Rural and regional councils may become financially crippled in NSW after the Independent Pricing and Regulatory Tribunal announced on Monday the lowest rate cap increase in 20 years, the council peak body said.
The rate cap has been set at a baseline of just 0.7 per cent in NSW, though Local Government Areas subjected to population growth will benefit from rate cap rises.
Rate capping sees a state government impose a limit on the revenue councils can collect from their community every year to fund local services.
For many councils still reeling from devastating setbacks such as floods, bushfires and the COVID-19 pandemic, Local Government NSW (LGNSW) President Darriea Turley said the baseline rate cap would inflict further hardships on communities.
“This is the lowest rate cap in more than 20 years, and less than half the second-lowest cap of 1.5 per cent allowed in 2017/18. “It will come as a real kick in the guts to councils who are already working so hard to help their communities recover from the events of the past two years.”
Cr Turley said skyrocketing commodity costs and supply chain delays were starting to bite:
“The cost of fuel is up nearly 100 per cent, so that alone with have a major impact on operating costs for councils. “IPART too has decided to apply the public service wage increase of 1.2 per cent instead of the 2 per cent guaranteed to councils workers for 2022. “That means councils will have to dig deeper into their existing funds to pay their staff, so that is another very real impact.”
On behalf of councils across the state, the peak body threatened to cut services in response to the revenue restraint, with the president saying:
“The only other way to make up the shortfall which will be the direct result of this rate cap is to spend less on local roads, parks, pools, libraries and other community services on which our regional and rural communities depend.” “A lot of planned work, intended to drive a locally-led recovery from COVID, will now simply be out of financial reach.”