Posted on March 26, 2024 by Liam Mulligan and Katie Mortimer

ALERT – NSW Parliamentary Inquiry into the ability of local government to fund infrastructure and services

The NSW Legislative Council’s Standing Committee on State Development recently announced an inquiry into the ability of local government to fund infrastructure and services.

When announcing the inquiry, the Chair of the Committee, Emily Suvaal MLC, noted that: ‘Councils are experiencing significant financial challenges which are threatening the long-term sustainability of the sector. As the level of government closest to the people of this state, we owe it to councils to ensure they can continue to deliver the important services communities expect and deserve.’¬†

The Chair of the Committee also indicated that a particular focus of the inquiry will be the “rate peg” – the legislative cap on the amount that local councils may increase rates each year to meet the rising cost of services. The rate peg has been a matter of some controversy over recent years and has been the subject of a number of reviews, including by the Independent Pricing and Regulatory Tribunal which concluded in late 2023.

The Terms of Reference for the inquiry include:

(a) the level of income councils require to adequately meet the needs of their communities

(b) examine if past rate pegs have matched increases in costs borne by local governments

(c) current levels of service delivery and financial sustainability in local government, including the impact of cost shifting on service delivery and financial sustainability, and whether this has changed over time

(d) assess the social and economic impacts of the rate peg in New South Wales for ratepayers, councils, and council staff over the last 20 years and compare with other jurisdictions

(e) compare the rate peg as it currently exists to alternative approaches with regards to the outcomes for ratepayers, councils, and council staff

(f) review the operation of the special rate variation process and its effectiveness in providing the level of income Councils require to adequately meet the needs of their communities

(g) any other related matters.

The Committee has called for submissions from interested individuals and stakeholders, including local government. The submission period ends on Friday 26 April 2024.

More information on the Inquiry can be found here. Please contact Liam Mulligan on 8235 9715 or Katie Mortimer on 8235 9716 to discuss.