Rate rises loom after funding shock

Hot on the heels of news that Wollongong City Council is facing a $16.1 million funding cut comes confirmation that the 2027-28 rate peg has been set for NSW councils.

The rate peg is the maximum percentage by which a council can increase its general income, which is the money each council raises through rates.

In Wollongong’s case, the rate peg for the next financial year is set at 4.5 per cent which allows for a 0.6 per cent population increase. That’s in the higher range of rate settings across the state’s 128 local government areas.

Shellharbour’s rate cap has been set at 4.3 per cent (allowing for 0.5 per cent population growth), Kiama is 3.7 per cent with no population growth, and the Shoalhaven is 3.9 per cent with a modest 0.1 per cent population growth.

Independent Pricing and Regulatory Tribunal (IPRT) chair Anthony Wing said the rate peg allowed councils to manage changes in service delivery costs while limiting how much they can increase total income from rates.

Mr Wing said general income made up about one-third of the income that most NSW councils receive, on average, with the rest coming from grants, fees, developer contributions and other charges.

“The rate peg doesn’t determine how much rates for an individual household or business will increase,” Mr Wing said.

“It is now up to each council to decide whether to increase rates, which categories of rates will rise, and what support to provide for people in need of financial assistance.”

Mr Wing said the 2027-28 rate pegs also recognise the ongoing costs of strengthening councils’ cybersecurity capability, while balancing the impact on ratepayers.

The cybersecurity adjustment ranges from 0.4 per cent to 1.4 per cent, representing an indicative increase for an average residential ratepayer of around $6-$8 a year.

“Councils are accountable for how they use their rates income to strengthen their cybersecurity capability,” Mr Wing added.

Facing a 67 per cent funding cut

This week’s news on rates comes at a time when Wollongong City Council wrestles with how to address a potential $16.1 million annual hit to its budget’s bottom line, the result of a proposed 67 per cent funding cut from the NSW Local Government Grants Commission.

At an extraordinary meeting of council last week, when councillors endorsed a submission objecting to the proposed reallocation of grants, Cr David Brown said: "If we were to fail in our case, and if we were to say that we'll have to make up this lost money by rates increase, that's a 10 per cent rise on top of GST."

In its submission, council argues that the decision to reduce the annual grant from $23.8 million to $7.7 million ignores the fact that Wollongong plays the role of a regional hub for the Illawarra-Shoalhaven area, and the added pressure this puts on local services and infrastructure.

At the October 8 meeting, Lord Mayor Tania Brown and councillors warned that the funding shortfall, if not reversed, could lead to rate rises, job losses and a decline in services such as road and pothole repairs and playground maintenance.

The IPRT said councils could only increase their general income by more than the rate peg if it has consulted with the community and received an approved special variation.

Lord Mayor Tania Brown says she has raised the council’s funding concerns directly with NSW Premier Chris Minns.