Households across the nation are struggling to pay essential bills and maintain living standards in the face of rising living costs. Now homeowners say extravagant council rate increases will tip them over the edge.
Residents in Sydney’s inner-west have blasted an “outrageous” 93 per cent increase in their council rates over the next four years, as other areas face average increases of nearly 50 per cent.
Seventeen NSW councils applied to the Independent Pricing and Regulatory Tribunal (IPART) for special variations to increase their general income over the ‘rate peg’, which determines the maximum increase councils can charge ratepayers.
Now IPART has released a final report outlining upcoming changes to the methodology used to set rate pegs in NSW, sparking fears of an extra jump in rates in coming years.
In 2023-24, the base rate peg in NSW was set at 3.7 per cent; in Victoria, a rate cap of 3.5 per cent was set for the 2023/24 financial year. However, as noted above, councils, which are also facing cost pressures, can apply for a special variation.
‘You don’t go out, you don’t socialise’
Pensioner Jim Howard lives in southern NSW and told the ABC that his rates could soon increase from about $1800 a year to $2100 – if his local council introduced a special rate variation.
“As soon as that $300 extra comes in, it [available income] is coming down to about $9 [a day] – you’ve got to feed yourself with that,” he said.
“It’s hurting big time. I’ve got my wife in care and that costs me extra money, I’ve got no money left as far as extras. You don’t go out, you don’t socialise.”
Ratepayers told IPART during the review period that their prime concern was the affordability of their rates and the impact a new rate peg methodology would have on their living costs.
Councils’ efficiency queried
They also questioned whether there was an effective measurement of councils’ productivity. Many indicated they were not confident councils use the money they collect through rates efficiently.
The upcoming changes have been made to support councils that are struggling financially, but the belief is that ratepayers will inevitably be hit with bigger rates bills.
The IPART review was brought about by concerns that rate pegs were being set too low, that they were determined based on outdated data, and that the current methodology did not address the differences between different types of councils (i.e. rural, regional and metropolitan).
That has resulted in an increase in councils needing to apply for a special variation, which adds an extra administrative and financial burden.
The Combined Pensioners and Superannuants Association (CPSA) fears the changes will have a major impact on age pensioners, those relying on government support and anyone on a low income.
Concessions not indexed
CPSA senior policy officer Ash Fowler says pensioner concessions for council rates are not indexed and have not changed since they were introduced in 1993.
“Currently, the general rebate is set at a flat $250, regardless of changes to costs of living and actual council rates.”
He says the CPSA supports an Independent Pricing and Regulatory Tribunal recommendation for a comprehensive statewide evaluation of existing pensioner concessions “with consideration to potential initiatives to enhance support for vulnerable ratepayers”.
The National Debt Hotline says if you are having difficulty paying your council rates, you should talk to your local council as soon as possible.
“Most local councils have ‘hardship programs’ that offer assistance to ratepayers experiencing financial hardship and struggling to pay their rates.”
It also says to be sure to check for rebates and concessions.
If you are receiving a Centrelink benefit or you’re of Age Pension age, check that you’re getting the concessions and rebates you are entitled to.
Where to find help in your state or territory
Australian Capital Territory: Rates assistance
NSW: Apply for council rates rebates
Northern Territory: NT Concession Scheme
Queensland: Rates subsidy
South Australia: Cost of living concession
Tasmania: Council rates remission
Victoria: Rates concession
Western Australia: Local Government Rates Rebate
Are council rates a burden for you? Will that affect your ability to stay in your home in the longer term? Share your thoughts in the comments section below.
Also read: 60 per cent of eligible Aussies missing out on energy rebates, research finds
The whole justification for Council Amalgamation and the justifications put forward by Councils fighting for it is that it would limit Rate increases and make Councils more sustainable without increasing rates.
I agree that the efficiency of councils could be questioned sometimes and , even if found to be efficient, in this economic climate councils should contrive to keep rates the same by possibly putting improvements on hold until the economy improves. They could take a leaf from the federal government and review the works that are currently pending.
The whole justification for Council Amalgamations and the justifications put forward by Councils fighting for it is that it would limit Rate increases and make Councils more sustainable without increasing rates.
The pegging of increases by iPart was part of a nasty government deal to get the amalgamations over the line and was always going to rip off the public in the longer term.
Councils who acquired developing suburbs (especially those with medium and high density developments) were already on a windfall as they charge a minimum fee per Lot, which means they get much more than they do for a standard house block, but in most cases provide fewer services, especially where the developments are community titled.
Combine this with the fact that the more medium and high density developments a Council has in their area, the greater the contribution to the Emergency Service Levy by these buildings, which means Council have to contribute less. This is another backroom deal done by government whereby Strata Buildings in NSW must have insurance. The ESL is part of this insurance. A much smaller percentage of Australian homes have insurance, which means they don’t contribute to the ESL.
The NSW Government has turned a blind eye to the fact that Strata Insurance is a closed group and charges are exorbitant. The increase in ESL levies was a natural pass on to Strata, so Councils didn’t fight it. Just another way home owners who took the governments advice and downsized are being fleeced for trying to do the right thing.
It is interesting that the State Government is looking at this situation, but there can be three outcomes: 1. Strata Buildings pay more. 2. Council pays more, or 3. The State Government contributes more!
One doesn’t need to be a rocket scientist to see who will get saddled with the bill; homeowners who are being hit from all sides and have little chance of holding Councils and Government to account.
Older Australians are being doubly impacted as they can’t find more income and the pensions are ignoring the reality of cost of living increases by selectively measuring what is increasing.
And if you look at the number of retirees who live in Strata buildings and have limited incomes, they have experienced Strata increases, Insurance increases and now Rate increases. Talk about bleed the average Aussie