While WSROC member councils have welcomed the recent announcement by the Independent Pricing and Regulatory Tribunal (IPART) that it has set its 2023-24 council rate peg at 3.7 per cent — I would nonetheless urge IPART to re-examine the methodology it employs to calculate the financial needs of councils.

With the current annual inflation rate now at nearly 7.0 per cent, the 3.7 per cent cap represents a decrease in real spending power at precisely the time when Western Sydney councils are dealing with the aftermath of COVID, bushfires and the recent unprecedented floods crisis.

While Western Sydney councils are determined to keep rates as low as possible, we are also required to deliver services and infrastructure that our communities expect and deserve.

The 3.7 per cent cap, announced on 29 September, while above the usual cap of about 2.28 per cent, comes immediately after an historically low 0.7 per cent increase for 2022-23.

Greater Western Sydney’s population is growing at such a rate that we will need to house more than one million additional people by 2031.

As councils in Greater Western Sydney look to the future, the demands of population growth and other internal and external factors are putting ever greater financial pressure on them. Then they must cope with a range of increased levies and the rising costs of asset maintenance, too.

Making matters worse, is the constant trend by government, especially the State Government, to shift the costs of providing many vital services onto local councils.

Cost shifting by the NSW Government and the Australian Government onto local councils in NSW in the financial year 2015/16 alone was estimated to have been $820 million — up from an estimated $380 million in 2005/06.

The increase is mainly driven by the NSW Government’s $800 million annual waste levy. 

However, most of the day-to-day work of the state’s waste management system is conducted by local councils — and paid for by local communities.

Councils should be allowed to recoup the cost shifting imposed by the NSW Government and then have the 3.7% cap on top of that.

It is clear from IPART’s past performance that the modelling and methodology it employs to set the rate peg don’t align with the real world.

The demand for ever more housing also compounds other significant challenges our councils are dealing with including finding ways to ensure our communities have access to sustainable, reliable, and affordable energy; to rebuild local infrastructure after recent disasters such as floods and bushfires; to provide reliable and sustainable transport solutions, and so much more.

It should be noted, though, even this latest 3.7 per cent rate peg falls well below the Australian Bureau of Statistics' 5.3 per cent annual Consumer Price Index inflation rate for Sydney to June 2022.

While we welcome IPART’s announcement, the plain fact is that even the standard yearly increases of around 2.28 per cent are not proportionate with the rising costs of Council expenditure.

On top of everything, inflation has now begun to spiral, providing further evidence that IPART’s methodology is wrong.

We simply cannot do this with a system that appears to be incapable of pre-empting or reacting to a rapidly changing economic landscape.

To address long term financial pressures and to deliver on community priorities, WSROC is urging IPART to review the methodology it will use to set the rate peg from 2024-25 and in subsequent years.

We especially need IPART to closely examine how the rate peg is calculated and what improvements could be made to prevent future financial shocks to the local government sector.