FED-UP with a "broken system" - Lake Macquarie City Council (LMCC) will write to the state's independent pricing watchdog condemning the method it uses to set maximum rate hikes.
The Independent Pricing and Regulatory Tribunal (IPART) has set the rate peg at 2.5 per cent, which the council estimates could see it $20 million out-of-pocket on its operational plan in the next two financial years.
Long-term, the council forecasts the impact is in the order of $159 million, putting it under incredible financial pressure and leaving it unable to deliver on plans it has put to the community.
Deputy mayor Adam Shultz said he doesn't want to have to spring an unprecedented special rate variation on residents in the years ahead.
"This would have a significant snowball effect here in Lake Macquarie, but we aren't alone in this, this methodology is imposed on all 128 councils in NSW with the potential to wreak havoc given the inflationary pressures at the moment," he said.
"The financial pressures being experienced by LMCC are not unique to our city.
"Councils are not immune from the rapidly changing and unprecedented economic environment in which costs are rising across all areas of the economy."
IPART is currently undertaking a review of the method it uses to determine the rate peg across the state.
Any changes to its approach as a result of the review won't be applied until at least the 2025 financial year.
In Lake Macquarie, rates made up 44 per cent of the council's revenue in 2022.
The council argues the 2.5 per cent rate peg for 2023 with an inflation level of 7.3 per cent leaves them with a 4.8 per cent discrepancy, with a similar issue despite a 3.7 per cent rate peg in 2024.
It will write to IPART asking it to continue to factor in population growth in rate hikes, to allow cash-strapped and fast-growing councils to raise more revenue.
And, the council plans to write to both the NSW Minister and Shadow Minister for Local Government, as well as IPART, to highlight the financial impact that inflation and cost increases are having on its bottom line.
Cr Nick Jones said an easy out would be to argue the council is trying to put more pressure on ratepayers by increasing rates.
"We have as a council a responsibility to make these tough decisions, but this isn't even a tough decision - this is going above and beyond, it's not talking about increasing rates it's talking about attacking the methodology from IPART which we think is a joke," he said.
"If we don't address this now, all we're doing is kicking the can down the road - so either residents are going to be hit in the backside with a cut to services or they're going to be hit with a special rate variation down the track.
"All we're doing here is trying to be as upfront as possible, we know the figures sitting here in front of us and we know that what IPART has offered is just not sufficient."
Submissions to the IPART review close on Friday.
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