The anchoring of local authority tariffs to be reviewed – L’Echo

The announcement by the Independent Pricing and Regulatory Tribunal (IPART) that it will undertake a long-awaited review of local government rate pegs has been welcomed by Local Government NSW (LGNSW), the supreme body representing advice.

In a statement, LGNSW said it had long called for the review, “particularly since IPART’s capped rate rises to 0.7% for 2022/23 – the lowest base rate cap in more than two decades – in the face of rising inflation which is now expected to reach 7.75% by the end of the year”.

“IPART later acknowledged the dire financial position its initial decision would have on the councils, and subsequently allowed 86 NSW councils to raise their rates by up to 1.6% and 2.5%”.

Carefully review how the rate anchor is calculated

LGNSW President Darriea Turley said, “This review will provide an opportunity to take a close look at how rate pegging is calculated and what improvements could be made to prevent future financial shocks to the credit industry. local authorities”.

“IPART’s decision to introduce a record rate cap just before inflation started spiraling out of control is clear evidence that the methodology used to calculate the rate cap is completely broken.

“This welcome overhaul will hopefully ensure that such mistakes are not repeated by replacing faulty methodology that is not fit for purpose.

“As per the terms of reference, the review will consider how the rate peg methodology can better reflect inflation and the costs of providing local government goods and services.”

Turley added: “Essentially, the terms of reference also explicitly include a survey of the Fixed Rate Population Growth Factor, which aligns with a resolution from this year’s LGNSW Special Conference.”