NSW PENSIONERS who have been pensioners for a long time know that the NSW council rate rebate of $250 a year is getting smaller and smaller in proportion to their council rate, which easily top $1,000 or $1,500 a year these days.
The same goes for the annual $87.50 water and the $87.50 sewerage rebates.
Both the council rate rebate and the water and sewerage rebates are legislated in the NSW Local Government Act 1993, which commenced on 1 July 1993, just over thirty years ago.
Back then the council rate rebate was set at 50 per cent up to a maximum of $250 per annum to all pensioners who own their home.
Clearly, the intention was to give rate relief to pensioners in council areas where rates were comparatively low. If, at the time, your rates were higher than $500 your rebate would not be 50 per cent but less.
Obviously, rates under $500 were linked to comparatively low land values, which meant owner-occupiers tended to be nowhere near well-off. Those owner-occupiers would receive a 50 per cent discount.
Council rate rebate bracket creep
However, with rates under or at $500 a year now non-existent, you could say that the NSW pensioner council rate rebate is the most flagrant, most significant example of bracket creep in Australia.
The earliest information about historical council rates CPSA could find by open source research were those for 2008/2009. The median rate in NSW back then was $637 a year. The maximum $250 rate rebate represented a discount of 39 per cent.
In 2023, council rates in greater Sydney, the South Coast, Central Coast, Newcastle and the North Coast start at $1,250 and in many cases exceed $1,500 a year. Based on those two common rebate values ($1,250 and $1,500), the rebate’s real value has come down from 39 per cent in 2008/2009 to between 20 and 17 per cent respectively in the most populated areas of the state. In other words, the real value of the council rate rebate has roughly halved over the last fifteen years.
It will also be clear that increasing the annual council rate rebate from $250 to $625 (a 250 per cent increase) is extremely unlikely to happen. The $625 would be a reasonable rebate, given that it is the lower rate in major NSW population centres.
An alternative to 50%
It may therefore be more relevant to look at what the proportion of the council rate is to the basic pension. We will call that the rebate-to-basic pension ratio
Between 1993 (rate was $500) and 2009 (rate was $637), the rebate-to-basic (single) pension ratio declined from 3 per cent to 2.8 per cent even though the average rate went up. That’s good news. It meant that indexation of the pension was such that pensioners weren’t paying more percentage-wise. In fact, the rebate-to-basic-pension went down 9 per cent.
But the concerning trend since 2009 (rate was $637) is that the rebate-to-rate ratio rose to 3.8 per cent (rate was $1,250) in 2023. That represents a 37 per cent increase in what pensioners paid out of their basic pension compared with 2009.
It shows that pensioner purchase power is declining as a result of CPI-plus increases in council rates. These declines are not being compensated to the full extent by the March and September pension indexations anymore.
CPSA is concerned that the trend of council rates rising by more than CPI is already putting pensioner income under pressure, and that this trend will continue and perhaps rises will become even more steep once the Independent Regulator and Pricing Tribunal (IPART) starts using its new rate pegging methodology.
CPSA has similar concerns about the discount limits of water supply and sewerage special rates or charges, which are not to exceed $87.50 a year.
Let’s have an inquiry!
CPSA has written to the NSW Treasurer asking him for an inquiry or investigation into the adequacy of the current and future pensioner council rate and water and sewerage rebates.