Local Government Rating Reform

Recent legislative changes for local government – Local Government Rating Reform

The NSW Government is committed to strengthening the performance and sustainability of local government. To deliver on that commitment, the Minister for Local Government, the Hon. Shelley Hancock MP, introduced a Bill containing a series of sensible reforms developed collaboratively with the local government sector as part of an extensive public consultation process.

That Bill, now the Local Government Amendment Act 2021 was passed by the NSW Parliament on 13 May and assented to on 24 May 2021.  A copy of that law as passed by the Parliament made be viewed here.

This law provides for changes that implement the Government’s commitments to rating reform and enables superannuation contribution payments for councillors. It also aligns terms of office of chairpersons for county councils and joint organisations to their member councils and allows greater flexibility in the administration of elections.

Immediate changes to the rating system

There is now greater flexibility for councils formed in 2016 to harmonise rates from 1 July 2021. Each council can choose, in consultation with their communities, to harmonise their rating structures gradually over up to 8 years.

All councils, including those harmonising their rating structures, may also:

  • set separate residential rates for different residential areas
  • set different rates for farmland based on geographic location

The Government is strongly committed to ensuring that growing communities have adequate and effective infrastructure needed to support that growth. To that end, IPART has been commissioned to recommend a new methodology for taking population growth into account when setting the rate peg. A final report on this review is due to be completed in September 2021.

The Act now clearly allows multiple rate pegs to be set, if required, enabling the Government to deliver its commitment to align council’s general income to population growth to help relieve pressure in growing communities.

Further information about IPART’s review may be found here.

When changes to the rating system come into effect

While the Local Government Amendment Act has been assented to, not all changes have come into effect. Some changes took effect on 24 May 2021 and may be implemented by councils and others will commence in future by proclamation, once regulations and guidance may be made to support implementation.

The following table sets out when each rating change commences.

ReformCommencesApplies toRegulations required?
Gradual rates harmonisationOn assentMerged councilsNo
Separate residential rates in urban areasOn assentAll councilsYes
Farmland rates by locationOn assentAll councilsNo
Multiple rate pegsOn assentAll councilsNo
New environmental land rating categoryBy proclamationAll councilsYes
Change to exemption for conservation agreementsBy proclamationAll councilsYes
More flexible business ratesBy proclamationAll councilsYes
New special rate for joint infrastructureBy proclamationAll councilsNo
Exemptions for special ratesBy proclamationAll councilsNo
Limiting postponementBy proclamationAll councilsNo

Local government webinar on rating reform

On 25 June 2021 the Office of Local Government held a webinar for local government about changes to the rating system arising from the Local Government Amendment Act 2021.

A recording of the webinar may be viewed here and a copy of the presentation slides is available to download here.