IPART has set the 2021-22 rate peg for NSW councils at 2.0%.
We calculated the rate peg for 2021-22 by taking the increase in the Local Government Cost Index (LGCI) to June 2020 of 1.8%, setting the productivity factor to 0.0%, and adding an adjustment of 0.2% for the costs of the 2021 local government elections.
The rate peg is the maximum percentage amount by which a council may increase its general income for the year.
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.
Councils applying for a special variation in 2021-22 should use the 2021‑22 rate peg set by IPART – which will be released in September 2020 – in their applications, and an assumed rate peg of 2.5% for 2022‑23 and in future years, unless stated otherwise in the Office of Local Government’s Guidelines for the preparation of an application for a special variation to general income for 2021‑22. The Guidelines will be made available in October 2020.
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.