest levels of youth unemployment, and one of the highest levels of under-employment in the country.
Our rates are already high by comparison with other similar Councils and now look to be rising again.
The question is "How will the majority of our ratepayers meet the increased rates and levies?"
Above: Stephen Jones, Shadow Assistant Treasurer, was in Batemans Bay with the Federal Member for Gilmore Fiona Phillips to meet with Seniors from across the region over a Morning Tea session and hear of their concerns.
