A special rate variation allows councils to increase rates above the rate peg increase which is set by the Minister for Local Government. There are two types of special rate variations that a council may apply for:
Local councils wanting to increase the minimum rate levels - above the rate peg - need to submit an application to IPART (Independent Pricing and Regulation Tribunal) for review and assessment.
IPART is the Independent Pricing and Regulatory Tribunal, a State Government Agency responsible for determining the maximum price increase for a number of utilities and services including local government rates. For more information on IPART visit www.ipart.nsw.gov.au(External link)
Each year, councils wishing to apply for a special variation apply to IPART in February. The applications are assessed against criteria listed in the Office of Local Government’s Guidelines. These include undertaking long term financial planning, ensuring community awareness of the need and extent of the proposed increase in rates, and consideration of the impact on ratepayers and the community’s capacity and willingness to pay. In addition, councils must meet criteria related to productivity improvements.
IPART requires councils to actively engage residents in discussions about the proposed increase above the rate peg. Councils can do this with public hearings and other community engagement tools that suit their population. IPART will consider how effective each council’s community inclusion has been before determining its application to increase charges above the set rate.
Councils need to show IPART there is:
In addition to council’s evidence, IPART will assess any other information it considers relevant, including letters from ratepayers.
IPART can wholly or partially approve or reject a council’s application.
Rate income for all Councils in NSW is restricted under an arrangement known as ‘rate pegging’. Rate pegging means Councils cannot increase their total rate income from one year to the next above the pegged annual increase level. The rate peg is a percentage set each year by the Independent Pricing and Regulation Tribunal (IPART). In 2019/2020 the rate peg has been set at 2.7%.