Additional rate variation

The Independent Pricing and Regulatory Tribunal (IPART) sets the amount that NSW Councils can increase rates each year, in line with inflation and other considerations. In December 2021, the Independent Pricing and Regulatory Tribunal (IPART) announced a rate peg of 0.7% for the 2022-2023 financial year. This rates increase is significantly less than the rate increase IPART advises councils to use when developing their annual budgets and financial plans, and less than increases in the prices of goods and labour. If this increase is applied, Council will have less funds than usual to provide its normal levels of service to the community. 

IPART has recognised the problem the lower rate peg presents for many NSW councils. Consequently, IPART has invited applications for an Additional Rate Variation (ARV). To ensure we are able to maintain normal service levels and remain financially sustainable, Ku-ring-gai Council is applying to IPART for an ARV.

How much extra will ratepayers have to pay?

For the average residential ratepayer, the increase to your rates would be $38 per year if the application for an additional special variation is successful. If the Council is unsuccessful in applying for an additional special variation, rates in Ku-ring-gai will increase by 0.7% in 2022-2023. For the average residential ratepayer, this means an increase of $10 per year.

The table below provides an indicative impact on the average residential  and business rates from the 2022-2023 financial year onwards. This includes the cumulative effect for two scenarios; the impact on rates at 2.5% rate peg ( including the permanent additional special variation of 1.8%) and the impact on rates at 0.7% rate peg  (if additional special variation is not approved). It should be noted that IPART is conducting a review of the NSW rates peg, meaning the indicative figures provided in the table from 2023 onwards are subject to change.

Scenario 1

Impact on Rates at 2.5% (incl. Permanent ASV 1.8%)
  Base year Year 1 Year 2 Year 3 Year 4 Year 5  
Residential Rates 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27

Cumulative increase

Average residential rate with ASV $1,500 $1,538 $1,576 $1,616 $1,656 $1,697 10.4%
Annual increase (%)   2.5% 2.5% 2.5% 2.5% 2.5%  
Cumulative rates increase   $38 $76 $116 $156 $197  
               
  Base year  Year 1 Year 2 Year 3 Year 4 Year 5  
Business Rates 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27

Cumulative increase

Average business rate with ASV $4,700 $4,818 $4,939 $5,062 $5,189 $5,318 10.4%
Annual increase (%)   2.5% 2.5% 2.5% 2.5% 2.5%  
Cumulative rates increase   $118 $239 $362 $489 $618  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scenario 2

Impact on Rates at 0.7% rate peg (ASV not approved)
Base year Year 1 Year 2 Year 3 Year 4 Year 5
Residential Rates 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27

Cumulative increase

Average residential rate without ASV $1,500 $1,510 $1,521 $1,531 $1,542 $1,553 3.5%
Annual increase (%) 0.7% 0.7% 0.7% 0.7% 0.7%
Cumulative rates increase $10 $21 $31 $42 $53
Base year Year 1 Year 2 Year 3 Year 4 Year 5
Business Rates 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27

Cumulative increase

Average business rate without ASV $4,700 $4,733 $4,766 $4,799 $4,833 $4,867 3.6%
Annual increase (%) 0.7% 0.7% 0.7% 0.7% 0.7%
Cumulative rates increase $33 $66 $99 $133 $167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

When will ratepayers know what they have to pay?

IPART has recognised the problem the lower rate peg presents for many NSW councils and as a result, invited councils to apply for additional special variations in April 2022. Around 90 councils across NSW have submitted applications.

We expect to be notified of the outcome of our application by late June 2022. Rates notices for the 2022-2023 financial year will be issued to ratepayers in July.