What is a rate peg?

Since 1977, council rate revenue has been regulated in NSW under an arrangement known as ‘rate pegging’. Rate pegging allows all councils to increase their total rate revenue in line with the annual change in the rate peg. 

Rate pegging limits the amount which councils can increase their general income. General revenue mainly comprises rates revenue, but also includes certain annual charges. It excludes stormwater and waste charges, and water and sewerage charges.

The rate peg is the maximum percentage amount that a council may increase its general income for the year. Previously, the rate peg was set by the Minister for Local Government.  Since 2011/12, it has been set by IPART under a delegation by the Minister for Local Government.special variation. 

On 11 September 2018 IPART announced the 2019/20 rate peg at 2.7%. On 8 October 2019, the Office of Local Government advised councils to assume the rate peg of 2.5% for 2020/21 and future years.

For many years, the rate peg limit has not kept pace with the spiralling increases to costs for councils in NSW to deliver vital community services.


What is a special rate variation (SRV)?

A special variation (or special rate variation) allows councils to increase their general income above the rate peg. There are a range of reasons why a council may apply for a special rate variation, such as

- to address the financial sustainability of the council
- funding new or enhanced community services to meet growing demand in the community
- funding the development and/or maintenance of essential community infrastructure
- funding projects of regional significance
- covering special cost pressures that the council faces.

There are two types of special variations that a council may apply for under the Local Government Act 1993:

a) a single variation (section 508(2)) or
b) a variation each yeah for 2 to 7 consecutive years (section 508A). North Sydney Council is proposing to apply under section 508A.


What criteria does IPART use to assess SRV applications?

On 8 October 2018, the Office of Local Government advised that IPART will assess 2019/20 SRV applications against the following criteria (in addition to any other matters which IPART considers relevant): 1. The need for, and purpose of, a different revenue path for the council’s General Fund (as requested through the special variation) is clearly articulated and identified in the council’s IPR documents. 2. Evidence that the community is aware of the need for and extent of a rate rise. 3. The impact on affected ratepayers must be reasonable, having regard to both the current rate levels, existing ratepayer base and the proposed purpose of the variation. 4. The relevant Integrated Planning and Reporting (IPR) documents must be exhibited (where required) approved and adopted by the council before applying to IPART for a special variation to its general income. 5. The IPR documents or the council’s application must explain the productivity improvements and cost containment strategies realised in the past years and plans to realise over the proposed special variation period. 6. IPART’s assessment of the matters set out in criteria no. 3.

Why are North Sydney rates lower than other councils?

Historically, the Council opted not to increase rates higher than the rate peg but to seek other sources of revenue including user pays fees and charges and investments. The compounding effect meant that North Sydney’s rates fell further behind other councils over the years.

What has been the rate peg for the past 3 years?

Previous year's rate peg, as determined annually by IPART, have been: 2018/19 - 2.3%, 2017/18 - 1.5% and 2016/17 - 1.8%.