Funding better local infrastructure: have your say on rate increase options

Rates and annual charges contribute 60% of Council's general operating funds.

Rates are charged to privately-owned land (including units) in the Ku-ring-gai LGA.

Rates play a crucial role helping Council to renew and maintain $1.8 billion worth of local roads, footpaths, drainage, parks and other infrastructure.

They also help fund a wide range of Council’s services.

Each year, the NSW Government’s Independent Pricing and Regulatory Tribunal (IPART) sets a limit on how much councils can increase the amount of income they can collect from rates.

This is known as the rate peg.

Rate pegging has been in place in NSW since the late 1970s.

Historically, the annual rate peg has been lower than the actual increase in the cost of providing council services.

The rate peg applies to council's overall rate income, not individual ratepayer bills which can change based on property valuations.

A Special Rate Variation (SRV) is a process which enables councils to increase rates income beyond the rate peg.

SRVs are essential for funding critical priority projects and services when the rate peg does not provide sufficient funding to meet community needs or maintain essential infrastructure.

Before applying for an SRV, councils must engage extensively with their community and build a strong case for an SRV.

Independent Pricing and Regulatory Tribunal (IPART) approval is required for all SRVs.

There have been 90 SRV applications by NSW councils over the last ten years. This means the majority of NSW councils have applied for a SRV during this time period.

SRVs can be:

• Temporary (fixed amount, fixed period).
• Permanent (fixed amount, added to the rate base).

IPART is the Independent Pricing and Regulatory Tribunal.

Its role is to help NSW residents get safe and reliable services at a fair price.

Although it is a NSW government agency, IPART operates independently of the government as the pricing regulator for water, energy, public transport and local government.

For local government, IPART determines the annual rate peg, which is the maximum amount councils can increase their rates by each year, unless they submit a Special Rate Variation application.

IPART also assesses and determines any Special Rate Variation and minimum rate increase applications from councils.

For more information about IPART visit www.ipart.nsw.gov.au/

Council’s Environmental Special Rate Variation (SRV) has been in place since 2005.

It funds, each year, about $3.8 million worth of essential environmental programs and works, including:

• Protecting bushland and biodiversity
• Improving waterways
• Reducing energy, waste and transport emissions
• Delivering active and sustainable improvements; and
• Strengthening resilience to climate change.    

In 2025/26, the average residential ratepayer will pay around $94 towards the Environmental SRV.

Council’s Infrastructure SRV has been in place since 2001. It funds the renewal of Council roads which are in poor condition. It raises about $3.6 million each year, with each residential ratepayer contributing on average about $85 to this outcome.

Council provides financial assistance to eligible pensioners by reducing rates, charges, and interest on their principal residence.

This includes a statutory concession of up to $250, which Council is required to provide under the Local Government Act.

Council also provides an additional voluntary concession which makes up 8.5% of total rates and charges.

In 2025/26, for the average pensioner, this amount is worth an additional consession of $146.

Council understands that people may face difficulty paying their rates and charges.

Council has a Rates, Charges and Sundry Debts – Assistance, Concessions and Recovery Policy, which is available on Council's website. It outlines the steps and processes Council will consider in these circumstances.

Council will be reviewing this policy to make sure it remains fair and accessible to people in genuine need.

It is important that ratepayers contact Council promptly if they are having trouble making payments by their due date so that it can provide support and advise of options.

In recent years, Ku-ring-gai Council has faced a range of financial challenges, which have limited Council’s ability to renew and maintain existing infrastructure and build new infrastructure. These challenges are listed below:

• Rising costs: Over the last decade, Council’s costs have increased by 40%, while rate revenue has only grown by 28%. This is mainly due to ongoing NSW Government rate pegging and high inflation.

• Limited rates revenue: Council has historic rating system disadvantages, including a comparatively low level of total rates revenue per capita to support its population and extensive infrastructure network.

• Cost shifting: Each year, Council needs to spend at least $13 million on costs which were imposed by the NSW and Federal Governments, including funding shortfalls in development application fees and waste collection costs. For more information on cost shifting, see the latest report from Local Government NSW (LGNSW) here: Cost Shifting | LGNSW.

