Mayoral Memo - 22 November 2023
It is not often that I am excited by a price increase, but today a price increase is good news.
In 1977 the Neville Wran led NSW Government introduced a concept called rate pegging. I will ignore for the moment the relevancy of this concept five decades later.
IPART makes an announcement each year to inform Councils across the State how much they can increase their rates.
Inflation is currently running high in this country. 6.0 per cent was the All Groups CPI for Australia in the 2022/2023 financial year, with the previous two years at 6.1 per cent and 3.8 per cent.
So it was a great surprise at the end of 2022 when IPART announced that the rate-peg for the 2023/2024 financial year was…0.7 per cent! What?
Whilst a smaller increase sounds like a good thing to ratepayers, especially with the current cost of living pressures we are all experiencing, it comes with an unintended consequence.
A reduction in services.
Logic says that if expenses are increasing at 6 per cent and income goes up by 0.7 percent, services are going to have to be reduced.
There was an immediate and negative reaction to the announcement and Councils across the State lobbied the government and IPART about the inadequacy of the rate peg amount.
In response, the rate peg was increased to 3.7 per cent. In the lead up to June this year, 17 Councils asked for an additional increase in rates including Strathfield (92.8%); Queanbeyan-Palerang (64.3%); Armidale (58.8%) and Walcha (57.7%).
It was obvious the IPART methodology was broken. A variety of Councils each year were putting in applications for increases well above CPI to “catch up” many years of under-funding.
This year IPART has introduced a new methodology to replace the one-size-fits-all approach. Population growth, infrastructure requirements and service demand play a pivotal role in this new model.
In simple terms, the new rate peg starts with a Base Cost Change (BCC) by Council group (metro; regional and rural) and adds a population growth factor. This year the core rate peg amount varied from 4.5 to 5.5 per cent. The population factor was between 0 and 2.7 per cent.
Dubbo’s final rate peg amount is 5 per cent. Only 31 other Councils were given a higher peg and when we compare Dubbo in the Evocities group, you see our strong future growth prospects. Dubbo and Wagga Wagga were the equal highest in that group with Armidale (4.5%); Orange (4.7%); Albury (4.7%); Bathurst (4.8%) and Tamworth (4.9%) all showing lower population growth factors.
It may sound strange to be excited by a price rise, but this increase means that IPART recognises the strong future growth potential of Dubbo and it means we will be able to continue to deliver most of the current services in our community.
Councillor Mathew Dickerson
Mayor of Dubbo Regional Council
Last Edited: 21 Nov 2023