NSW’s Independent Pricing and Regulatory Tribunal (IPART) has changed the methodology used to set the annual rate cap.

The modified formula has been welcomed by the local government sector, though many councils still oppose the cap itself.

For more than 40 years, local government has opposed the rate peg because it is a political sleight of hand,” Local Government NSW President Keith Rhoades said.

“The cap doesn’t protect family budgets, because families are often forced to pay in other ways – deteriorating local roads, reduced services or new charges and levies.

“The reality is that budgets only stretch so far, and rate-pegging just disguises the financial impact on communities and local economies.

Cr Rhoades said the rate peg – calculated by IPART on the basis of the Local Government Cost Index, similar to the Consumer Price Index – had been set at 2.3 per cent for 2018-19.

There has been an increase on the 1.5 per cent peg this year, and 1.8 per cent the year before, something IPART has attributed to the rising costs faced by councils.

“IPART has attributed the increase to increases in labour costs, electricity and street lighting charges, and higher constructions costs for roads, drains, footpaths, kerbing and bridges,” he said.

“They have heard us about the pressures on local budgets.”

Clr Rhoades also commended IPART for dropping the productivity factor from the rate peg calculation

“The sector has lobbied for many years for IPART to drop the so-called “productivity factor” from its calculation,” he said.

“Council outcomes such as the provision of parks, public libraries, inclusive communities, urban planning and regional development are not easily translated into the economic theory behind the productivity factor.

“A great deal of the work councils do involves creating healthy, resilient and inclusive communities and neighbourhoods with the amenity, infrastructure and open space that contributes to the quality of life.”

The local government lobby also welcomed a proposal to bring the annual rate peg announcement forward from late November to early September, possibly from next year.

“This is a sensible move that provides the information councils need for their budget processes in a much more timely way,” Cr Rhoades said.

IPART is expected to confirm a decision on the future timing of rates cap announcements in May next year.