• St Ives Indoor Sports Centre:  Council has entered into a $13.5 million loan to fund the construction of the St Ives Indoor Sports Centre.  A funding source is needed for this loan.

• Extreme weather: Councils are facing increasing costs managing the rising impacts of extreme weather events. Each of these events typically costs hundreds of thousands of dollars in clean-up expenses.

• Low business rates: Ku-ring-gai is, unlike many other metropolitan councils, unable to rely on significant business rates revenue. Ku-ring-gai in 2023/24 earned $40 in business rates per capita, compared to a Sydney council average of $132.

These issues have led to inadequate funding for Council’s infrastructure, which has meant this infrastructure has deteriorated over several generations.

Council is responsible for managing $1.8 billion worth of community infrastructure.

The condition of these assets has been gradually declining due to decades of insufficient funding.

Currently, 20% of our infrastructure is in poor or very poor condition.

The infrastructure backlog is an estimate of a practical cost to renew assets that are in a poor or very power condition to a “new condition”.

As of 2023/24, $227 million was needed for this purpose.

If no additional funding or action is taken, this backlog is projected to grow to $325 million by 2034/35.

Renewing our infrastructure is essential for Council's long-term financial sustainability.

Rates and  annual charges are Council’s most important revenue source, contributing to 60% of its general income.

A rate increase has the potential to:

• reduce the current gap between available funding and required expenditure on infrastructure, and therefore deliver better infrastructure outcomes
• address rising infrastructure costs
• fund major projects, including the St Ives Indoor Sports Centre and Marian Street Theatre.
• ensure financial sustainability, by ensuring an adequate amount of funding for infrastructure is included in operational funding.

Council has undertaken financial discipline over a long period of time, containing the cost of providing services within a culture of continuous productivity improvement.

For instance:

• Each individual Ku-ring-gai Council full-time equivalent staff member in 2023/24 serviced 309 residents, which is the second highest of any Sydney council and well above the Sydney average of 235 residents. This is a sign of efficiency, due to each Council staff member servicing more residents than comparable Sydney councils.
• In 2023/24, Ku-ring-gai Council had an operating expenditure per capita of $1,215, which was 16% less than the Sydney average of $1,441, and is a further indicator of efficiency. This suggests that the council is managing its operations and delivering services more cost-effectively compared to the average across Sydney.

Council has also sought to reduce infrastructure construction costs by moving towards a more cost-effective way to renew stormwater assets, by where possible relining pipes rather than reconstructing them.

In addition, in recent years, Council has implemented a range of other measures to increase revenue and improve efficiency.

Some revenue measures have included:

• Increasing rental returns from property management, including through the removal of historical subsidy arrangements and renewals in line with market valuation.
• Improving revenue from tennis court bookings, through increased utilisation, an improved online booking system and automated court allocation service
• Reviewing and adjusting fees and charges to reflect the costs of providing the services supported by these fees (such as golf course fees to align with other comparable courses within the region and to reflect the increase in maintenance costs)
• Actively pursuing grant opportunities to support asset upgrades, programs and other initiatives

A sample of savings and productivity measures have included:

• Actively managing debt by moving from variable to fixed-rate loan interest rates, to reduce loan costs by managing the risk of increasing rates
• Securing a loan subsidy for a major project through the LCLI (Low-Cost Loan Initiative) managed by the Department of Planning, Housing and Infrastructure (DPHI)
• Implementing technology enhancements through a printer replacement program that reduced printing costs and a transition to a new Teams phone systems, which eliminated traditional hardware and generated ongoing savings.
• Transitioned to a cloud-based software system to reduce the need for on-premises infrastructure and provide simplified software management.
• Introducing a new online application for convenient and efficient payment of rates by ratepayers, along with a new downloadable waste phone app to improve the customer experience and reduce enquiries on waste collection.
• Delivering library collection management and technology systems efficiencies
• Transitioning to electronic business papers
• Continuing to be part of the shared service for internal audit service, which provides services for six Councils. This enables economies of scale in the provision of internal audit services and improved efficiency.

