The Independent Pricing and Regulatory Tribunal (IPART) has approved all applications made by New England councils and eighty-one other NSW councils to increase their rates above the level of the annual rate peg.
The 'modest increases' were approved for Armidale Regional Council, Glen Innes Severn Council, Inverell Shire Council, Moree Shire Council and Uralla Shire Council following an additional special variation process.
"The latest rate peg was determined in the low inflation environment at the beginning of the COVID-19 pandemic," Tribunal member Deborah Cope said.
"Since then, high inflation and global uncertainty increased councils' costs. Some councils have demonstrated that without additional funds they will not be able to deliver the projects they have already consulted on and included in their budgets."
The increases for councils are between 1.6 per cent and 2.5 per cent including the rate peg.
Armidale Regional Council and Uralla Councils were capped at 0.7 per cent and both have had that increased to 2.5 per cent; both Glen Innes Severn Council and Inverell Council were also capped at 0.7 per cent and they have each had a 2 per cent increase approved; while Moree Council has had its 0.7 per cent cap lifted to 2.28 per cent.
The decision to allow councils to increase their rates by a maximum of 2.5 per cent, against an inflation rate expected to reach 7 per cent by December, has been welcomed by the state's local government sector.
Local Government NSW (LGNSW) President Darriea Turley said the special rate variations announced by IPART acknowledged the dire financial situation created by its initial decision to cap rate rises at 0.7per cent.
"Without this, many councils would have been forced to choose between cuts to jobs or roads maintenance, parks, libraries and other community infrastructure and services," Ms Turley said.
"So while we strongly welcome today's announcement, we remain deeply concerned that such an anomaly can be produced by IPART in the first place."
Each year IPART calculate a rate peg which sets how much councils can increase the revenue they collect from rates.
"This year the rate peg was set at a minimum of 0.7per cent, with some further increases allowed in councils with growing populations," Ms Cope said.
"The rate peg was lower than many councils expected."
Northern Tablelands MP Adam Marshall took to the floor of State Parliament in February, condemning the IPART determination and urging the body urgently review its "paltry" increase figure.
And backing Mr Marhsall's outrage, Armidale Regional Council general manager James Roncon told the Express the time the cap would mean an immediate $350,000 deficit for his council's budget.
The Office of Local Government announced guidelines for an additional special variation process for the 2022-2023 financial year after a backlash from council's across the state.
"The additional special variation process gave councils an opportunity to increase this figure," Ms Cope said.
"We were careful to balance the need of councils to maintain the services and investment they had already committed to against the need to keep rates affordable for the community."
Applications were assessed against guidelines provided by the Office of Local Government. The guidelines require councils to show that they had budgeted for higher income than that provided by the rate peg and that they need the additional money to deliver on the projects they have already planned and included in their budgets.
Ms Cope said IPART is reviewing the rate peg methodology to deal with volatility in economic conditions and the timing of the calculations in a' fast-changing economic' climate.
"Our review will be looking at how to deal with this challenge in the future," she said.
Although Tenterfield Shire Council did not apply for a special rate variation for the 2022-2023 financial year, and received suggestions from a group of residents who brainstormed cost saving ideas, it is considering submitting an application by September for the next budget year.
"Like many councils across NSW, Tenterfield Shire Council is grappling with soaring costs for materials, fuel, electricity, insurance and inflation," said Tenterfield Shire Council chief executive Daryl Buckingham.
"As such, council is implementing service reductions as a cost-saving strategy. Council is also analysing possible rate increases via a special rate variation by an amount yet to be determined by the council."
Glen Innes Severn Council general manager Craig Bennet said there were obstacles for council to overcome before adopting resident group ideas.
"They may come up with suggested cost savings or revenue opportunities but...the rest of the community may not agree," Mr Bennet said. "They [council] will need to consult the rest of the community."
James Roncon said Armidale Regional Council was often approached by members of the community with 'all manner of suggestions' about how council might be able to save money, generate revenues or a combination of the two.
"Personally I really appreciate those type of approaches from people for a few reasons; it demonstrates interest in the local community and there are sometimes pearls of wisdom you can seek to take on board," Mr Roncon said.
"It also provides an opportunity for us to explain the role of local councils, the constraints we work within and why we might not be able to act in a particular way."
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