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Edward River applies to increase rates above cap

The ability to provide ‘business as usual’ is under threat at Edward River Council.

All NSW councils have been locked into a rate cap of 0.7 per cent in the 2022-23 financial year by the Independent Pricing and Regulatory Tribunal, limiting the ability to increase overall general rates revenue (excluding stormwater, water, sewerage and waste).

The “manifestly low” cap is well below forecasts provided to ERC, and significantly less than council requires to cover expenses.

Council has applied for a special rate variation for a 2.5 per cent increase overall (1.8 per cent above rate cap), but approval is not guaranteed.

Council general manager Phil Stone said councils were caught off guard by the 0.7 per cent rate peg, which was handed down just two weeks after IPART advised council to assume a 2.5 per cent increase.

“Council continues to have its operational costs rise more than both the CPI and the IPART index for councils,” Mr Stone said.

“As recent tenders and projects have demonstrated, ERC cannot achieve the industry discounts that a major metropolitan council might and will remain disadvantaged when local government sector averages are used to form rating policy.”

In a report to council, senior governance advisor Greg Briscoe-Hough said the community’s expectations of council in coming years warranted the application for a special rate variation.

Priorities identified in the development of council’s community strategic plan included a growth management strategy, development of airport land, the seniors living precinct, sewerage treatment plant upgrades and financial stability.

“In the event of the new rate peg formula (0.7 per cent) being implemented as originally proposed by IPART in the immediate future, it should be noted that this will reduce council’s ability to maintain ‘business as usual’, let alone any population growth,” Mr Briscoe-Hough said in the report.

“The prospect for any increases in rates associated with population is not something that can be immediately implemented or achieved outside of deliberate strategic, and appropriately funded, intervention.”

Mr Stone said if approved, the special rate variation will allow council to increase its total rates income by about $150,000 in the next financial year.

“How that amount is recovered is based on council’s normal revenue policy, the number of assessable properties and the latest land valuations,” Mr Stone said.

“For a minimum residential rated property, the increase would be approximately $10 to $30 a year.”

As a fail safe for the future, council is requesting the special rate variation be made permanent.

“The size of council’s rate base will reflect the increase indefinitely if approved,” he siad.

“The opportunity to apply the rate increase this way helps to address council’s long-term viability, provides certainty for long term planning, and will reduce the size of any future special rate variations and not require a catch up further down the track.”