Yes. In 2022/23, Council commissioned consultants to undertake an independent review of its financial sustainability.

This review, known as the Financial Sustainability Review, was reported to Council in February 2023. The review examined the following questions:

• Are the assumptions underpinning Council’s financial strategies sound?
• Are the strategies sufficient to maintain Council’s assets and infrastructure portfolios and deliver its 10-year capital works plan?
• What options does Council have to deliver its maintenance and works commitments and obligations?

The review found that, Council had:

• Operating expenditure per capita which was below the average amount for major metropolitan councils.
• A relatively efficient staffing structure, with each staff member servicing more residents than any other major metropolitan councils
• An infrastructure backlog which was higher than comparable metropolitan councils

Given the above, and in light of the significant infrastructure funding required, the review recommended that, among other things, Council explore a Special Rate Variation.

Due to the system of rate pegging in place in NSW since the late 1970s, Council does not receive any benefit from increased property values.

This is because, under the rate pegging system, the amount of revenue Council can receive from rates is capped each year.

This means that even if individual properties are worth more, Council’s overall income remains limited unless it applies for a Special Rate Variation.

Over time, this tends to lead to property owners paying less rates as a proportion of their land value.

Council will receive additional rate income from increased development.

However, it should be noted that this rates income will be needed to service the needs of the new residents and the additional services and infrastructure they require.

Most new dwellings will be on the lowest rate amount Council can charge an individual property.

Therefore, increased development will not alter the current inadequate rating system to support local infrastructure.

Council currently operates efficiently with limited resources.

For instance, Council has:

• the second highest ratio of residents to staff (309 residents for each full-time staff member) in Sydney; and
• an operating expenditure per capita of $1,215 in 2023.24, which is 16% less than Sydney average of $1,441.

While Council will continue to explore cost savings and operational efficiencies, savings alone are unlikely to deliver the level of funding required to address Council’s growing infrastructure needs and backlog.

If a Special Rate Variation (SRV) is not approved, Council will need to consider reducing or reviewing the level of services provided to redirect funds towards critical infrastructure maintenance and renewal.

Taking out new borrowings to deal with broader financial sustainability and infrastructure provision issues without identified sources of repayment is not considered to be a prudent approach.

This is because borrowing would:

• add financial pressure to Council’s budget by increasing repayments without generating new revenue
• require future generations to pay for services and infrastructure used today
• not be linked to an individual asset or project; and
• fail to address the underlying business fundamentals.

This is a ‘business as usual’ option based on Council’s current financial operating model, expanded over ten years.

Rates would increase in line with the NSW Government rate revenue peg which is available to all NSW councils. Council is assuming the government will set a rate peg of 3% in 2026/27, resulting in residential ratepayers paying an average $52 a year (equal to $1 per week) increase from July 2026.

Business ratepayers would pay an average increase of $173 in 2026/27.

Ongoing deficits will mean Council will not be able to invest additional funds into asset maintenance and renewal, leading to a significant increase in Council’s infrastructure backlog.

As a result, the quality of infrastructure will continue to decline, with Council required to spend increasing amounts on temporary repairs.

Under this option, Council would increase rates by 22% in the financial year 2026/27, including an assumed NSW Government rate peg of 3%. This would lead to an average annual residential rate increase of $378 (or $7.27 per week).

Business ratepayers would pay an average increase of $1,272 in 2026/27.

The rate rise would deliver an additional $16.5 million a year to enable Council to renew and upgrade existing local infrastructure. 

This funding would be allocated as follows:

• $5.9m for stormwater and drainage, for example kerb inlet pits, pipes and drains
• $6.7m for buildings, for example halls, public toilets and pavilions
• $1.5m for recreational facilities, for example playing surface, pathway, lighting, drainage and fencing improvements at sports fields, courts, parks and open space areas
• $0.94m for footpaths, including to remove trip hazards.

It would also fund $1.46m a year in loan repayments on the St Ives Indoor Sports Centre’s construction.

