By Angela Dorizas

Delivery of vital community services in New South Wales is under threat following the State Government’s decision to reduce the rate cap to only 2.6 per cent, according to the Local Government and Shires Associations (LGSA).

The rate-peg sets the maximum income that NSW councils can collect from rate revenue.

Annoucing the rate change, Minister for Local Government Barbara Perry said rate pegging ensured councils received a moderate rate income increase in line with changes in the economy.

“Inflation has been down and the rate peg reflects this,” Ms Perry said.

Shires Association President Bruce Miller said now more than ever rate pegging needed to be scrapped.

“The Government has, in the past, promised to consider the removal of rate pegging, but we’re still yet to see some action,” Cr Miller said.

“Councils are answerable to their ratepayer and – as is the case in other states – should have the power to make rate increase decisions based on the needs and wishes of their communities.”

Cr Miller urged the Government to consider the rate variations required by individual councils.

Local Government Association president Genia McCaffery said the rate cap reduction would make it increasingly difficult for councils to provide adequate community facilities and services.

“Councils have a huge responsibility to provide for their communities, but it’s going to be very difficult with such a reduced rate,” Cr McCaffery said.

“While it might be in line with current CPI, it’s simply not enough to cover our escalating expenses, including a $6 billion infrastructure backlog.

“We already have to deal with an inadequate share of taxation and a cost shifting bill that totals $400 million every year – we can’t keep fighting with one hand tied behind our back.”

Ms Perry said councils can apply for a special rate variation to lift their income above the rate cap, but must have community support and a strong business case.

“This process makes it clear that any proposal by a council to lift rates above the peg needs to have the community’s backing.”