Residents of Strathfield in Sydney’s inner-west have blasted an “outrageous” 93 per cent increase in their council rates over the next four years, as other areas face average increases of nearly 50 per cent.
Strathfield Municipal Council was one of 17 NSW councils that applied to the Independent Pricing and Regulatory Tribunal (IPART) for special variations to increase their general income over the rate peg, which determines the maximum amount councils can increase the income they collect from ratepayers.
IPART set the base rate peg for 2023-24 at 3.7 per cent. There is also an allowance for population growth, meaning some councils have rate pegs of up to 6.8 per cent.
Seventeen councils applied to IPART in February and March to raise additional revenue, and the tribunal on Thursday announced it had fully approved 14 of the applications and partially approved three.
Residents of Strathfield will be slugged with a 35.1 per cent increase in 2023-24, followed by 13 per cent the following year, 17.5 per cent the year after and another 7.5 per cent in 2026-27 — a cumulative increase of 92.83 per cent over four years.
The tribunal received more than 1800 submissions from residents about the proposed increases.
“Historically, Strathfield Council has been a very efficient council, in that it did the basics well (waste, cleaning, development applications, etc.),” one person wrote.
“Candidates for councillors did not advocate discretionary, or bread and circuses, services in order to be elected. However, something went wrong in recent years and now Strathfield Council is before IPART seeking outrageous rate increases.”
The writer went on to list discretionary services introduced by the council, including a $1.3 million Connector bus, commercial property letting, the three-day Strathfield Festival, investigations of aquatic leisure centres, parenting programs, tech programs for seniors, community choirs, Covid testing at the library, various fitness programs including fun runs, and “most outrageously, glossy four-page colour brochures, hand-delivered to residents’ letter boxes, which describe the bread-and-circuses services that have nothing to do with the council’s core business”.
Others accused the council of misleading residents about the true impact of the rate increases for those living in houses, who will bear the brunt of the burden due to the large number of high-rise apartments in the area.
“For a significant proportion of residents, their rates will rise by hundreds or even more than a thousand dollars,” one person wrote.
Another said, “Based on the latest projections calculated by Strathfield Council, typical properties in the Homebush Village area with land values around $2.5 million to $4 million will generally see an overall rate burden of around $2800 to $4000, an increase of around $500 to $1500 compared to current levels.”
The next highest increase approved by IPART was Queanbeyan-Palerang Regional Council, which will jack up rates by 64.3 per cent over three years, followed by Armidale Regional Council which sought a 58.8 per cent increase over three years.
The average increase across the 17 councils was around 46 per cent.
Tenterfield Shire Council had applied for a three-year cumulative increase of 104.49 per cent, but was only partially approved for a 43 per cent increase over one year.
Mayor Bronwyn Petrie told the ABC it was a “start”, after being forced to make service cuts. “We have made huge saving cutbacks in the last two years, a very much restricted program,” she said.
“We are running so lean, but now that we have this decision, the community will then see what we said through the consultation very, very clearly, that if we do not get a sufficient rate rise there will be more cuts to services. It will hurt us all in the community, but we will just have to do the best we can for our community, in the best way we can going forward.”
NSW Farmers has slammed the “ridiculous” regional rate rises, saying the added costs would smash local communities.
“We’re all facing the same cost-of-living pressures, high power prices, high fuel prices, rising interest rates, and we’ve got no ability to meet those extra costs,” NSW Farmers president Xavier Martin said in a statement on Friday.
“Every time you turn around someone’s putting their hand in the farmer’s pocket, and these rate rises will just further squeeze businesses and households in these areas. This is going to seriously hurt a number of farming businesses, and will also be a big hit to families.”
Announcing the decision on Thursday, IPART chair Carmel Donnelly suggested this year’s “large special variation applications” reinforced the tribunal’s calls for the NSW government to commission an independent investigation into the financial model of councils in the state.
“This call for an independent investigation is in response to a broad range of issues people have highlighted during consultation with IPART, including financial sustainability of councils, financial management and the affordability and fairness of council rates,” she said.
“Many stakeholders expressed concerns about the special variation process during our recent review of the rate peg methodology. We also received over 1800 submissions about these 17 special variation applications, including from people who raised broader issues about the financial model for councils.”
IPART is required to assess special variation applications against criteria set by the Office of Local Government.
The criteria “require councils to demonstrate the need for the additional revenue, provide evidence that the community is aware of the need for and extent of a rate rise, exhibit relevant planning documents, explain council’s productivity and cost containment actions and plans, and establish that the impact on affected ratepayers is reasonable”, IPART said.
“We considered everything raised in submissions including the impact of rates increases on ratepayers given current cost-of-living pressures,” Ms Donnelly said. “We also considered the impact on communities if councils were unable to deliver services that people depend on.”
The independent investigation suggested by IPART “could examine why some councils have decided the only way to address financial sustainability is through seeking substantial increases to rates income, and could also review the current special variation guidelines, criteria and process”, she added.
Following IPART’s decisions, the 17 councils will now decide how to set rates.
“We encourage councils to consult with the community to decide how best to implement the allowed increase, noting that elected councillors can choose how they set council’s rates, including deferring any increases for up to 10 years and how they set rates across the rating categories,” Ms Donnelly said.
frank.chung@news.com.au