IPART Local Government Reports Consultation 2019
To support the NSW Government’s long-term commitment to a fair and equitable rating system for ratepayers, as well as ensuring local councils have a stable and reliable revenue base so they can continue to independently plan and deliver improved services for their communities into the future, the Government asked the Independent Pricing and Regulatory Tribunal (IPART) to undertake several independent reviews.
The purpose of these reviews was to identify ways to strengthen councils by improving their ability to serve the needs of their communities into the future.
These reviews focus on areas of government regulation that required detailed consideration, consultation and review. The final reports for these are:
- a review of the local government rating system,
- a review of reporting and compliance burdens on local government*, and
- a review of local government compliance and enforcement*.
* Note: The second review focuses on reducing burdens placed on local government by the State. The third review focuses on reducing costs imposed by local government on business and the community.
IPART’s three reports are nearly 1,000 pages long and contain 135 detailed recommendations, covering some of the most significant issues facing local councils and their communities.
The Government has been carefully considering each and every recommendation and has ruled out some recommendations because they would impact on vulnerable members of the community, affect regional jobs and economies, and substantially increase costs for taxpayers and the broader community.
In addition, a number of recommendations have already been implemented though other reform programs. See the Government’s Interim Response for further detail.
The Government is seeking to carry out widespread consultation with residents, council staff, councillors, peak bodies and other key stakeholders as the Government finalises its response to these complex reports.
Thank you to those who took the time to provide feedback on IPART’s reports. Feedback will be used to inform the development of the Government’s responses.
| IPART Review final report | Contact email address (for queries) |
|---|---|
| Review of the local government rating system – PDF | lgratingsystem@olg.nsw.gov.au |
| Review of reporting and compliance burdens on local government – PDF | lgregburdens@olg.nsw.gov.au |
| Review of local government compliance and enforcement – PDF | lgenforcement@olg.nsw.gov.au |
IPART rating review
The Government has released its response to IPART’s Review of the Local Government Rating System, and a summary analysis of the 110 submissions received.
The Government response includes the following key elements:
- Within the context of the broader rating framework there are limited benefits for the implementation of a Capital Improved Value (CIV) method of calculating rates at this time.
- The Government does not support the recommended changes to the local government rates pensioner concessions framework and does not support significant changes to the existing rating exemptions framework. The Government is committed to not disadvantaging vulnerable communities.
- Providing support for greater flexibility in the current rating system through the creation of additional rating categories and sub-categories, and facilitating councils’ ability to align income growth with population growth.
- Review of the Local Government Rating System– PDF
- IPART Rating Review – Government Response – PDF
- IPART Rating Review – Submission Summary and Analysis – PDF
IPART undertook these reviews. Further information about those review processes is available on IPART’s local government webpage:
- Review of local government compliance and enforcement
- Review of reporting and compliance burdens on local government
- Review of the local government rating system
Any questions about the current consultation process may be sent to the above email address for each report.
Consultation on Local Government Rating Reform
Following extensive consultation with the local government sector and the community, the NSW Government released for further comment an Exposure Draft of the Local Government Amendment (Rates) Bill 2021 to implement the NSW Government Response to IPART’s review of the local government rating system.
The Exposure Draft Bill, and other key rating reforms, if implemented, will help to improve the equity and efficiency of the rating system and enhance councils’ ability to implement sustainable fiscal policies over the long term.
A consultation guide, Towards a Fairer Rating System, was released to explain the proposed changes in the Exposure Draft Bill and to assist councils and others to provide feedback on this and other rating reforms.
The Government received more than 215 submissions which have been assessed in shaping the final Bill for introduction to Parliament.
Aligning rating income with population growth
In its response to the IPART rating review, the NSW Government committed to allow rating incomes to grow in line with population growth to ease growing pains for councils and communities.
Some councils, particularly in Sydney’s growth corridors, have faced a substantial increase in population while their rating bases have come under significant pressure with higher demand for new or upgraded local infrastructure and services.
In late 2020 the Government commissioned IPART to develop a methodology for population growth to be taken into account when it sets the annual rate peg which caps council rating revenue increases each year.
The measure is designed to generate additional revenue for councils to provide infrastructure for growing communities while protecting residents from unfair rate rises through the rate-pegging system.
The Government has released modelling by the Centre for International Economics (CEI) to outline financial impacts on councils of aligning rating income with population growth and reforms to the NSW infrastructure contributions system.
The modelling reveals NSW councils would receive $675 million in additional rates over five years, with reduced infrastructure contributions of $275 million, resulting in a net gain of $400 million to provide key infrastructure for growing communities.
Councils have been placed into one of four categories depending on whether they are metropolitan or regional and non-metro councils and above or below the State average for population growth.
The new population growth methodology would be implemented from the 2022-23 financial year.
More information about development of the population growth methodology can be found on the IPART website here.
The CIE modelling can be found here.
More information about reforms to the NSW infrastructure contributions system can be found here.
