Lane Cove Rates To Rise after IPART Ruling

    In late 2021, New South Wales local councils were advised that the proposed rate increase for 2022/23 was 0.7%.

    The announcement of a 0.7% rate increase came as a major surprise to Councils throughout NSW as it was one of the lowest rate increases announced since rate pegging was first introduced in 1977.   The rate peg is the maximum amount councils can increase rates by and is set by the Independent Pricing and Regulatory Tribunal (IPART).

    Since that announcement, there have been significant concerns about the impacts of the low rate increase raised by councils, particularly given the increasing costs associated with providing essential services to the community.

    Local councils were permitted to apply to IPART for an increase.

    IPART has now approved applications by 86 NSW councils to increase their rates above the level of the annual rate peg.   IPART believes increases of between 1.6 per cent and 2.5 per cent were modest.

    Lane Cove Council Rate Rise – 2%

    Lane Cove Council applied for an increase of 2.00 per cent and IPART approved this increase.

    This 2.0% rate increase for residential properties equates to a $26 per annum increase (or 50 cents per week).

    In a briefing to Lane Cove Council at the March Lane Cove Council Meeting, the officer’s briefing report included the following:

    “Council’s adopted Long Term Financial Plan includes an estimated rate increase of 2.0% for 2022/23. The difference between 0.7% and 2.0% is approximately $350,000 in additional rates revenue. Council is currently finalising its financial estimates as part of the 2022/23 Budget process, and the additional rates revenue will go a long way towards council balancing its budget.

    Whilst the adopted Long-Term Financial Plan indicates a small budget surplus for 2022/23, it was predicated on a 2.0% rate increase and was prepared almost 12 months ago prior to the finalisation of Council’s 2020/21 annual financial statements. Since that time, additional depreciation has been brought to account as an expense which requires additional funding to ensure our infrastructure renewal spend is such that our key infrastructure renewal and backlog ratios remain above ‘fit for the future’ standards.

    Importantly, a rate increase of only 0.7% will also have a long term cumulative impact on council’s ability to not only balance budgets in the future but may also compromise Council’s ability to provide services and service levels the community has come to expect. From a financial perspective, an additional 1.3% in rate revenue (difference between a 2.0% increase and a 0.7% increase in rates) amounts to more than $4m in foregone revenue over the next 10 years.

    The financial impacts of Covid-19 continue to adversely impact Council’s income and expenditure estimates. There is no provision in the 2022/23 Budget for covid-19 related impacts. By way of example, the financial impact of Covid-19 in 2020/21 was $1.6m and in the current 2021/22 Budget, it is forecast to be $1.0m.

    Council’s average residential rate is approximately $1,300 per annum. A 0.7% rate increase equates to a $9.10 per annum increase (or 18 cents per week). A 2.0% rate increase equates to a $26 per annum increase (or 50 cents per week). The incremental increase in residential rates from 0.7% to 2.0% is considered relatively minor.

    Council’s average business rate is $4,800 per annum. A 0.7% rate increase equates to a $33.60 per annum increase (or 65 cents per week). A 2.0% rate increase equates to a $96 per annum increase (or $1.85 per week). The incremental increase in business rates from 0.7% to 2.0% is considered relatively minor.”

     

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