Ratepayers to feel the pinch as 43% rate rise approved for Bega Valley Shire

The increase will be followed by a further increase of 19.6 per cent in financial year 2024/25.

But the mayor Russell Fitzpatrick said it wouldn't give council any extra money to put towards special projects, "it would simply be a case of being able to carry on business as usual".

He said council would still need to look at slashing the budget in the future.

"Our own source revenue is too low and the 90 per cent is the figure that we need," Cr Fitzpatrick said.

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Council had originally talked about a 90 per cent increase in general rates but looked at alternatives after a strong backlash by ratepayers in the shire.

Every year IPART decides a rate peg for each council in NSW which sets the maximum amount councils can increase the general income they collect from ratepayers (rates income). For 2023/24, the rate peg for Bega Valley was 4.1 per cent. This figure will be included as part of the 24 per cent increase.

Council decided it needed more than the rate peg to continue to provide services to the shire. Speaking in July 2022 the CEO Anthony McMahon said if they didn't do something very soon council would run out of cash and not be able to pay creditors.

The approval will be an added blow to home owners and businesses with mortgages, who are still reeling from a succession of mortgage rate hikes over the last 14 months.

Renters may also be affected if landlords decide to pass on some or all of the extra costs.

Although the increase applies to the general rate only, it could add several hundred dollars a year to rates for even the most modest of homes. For those living on the coastal fringes where land values have increased two or even three times, the effect will be greater.

"I'm disappointed that it has to be done. The ratepayers are paying again just so we can have business as usual. It shows how rate pegging is out of touch with the real costs," Cr Fitzpatrick said.

Council staff have already said they are preparing to deal with more cases of hardship.

Cr Fitzpatrick said it was time for the federal government to return the financial assistance grants (FAG) given to local councils to one per cent of GST and he called on member for Eden Monaro Kristy McBain to take up the cause.

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He said that the pre-payment of the FAG - something government had chosen to implement in recent years - meant it ended up being used to fill the black hole left by a deficit in council's general fund.

Seventeen NSW councils applied for SRVs; 14 were approved and three were partially approved. The increases ranged from 6.35 per cent over one year to 92.83 per cent over four years.

Cr Fitzpatrick said the high number of councils needing SRVs showed that the rate cap methodology was flawed.

IPART has released a draft report to suggest the NSW Government consider commissioning an independent investigation of the financial model for NSW councils.

IPART chair Carmel Donnelly said the call for an independent investigation was in response to a broad range of issues people had highlighted during consultation with IPART, including financial sustainability of councils, financial management and the affordability and fairness of council rates.

"Many stakeholders expressed concerns about the special variation process during our recent review of the rate peg methodology," Ms Donnelly said.

"We also received over 1800 submissions about these 17 special variation applications, including from people who raised broader issues about the financial model for councils."

"We considered everything raised in submissions including the impact of rates increases on ratepayers given current cost of living pressures," said Ms Donnelly.

"We also considered the impact on communities if councils were unable to deliver services that people depend on."

CEO Anthony McMahon said council needed additional funds to adequately maintain the shire's infrastructure, including the upkeep of 1400 kilometres of roads, public swimming pools, parks and playgrounds, public toilets, libraries and the airport.

"Council acknowledges the challenging nature of any rate increase for many community members, but we cannot stress enough the importance of bridging the expanding gap between income and expenses.

"We continue to actively work on reprioritising work plans, completing grant-funded projects and are committed to further reviewing asset and service priorities in future years to ensure future financial sustainability.

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"Ratepayers are encouraged to assess the impact of the SRV on their respective properties by using the SRV calculator available on the council's website," Mr McMahon said.

"We also urge those significantly affected by the rate increase to reach out at the earliest opportunity to discuss possible hardship assistance."

The SRV will be discussed at the June 28 council meeting. Given the way voting has taken place to date on the subject, it can be assumed that councillors will resolve to apply the increases.

Cr Fitzpatrick said council had to demonstrate the need for the additional revenue, provide evidence that the community was aware of the need for and extent of a rate rise, exhibit relevant planning documents, explain council's productivity and cost containment actions and plans, and establish that the impact on affected ratepayers is reasonable.

"This rigorous process ensures a delicate balance between addressing community concerns and council's genuine need for increased revenue to enhance financial sustainability and service delivery.

"Should councillors choose to proceed with the rate increase, it will be effective from July 1 of this year," Cr Fitzpatrick said.

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