The tribunal in charge of setting council rates has announced a review into its process after an unusually low peg last year.
The Independent Pricing and Regulatory Tribunal will assess its methodology after 86 out of 128 NSW councils sought rises on top of the lower peg last year, which ranged from 0.7 per cent to 1.2 per cent for councils that had experienced significant population growth.
IPART chair Carmel Donnelly said rate pegs were decided using Australian Bureau of Statistics data on cost increases, but this could be years old by the time the rates were introduced. She said this was the first time since IPART began setting the peg in 2010 that low inflation was quickly followed by vastly increasing inflation.
"We're now in a more challenging, volatile economy, and we need to have an improvement to it," Ms Donnelly said. "So we will do a very thorough review and be open to suggestions about how we could improve how we deal with volatility, how we could deal with lags."
The review was welcomed by Local Government of NSW and NSW Labor, the latter of which saw it as an opportunity to ease living costs.
New research from the Australian Housing and Urban Research Institute shows people regional cities enjoy lower housing costs compared with capital cities but have lower incomes and reduced career prospects.
Maitland was one of the few councils that elected not to seek an additional rate rise this year, citing cost of living pressures as a reason. But other Hunter councils argued the peg wasn't near inflation and would have multi-million dollar impacts in years to come.
Ms Donnelly said it was too early to say if the review would lead to lower or higher rate pegs in the future.
"Given we're taking into account the need to protect ratepayers from excessive increases while saying if there's improvements we can make to reflect changes in inflation and local government costs, it may well be that what comes out is something around the same level of increase but having less unpredictability about it," she said.
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