Newsletter 73 – Rates and IPART

  • Posted by IanMuttonAdmin
  • On March 2, 2026

 

How about Affordable Rates?

 

Simply put, North Sydney Council can’t increase rates above the Government’s “peg”. The “peg” is set for each Council by the Independent Price Regulatory Authority (IPART) – for 2025-26 it will be between 2.5% and 4.2%. If a council wants more, it must apply to IPART for approval.

Last year Council wanted more; it wanted approval to increase rates by 87% over two years.

  • The application was rejected.

This year Council is seeking approval to increase rates by, for:

  • residents/businesses units, 63%, and
  • houses/buildings, 53%.

This is not the end of rate rises.

Council states in its Long-Term Financial Plan (supporting the proposed large rate rise), the application for a rate increase is aimed for the medium term and suggest that the next council will need to seek a further rate rise.

Is a rate increase justified?

Council claims its financial position is unsustainable – the facts suggest otherwise.

Council’s recent financial performance shows underlying financial resilience with satisfactory operating margins and sufficient funding to run its operations.

  • Over the past seven years, council has averaged:
    • a net operating profit of $16 million, and
    • term deposits of $89 million.
  • Council’s term deposits:
    • increased from $69 million in 2024 to $100 million in 2025 – 45% increase in one year, and
    • stood at $100 million in 2025 – 12% higher than the seven-year average.
  • Council’s cash on hand in the 2025 financial statements was $29.9 million – 16% higher than the seven-year average for cash.

Council says its biggest financial problem is a deficit of $157m to pay for infrastructure maintenance over 10 years.

This is significantly overstated.

In 2024, Council changed its methodology for calculating the estimated costs required to bring assets to a satisfactory condition. It redefined what is a satisfactory condition. That redefinition meant that assets requiring maintenance in the midterm (so called “category 4”) would be included with those requiring immediate maintenance (so called “category 5”).

The redefinition:

  • set North Sydney apart from all other metropolitan councils, and
  • materially increased the reported $cost of the infrastructure backlog.

Comparative analysis of 29 other Councils shows that, on average, the reported infrastructure backlog is approximately 29% of a council’s gross replacement cost of category 4 and 5 assets.

On this basis the North Sydney Council’s infrastructure backlog figure should be $46 million (29% of $157 million, using categories 4 + 5).

Council is seeking to add to its substantial commercial and residential property holdings with reserve funds of $40m for “future projects”.

Funding requirements and delivery timeframes have not been disclosed for these “future projects”.

The amount is included in estimated reserves of $95m (excl. external restricted reserves) over 10 years.

Why such large and unexplained funds in reserves when there are claims of lack of funds for essential asset maintenance?

Allocating $40million for unidentified projects to be undertaken 2029 onwards seems excessive.

Excessive reserves can diminish transparency and accountability by concealing project cost blow-outs and poor financial decisions.

As IPART previously observed, excessive reserves can also lead to politically motivated or electoral-cycle driven expenditure, that may not truly be in the interests of the community.

Council is seeking $18m for the funding of a new computing system.

That’s around $530 for each and every household.

This expenditure is not supported by a business plan and no specifications are provided.

Are the proposed rate increases affordable?

Council is not a “for profit business enterprise”; it is there to serve our community and must tailor the services it delivers with the real needs and capacity of the members of the community to pay.

Council describes North Sydney residents as having an ‘exceptional capacity to pay’ – clearly some do.

  • Curiously, it uses largely 2021 data to justify the rate rise being reasonable. 2021 was a year of Covid when interest rates, rents and inflation were at an all time low. Since then, there have been significant rises in the cost of living – CPI up 22%, interest rates, health costs, childcare, essentials etc. There is endless talk about “affordable housing” – but the real need is for “affordable rates” – there are many in our community that are under financial stress and that stress should not be ignored

Think about the plight of residents:

  • who have invested a lifetime as members of our community, mostly elderly, who are asset rich but income poor – surely no one would suggest they should be forced to sell up, to sever their ties with the North Sydney community and go find somewhere else to live,
  • who rent, that’s 52% of our community, they are fully exposed to any increase in rates because the largesse landlord can’t be expected to provide respite, and
  • whose households have incomes below $650 per week – that’s 10% of our households.

Why not consider alternative funding?

Council has a substantial residential and commercial property portfolio.

At the very least it could be used to retire debt.

Consider the Ward Street carpark; it has a high redevelopment potential the realisation of which has been under consideration since 2016 when that potential was valued at $80m.

Council is not a “for profit business enterprise”; it is there to serve its community and must tailor the services it delivers with the capacity of the members of the community to pay.

Consider making your views known to IPART by either a submission, or when filling out the IPART survey.

  • Upload a written submission (even a short one is valuable)

https://www.ipart.nsw.gov.au/lodge-submission-2026-27-special-variation-applications

 

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