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.
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.