Pegging to impact rates rise 

A RATE peg increase of just 2.3 per cent above the CPI (Consumer Price Index) will likely impact an application by Gloucester Shire for a special variation to its rates in 2015, Danny Green said.

Council has pushed back an application to apply for a special rates variation above the pegged level after initially proposing to make a submission to the Independent Pricing and Regulatory Tribunal (IPART) early next year.

The general manager said the service provider had forecast for a reduced pegged limit in 2014-15, but it would still impact the council’s bottom line.

“We’ve forecast for a 3.25 per cent increase above the CPI, so yes there will be a gap from our current figures to when we finalise our submission to IPART for a special rates variation,” Mr Green said.

IPART said 2.3 per cent was the maximum allowable increase for councils to apply to general income in 2014-15. 

The main component of general income is rates revenue, but it also includes some annual user charges. It excludes stormwater, waste collection, water and sewerage charges.

If a council decides to increase residential rates in line with the pegged rate, it would mean an extra $20 for the year, or slightly less than $0.40 per week, for the average household.

IPART chairman Peter Boxall said this year’s pegged rate, down from 3.4 per cent in 2013/14, reflects the lowest rise in public sector wage costs in a decade, along with the final adjustment of the carbon price advance, which was included in the pegged rate in 2012-13.  

The adjustment for the carbon price advance was to avoid double counting of the impact of the carbon price on council services.

“The Local Government Cost Index increased by 2.8 per cent in the year to September 2013 and we deducted a 0.2 per cent productivity improvement factor to arrive at the underlying pegged rate of 2.6 per cent, before adjusting for the 0.3 per cent carbon price advance provided in 2011-12,” Dr Boxall said.

Mr Green said councils were already struggling with significant infrastructure backlogs. 

He said councils were being left with little choice but to apply for special rate variations above the pegged limit.

“It in no way allows us to meet our increasing costs,” he said.

“Other councils have applied for a special rates variation, but Gloucester never has.”

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