Penrith City Council has been granted permission to increase its rates above the level of the annual rate peg.
The Independent Pricing and Regulatory Tribunal (IPART) has approved a 2.5 per cent increase, almost double the rate peg of 1.4 per cent.
“The latest rate peg was determined in the low inflation environment at the beginning of the COVID-19 pandemic. Since then, high inflation and global uncertainty increased councils’ costs. Some councils have demonstrated that without additional funds they will not be able to deliver the projects they have already consulted on and included in their budgets,” said IPART member Deborah Cope.
“We were careful to balance the need of councils to maintain the services and investment they had already committed to against the need to keep rates affordable for the community.”
Applications by Councils including Penrith were assessed against guidelines provided by the Office of Local Government. The guidelines require councils to show that they had budgeted for higher income than that provided by the rate peg and that they need the additional money to deliver on the projects they have already planned and included in their budgets.
IPART is reviewing the rate peg methodology to deal with volatility in economic conditions. The review will also look at the timing of the calculations in a fast-changing economic climate.
“Our review will be looking at how to deal with this challenge in the future,” said Ms Cope.