New South Wales councils will be allowed to increase their general income by up to 3.4 per cent following a ruling by the Independent Pricing and Regulatory Tribunal (IPART).


The maximum increase is set to apply to all State councils that do not have approval for special variation for the 2013/14 period.


IPART Chairman, Dr Peter Boxall, said the rate peg represents the increase in costs incurred by local government, a deduction for productivity improvements and a deduction of part of the carbon price advance applied last year.


“In setting the rate peg, we have sought to strike a balance between ensuring that councils can meet the increased costs of delivering services while sharing the benefits of improved productivity with ratepayers,” Dr Boxall said.


“The rate peg applies to a council’s income, not to an individual’s rates, but if a council decides to increase residential rates in line with the rate peg, it would mean an additional $30 for the year, or less than $1 per week, for the average household.”


Dr Boxall said the main drivers behind the ruling are increases in the employee wages and on-costs, construction costs and electricity cost components of the Local Government Cost Index (LGCI).


“The LGCI increased by 3.7% in the year to September 2012,” Dr Boxall said. “In setting the rate peg we have subtracted a productivity factor of 0.2% from the index and 0.1% to account for part of the carbon price advance included last year to avoid double counting of the impact of the carbon price on council services.