Each council is required to determine the combination of rates, charges, fees and pricing policies needed to fund the services it provides to the community. This is called a revenue policy. The revenue policy contains a rating structure that determines which rates and charges you will have to pay and how they will be calculated. Charges are generally determined on either an annual basis or according to usage – or they may be a combination of both, for example, water and sewer charges.

Councils can choose how they calculate and distribute rates among categories of rateable properties in the council area. For each category or sub-category, rates can be calculated in one of three ways. They can be based:

• entirely on the land value of the property
• on a combination of the land value of the property and a fixed amount per property
• entirely on the land value, but subject to a minimum amount.

The land value is determined by the Land and Property Information Division of the Department of Finance and Services on behalf of the NSW Valuer General.

Categories are important, because rates differ depending on the category of the land. So if your land is, for example, categorised as residential you may pay a lower rate per dollar of land value than if your land is categorised as business.

If you are not satisfied with the category given to your property, you may apply to council for the category to be reviewed. If you do this, council must notify you of their decision and the reasons for that decision. If you still do not agree with the category given to your property, you may appeal to the Land and Environment Court. You must do this within 30 days of receiving council’s review decision. Contact the court to find out how to lodge an appeal.

Councils don’t determine your land value for rating purposes. Land is valued by the Valuer General under the Valuation of Land Act 1916 (as amended). These valuations are carried out approximately every four years and you should get a valuation notice after it is done.

If you don’t agree with the land value, you have 60 days to object. The Land and Property Information Division of the Department of Finance and Services will give you an objection form free of charge by calling 1800 110 038.

Even if you lodge an objection, you must still pay your rates while your objection is being considered. Whatever the Land and Property Information Division decides about your objection, they must advise you in writing. If you still don’t agree with the valuation, you have limited time to appeal to the Land and Environment Court . The response sent by the Valuer General will explain the final date for an appeal.

Under the Local Government Act 1993, the total amount of income that a council can raise from certain rates and charges is limited. This is called the rate peg percentage. The rate peg is determined on an annual basis.

Because of rate pegging, a council’s overall rates revenue cannot increase by more than the approved percentage increase.
If overall land values rise, councils may have to reduce or otherwise adjust the amount of rates levied per dollar so that total income does not grow by more than the approved percentage increase.

The Independent Pricing and Regulatory Tribunal of New South Wales (IPART) determines the rate peg that applies to councils’ general income.

IPART is the independent economic regulator for NSW. IPART oversees regulation in the electricity, gas, water and transport industries and undertakes other tasks referred to it by the NSW Government.

IPART determines the rate peg that will apply to all councils for the year using a Local Government Cost Index. The Index assists in calculating the operational costs of councils in New South Wales.

The rate peg percentage is calculated by subtracting a determined productivity factor for councils from the Local Government Cost Index.

Within rate-pegging, it is possible for some rates to increase by more than the rate-peg limit while others may increase by less than the rate-peg limit. In some cases, rates may decrease from the previous year.

A council’s rating structure and valuation changes are the main factors that will determine what happens to rates on an individual property. A general revaluation by the Valuer-General may result in the value of some land in a council area increasing or decreasing by more than other land. Where this happens the rates burden will shift. Councils may decide to vary rating structures from year to year to compensate for this.

Under the Local Government Act 1993 (Act), councils are able to apply for additional increases in general income beyond the annual rate peg amount. This is referred to as a “special rate variation’.

Under the Act, councils may apply for a single year increase under section 508(2), or a multi-year increase (of between two and seven years) under section 508A.

IPART has been delegated responsibility for assessing and determining special rate variations, however the NSW Government has retained responsibility for setting the policy framework under which applications will be assessed. This is reflected in the Government’s Special Rate Variation Application Guidelines, which sets out the assessment criteria that IPART must use when assessing applications.

Councils may seek a special rate variation in order to undertake environmental works, fund town improvements, redevelop community and civic facilities, address maintenance backlogs and maintain or improve existing service provision.

Local councils that are seeking special variations to general income above the rate peg amount are required to submit applications to IPART for review and assessment. The council must include details of its intention to apply for a special variation in its draft delivery program and operational plan and must consider any submissions received from the public. If a council’s application is approved, IPART will specify the percentage by which the council may increase its general income.

IPART must assess special variation applications against criteria set out in the Special Variation Guidelines, IPART must assess special variation applications against criteria set out in the Special Variation Guidelines.

Even though certain rates and charges are not subject to rate pegging, councils are still required to provide details in their draft operational plan and related draft revenue policy of what they are proposing to charge. Councils must consider submissions from the public before adopting the proposed rates and charges.

Annual charges for domestic waste management services and stormwater must be calculated to reflect the reasonable cost of providing those services to the community.

Urbanisation has resulted in increases in impervious surfaces and has significantly increased the volume of and pollutant load in stormwater flowing into urban waterways. These flows lead to waterway pollution as well as flooding in some areas.

To help councils better fulfil their role in managing these stormwater issues, the Local Government Act 1993 was amended in 2005 to allow them the option of levying an annual stormwater management service charge. The purpose of the charge is to help councils fund new or additional stormwater management activities. These activities may include stormwater pollution prevention, flood mitigation, rainwater and stormwater harvesting, community education programs and stormwater drainage systems operations and maintenance.

Councils that choose to levy the charge have to meet certain requirements, including consulting with their community through their annual planning process prior to levying the charge. The maximum amount that a council can charge is $25 for an average residential block, and the charge can only be levied on properties where council provides a stormwater management service.

Contact your local council to find out what stormwater management services your council is providing for any stormwater management service charge levied on your land.

Half of the total of your ordinary rates and domestic waste management service charge, up to a maximum of $250.

Half of your water rates or charges, up to a maximum of $87.50.

Half of your sewerage rates or charges, up to a maximum of $87.50.