The rate peg

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What is the Rate Peg?

The rate peg determines the maximum percentage amount by which a council may increase its general income for the year. For almost all councils, general income consists entirely of rates income. For a small number of councils, general income also includes some annual charges such as drainage levies. The rate peg does not apply to stormwater, waste collection, water and sewerage charges.

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 mainly based on the Local Government Cost Index (LGCI).
 
The LGCI measures price changes over the previous year for the goods and labour an average council will use. We also look at productivity changes over the same period.

 

Rate Peg 2017-18

For 2017-18, the rate peg has been set at 1.5% based on the change in the Local Government Cost Index (LGCI) and consideration of a productivity factor.  This year the productivity factor did not have a material impact on the LGCI.

We calculated the rate peg by:

  • taking the increase in the LGCI for the year to September 2016 of 1.47%
  • deducting a productivity factor of 0.001%

This results in rate peg of 1.47%, which we rounded to 1.5% for 2017-18.

For more information on the 2017-18 rate peg, see our Media Release and Fact Sheet.    

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 beyond the annual rate peg, by applying to IPART for a 'special rate variation'.
 
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