The rate peg

Rate Peg 2023-24

IPART has set a 2023-24 rate peg for each council, ranging from 3.7% to 6.8%.

IPART’s rate peg takes into account the annual change in the Local Government Cost Index (LGCI), which measures the average costs faced by NSW councils, in addition to a population factor based on each council’s population growth. 

The rate peg is the maximum percentage amount by which a council may increase its general income for the year.

For more information on the 2023-24 rate peg, see our Information Paper* and Media Release. The rate peg and population factor for each council is available in this spreadsheet. 

* This is an updated version to correct a minor typographic error to the date which the NSW Government committed to fully fund the ESL. This has no impact on the calculation of the rate peg.

We have used our existing rate peg methodology

We are currently reviewing the rate peg methodology. We will be looking at new approaches to setting the rate peg that reflect, as far as possible, changes in inflation and local government costs, while continuing to protect ratepayers from excessive rate increases. The rate peg for 2023-24 was calculated using our existing rate peg methodology.

What is the Rate Peg?

The rate peg is the maximum percentage amount by which a council may increase its general income for the year. For most councils, general income consists entirely of rates income. The rate peg does not apply to stormwater, waste collection, water and wastewater charges.

Councils can increase general income by up to the rate peg, less than the rate peg, or not at all. If a council does not apply the full rate peg increase, it will be able to catch up on the shortfall in general income over any one or more of the next 10 years. Councils have discretion to determine how to allocate the rate peg increase between different ratepayer categories.

How the rate peg is set

The rate peg is typically based on the change in the Local Government Cost Index (LGCI), a productivity factor, any special adjustments and, since 2022-23, a population factor for each council. However, IPART has discretion over the rate peg percentage and can adjust the rate peg above or below the percentage produced by the LGCI, productivity factor and population factor, if we consider this appropriate. The 2023-24 rate peg also includes an adjustment for the change in the superannuation guarantee in 2021-22.

How the rate peg affects individual rates

The rate peg sets the maximum increase in each council's general income for the financial year. The rate peg applies to general income in total, and not to individual ratepayers’ rates. As long as its general income remains within the set maximum increase, councils may increase categories of rates by higher or lower than the rate peg.

Individual rates are also affected by other factors, such as land valuations, which can affect percentage changes to rates alongside the rate pegging process. The rate peg affects some other council fees in addition to household and business rates.

Under the Local Government Act, councils are able to seek additional increases in general income above the annual rate peg, by applying to IPART for a 'special rate variation'.

Assumed rate peg for 2024-25 and future years

Special variation applications

Councils applying for a special variation in 2023-24 should use the 2023-24 rate peg set by IPART, and an assumed rate peg of 2.5% for 2024‑25 and in future years. Further information about the special variation process is available here.

Long term financial plan reviews and updates

We encourage councils that are updating or reviewing their Long Term Financial Plans to refer to the Office of Local Government’s Integrated Planning and Reporting Manual for local government in NSW, and to seek advice from the Office of Local Government where necessary to determine their revenue forecasts for rates and charges for future years.

Review of the rate peg methodology

The Independent Pricing and Regulatory Tribunal (IPART) welcomes the terms of reference from the Premier and Minister for Local Government to investigate and address concerns identified with the local government rate peg. Further information on the progress of the rate peg methodology review is available here

Rate Peg in recent years