Under this option, Council would increase rates by 29% in the financial year 2026/27, including an assumed NSW Government rate peg of 3%. This would lead to an average annual residential rate increase of $499 (or $9.60 per week).

Business ratepayers would pay an average increase of $1,676 in 2026/27.

The SRV would have the effect of providing an additional $22.6m a year for infrastructure spending.

This option would deliver all the benefits of the Renew Infrastructure option, along with the following additional renewal and upgrade funding:

• A further $600,000 for existing recreational facilities
• $3.8m for new footpaths
• $1.7m for other infrastructure, for example traffic and transport works. This could include implementation of approved traffic and pedestrian safety facilities at various locations.

Under this option, Council would increase rates by 33% in 2026/27, including an assumed NSW Government rate peg increase of 3%. This would lead to an average annual residential rate increase of $568 (or $10.92 per week).

Business ratepayers would pay an average increase of $1,907 in 2026/27.

This option would deliver an additional $26.3m a year in infrastructure spending.

This option would deliver all the benefits of the Renew and Enhance Infrastructure option, along with an additional $700,000 for other infrastructure upgrades (for example traffic and transport works).

It would also deliver $2.98 million a year to service a $30.36 loan to enable the construction of the Marian Street Theatre project, and an average annual operational subsidy once the theatre opens from 2028/29 onwards.

Option 2 (Renew Infrastructure) would fund the renewal and upgrade of existing infrastructure.

Option 3 (Renew and Enhance Infrastructure) and Option 4 (Renew, Enhance and Expand Infrastructure) would provide some funding for new infrastructure.

Much of Council’s stormwater infrastructure has largely not been renewed since it was first built the early to mid-1900s.

In 2022/23, Council conducted a comprehensive revaluation of its stormwater assets which uncovered that these assets were in worse state than had been previously assumed.

Issues include pipe blockages, joint failure and cracking, and tree root and other foreign object intrusion.

Council followed this revaluation with an external review of stormwater assets in 2023/24. This involved the collection of additional CCTV data and an independent assessment of the conditions, useful lives and a revaluation of stormwater assets.

This review estimated that 43% of Council’s stormwater assets were classified as being in a poor or very poor condition, with many of the assets coming to the end of their useful life and not operating as efficiently as they should.

As part of community research carried out by Council in 2024, 62% of ratepayers were at least somewhat supportive of paying higher rates to improve stormwater drainage.

This is why all Special Rate Variation options include increased funding for stormwater.

Council is responsible for around 300 buildings with a gross replacement cost of $207.36 million, including bus shelters, amenities blocks, libraries, community halls, childcare centres and carparks.

Council in 2023/24 engaged independent asset consultants to review and develop a prioritised capital upgrade program for Council’s buildings portfolio.

This review identified that about 53% of the evaluated buildings needed significant capital upgrades - either refurbishment or full knockdown and rebuild.

These upgrades are typically needed to address:

• modern accessibility standards, including access ramps, disabled toilets and providing sufficient internal access movement space
• the needs of womens facilities, including separated changing facilities and toilets
• significant issues with the building’s structure or performance, such as waterproofing failure, poor lighting or degraded internal finishes.

The review resulted in development of a 10-year detailed prioritised program of building upgrade works.

As part of community research carried out by Council in 2024, 52% of ratepayers were at least somewhat supportive of paying higher rates to improve community buildings.

Recreational facilities comprise all assets within our sports fields, parks and bushland locations. This includes ovals, golf courses, playgrounds, playing courts, walking tracks, fire trails and the Ku-ring-gai Sports and Aquatic Centre.

Community consultation consistently identifies recreational facilities and assets as one of the highest priority areas. As part of community research carried out by Council in 2024, 74% of ratepayers were at least somewhat supportive of paying higher rates to improve parks and sportsgrounds.

With a Special Rate Variation, Council will have insufficient funds to stop the deterioration of Council’s recreational facilities, with more of these facilities declining from a satisfactory to unsatisfactory condition.

The implications of this will include:

• issues with playing surfaces and amenity areas
• breakdown and failure of essential infrastructure within facilities
• increased risks to the public due to the deteriorating conditions.

The community has identified footpath funding as a high priority. Community research carried out by Council in 2024 found there was a notable gap between the importance that residents placed on existing footpaths, and their satisfaction with the condition of those footpaths. This clearly indicates that footpaths are not meeting community standards.

The same survey found about 69% of residents were at least somewhat supportive of paying higher rates to improve footpaths.

The backlog to bring existing footpaths to a new condition is currently standing at $6.3 million.

Without a Special Rate Variation, this amount is expected to nearly double, and about 20% of footpaths are expected to transition into unsatisfactory condition by 2034/35.

The implications of this scenario would include:

• more footpaths becoming unusable for some community members
• increased risk of falls and injuries.

As such, all Special Rate Variation options support increasing funding for existing footpaths.

Currently, 248km (25%) of Ku-ring-gai’s streets completely lack footpaths.

This means residents in these streets do not have safe, trip-free walking access to local public transport or retail services.

A total of 614km (62%) of streets only have a footpath on one side, forcing pedestrians to cross the road to access a safe walkway.

At the current rate of new footpath construction (around 12-14 streets per year), it would take until 2082 before all streets in Ku-ring-gai will have a footpath on at least one side.

That is why Options 3 and 4 include funding to accelerate the construction of new footpaths. This would allow the construction of footpaths on at least one side of all streets by 2045.

In 2021, the Department of Education completed the first stage of a two court indoor sports facility in the grounds of the St Ives High School.

In 2022, Council gained development approval for the second stage of this facility, which will deliver an additional two indoor sports courts, associated ancillary rooms, café and car parking.

Council approved the project to be funded by grant funding, internal reserves, developer contributions and a low-cost $13.5 million loan to be repaid by an increase in rates.   

The school will be able to use the facility during school hours and the community will have access outside of school hours. Construction works are underway, with an anticipated opening in early 2026.

Recent Council Long Term Financial Plans have referred to the need for a Special Rate Variation from 2026/27 to fund repayments related to this loan.

The Marian Street Theatre (MST) building operated as a theatre for more than 40 years until its closure in 2013 due to significant building code compliance issues and the need for extensive repairs.

The MST project intends to create a vibrant, multi-use arts venue with a strong focus on drama, featuring using multiple rehearsal and performance spaces.

Under Option 4, a Special Rate Variation would fund repayments on a loan for the project’s capital cost (estimated at $30.4 million) from 2026/27 onwards, and an annual operational subsidy from 2028/29 onwards.

No. An existing Special Rate Variation (SRV) is already in place to fund road resurfacing and improvements.

Approximately $3.6 million is invested annually in roads from this funding. Projects are outlined in Council’s Delivery Program and Operational Plan, and the Annual Report. This SRV means Council has sufficient funding currently in place to deliver works such as resurfacing and kerb and guttering improvements to reduce the infrastructure backlog for roads renewal over time.

Further information about the specific projects funded by the Special Rate Variation option would be published in the Delivery Program and Operational Plan, which is exhibited and updated each year. 

Council is proposing that any Special Rate Variation (SRV) would be permanent.

If approved, the Special Rate Variation increase would apply once from July 2026. In future years, rates would increase in line with the IPART rate peg only (assumed 3%).

Council is proposing a permanent increase, given the significant backlog of works that needs to be addressed.

Council is not currently proposing a phased, multi-year increase, so it can commence work as soon as possible to address infrastructure funding issues.

However, Council expects to receive feedback on this issue.

Council will carefully consider all community feedback. It is expected that Council will consider the results of community engagement at its October 2025 meeting, and decide on a preferred rate increase option..

Council may also choose to update and re-exhibit its Delivery Program and Operational Plan and Resourcing Strategy to reflect the preferred rate increase option.

If Council chooses to proceed with a Special Rate Variation, it would need to submit an application to IPART by February 2026. IPART would then exhibit this application in March-April 2026, with community members able to provide feedback directly to IPART.

Any Special Rate Variation, if approved, would commence from 1 July 2026.