FAQs

Cessnock City Council resolved to apply to the Independent Pricing and Regulatory Tribunal (IPART) for a 39.9 per cent 1-year permanent Special Variation (SV) for the 2026-27 year at its meeting on 14 January 2026. 

IPART conduct their own community consultation process from February/March 2026. You can subscribe to IPART's mailing list to be notified once consultation opens here. 

At the meeting, Council also voted to progress a review into Council's rating structure as to how Council's rates are structured and calculated across all rating categories. The review will include consideration of the most appropriate rating categories and subcategories, base rates and ad-valorem rates (rates calculated on land valuation) and is aimed at assessing impacts across the structure to improve equity impacts, legislative compliance and revenue stability, with a report on the outcome to be provided to Council for consideration for FY27/28.

Council rate revenue and certain other Council revenues have been regulated in NSW under an arrangement known as 'rate pegging' for the past five decades.

Acting on the advice of the Independent Pricing and Regulatory Tribunal (IPART), the NSW Government determines the percentage figure by which councils can increase their total general rate income each year through its rate-pegging policy. Independent scholarly evidence, has shown that the ‘rate peg’ is often well below the increases we face as a council to deliver the quality services and infrastructure valued by our community.

Applications for what is known as a ‘special variation’, which is where councils can apply for a larger rate increase, have become common and a periodic necessity for nearly all councils across NSW.

Further details on special variations can be found on IPART’s website here: https://www.ipart.nsw.gov.au/Home/Industries/Local-Government/Special-Variations

Council rate revenue and certain other Council revenues have been regulated in NSW under an arrangement known as 'rate pegging’ for the past five decades.

Acting on the advice of the Independent Pricing and Regulatory Tribunal (IPART), the NSW Government determines the percentage figure by which councils can increase their general rate income each year through its rate-pegging policy.

Independent scholars have shown that the ‘rate peg’ is routinely set well below the increases we face as a council to deliver the quality services and infrastructure valued by our community.

It is important to note that the costs faced by Council are completely different to the inflation rate (Consumer Price Index) routinely reported in the media.

The Independent Pricing and Regulatory Tribunal (IPART) makes decisions on applications for special variations from councils across NSW, within the policy framework set out by the NSW Government’s Office of Local Government and supported by the Local Government Act (1993, NSW).

IPART reviews each application to ensure it meets the following criteria:

• a demonstrated need for higher increases to charges
• community awareness of their plans
• a reasonable impact on ratepayers
• a process to exhibit relevant council documents to the public
• a history of well-documented council productivity improvements and cost containment strategies

IPART will then either approve the special variation application as proposed, approve a different rate increase, or deny the request.

It is important to note that neither the Councillors, council staff nor the community have a role in approving an SV – this is entirely the responsibility of IPART. Councillors adopt a motion to put a proposal to IPART and also provide important evidence. Council staff and community contribute to the brief of evidence and shaping of the proposal to IPART.

Further details on how special variations are assessed can be found on IPART’s website here: https://www.ipart.nsw.gov.au/Home/Industries/Local-Government/Special-Variations

Council’s Long Term Financial Plan (LTFP) indicates multiple years of ongoing operating deficits when capital grants and contributions are excluded. Our Community Strategic Plan paints a picture of optimism for our future, while recognising the challenges we face as a growing community.

As a council, we have been upfront for several years about budgetary challenges we are facing in this local government area. Future funding obligations have been consistently included as a specific risk in every Operational Plan for the past two terms of Council.

These budget challenges are largely due to factors such as a rapidly growing population, an ageing and growing asset base, cost shifting by successive state governments, and increases to costs and materials outpacing allowable rate increases capped by the state government.

Many of these problems are not unique to our Council, and are faced by numerous other councils.

An independent Financial Sustainability Review into our financial health, by the University of Newcastle, confirmed that rising costs and decades of underfunding have placed pressure on Council’s ability to deliver services and maintain infrastructure. The Financial Sustainability Review recommended additional revenue to maintain existing services and fix critical infrastructure gaps. It will be complemented by a suite of other important sustainability measures.

The purpose of the SV is to commence the journey to financial sustainability, with a view to maintaining service levels wherever possible, in response to very significant cost pressures which have outstripped revenue for many years. The funds will be directed to essential infrastructure backlogs and progress specifically reported on to the community.

While it’s true that population growth increases rate revenue, it also increases liabilities and expenses through providing council services and infrastructure like roads, parks, and playgrounds.

Developers pay a contribution towards building this infrastructure however these contributions are capped and are typically paid later in the development process. Importantly, contributions are indexed at CPI only and not at a level that meets increases in construction costs.

This means that by the time developer contributions are received, construction costs might have escalated. This results in a funding gap that must be met through general rates - transferring the financial risk of development away from developers and onto councils and communities.

Council is also left to carry maintenance and depreciation costs on these assets.

It’s also worth noting that, as our audited financial statements will show, rate revenue currently covers less than 30 per cent of council costs of delivering services and infrastructure to our residents.

At Cessnock City Council, we deliver a range of high-quality services and infrastructure, which are valued by our community. To do this, we rely on various funding mechanisms including rates.

As the audited financial statements will show, rates represent just under 29% of our total income. Moreover, the operating result (excluding capital grants and contributions) was a deficit of over $33 million.

Rates are used to deliver and subsidise infrastructure maintenance and upgrades, such as local roads and bridges, community and cultural facilities including libraries, community centres, parks, recreation and sporting facilities, and public aquatic centres. Depreciation, employee costs, and materials and contracts are also among the significant expenses Council faces.

Improving efficiency always has a role to play but will not address the structural budgetary challenges faced by council alone. Council’s financial challenges are primarily related to high levels of population growth, an ageing and growing asset base, cost shifting by successive state governments, and increases to costs and materials outpacing allowable rate increases capped by the state government.

Many of these problems are not unique to our Council, and are faced by numerous other councils.

Amid these growing financial challenges, our Council has remained an efficient organisation when it comes to its people. For example, a recent independent financial review found that Cessnock City Council consistently had the absolute lowest staff expenditure when assessed against other comparable councils in each of the past four years. 

While we’re an efficient council that is always continuing to look at our spending, alongside the proposed rate increase we’ve also made strides in identifying efficiencies within our budget. Our forthcoming updated Long Term Financial Plan has already identified $1.5 million in additional efficiencies that have been independently assured and will support our drive toward financial sustainability.

While closing facilities may appear to save money in the short term, they play a vital role in our community’s social connection and wellbeing. Removing services may have lasting social and economic impacts. Additionally, results of the recent 2025 Customer Satisfaction Survey showed that the community places a high value on the services Council provides.

We routinely look to sell underperforming or surplus assets with the consent of the elected council. Asset sales do not meaningfully address the structural challenges – where the revenue generated through rates does not increase at the same pace as expenses, cost of materials and supplies.

The NSW Government, through the Office of Local Government, sets the framework through which the Independent Pricing and Regulatory Tribunal assesses and rules on special variation applications from councils across NSW according to the Local Government Act (1993, NSW). The NSW Government, after advice from IPART, also sets the rate peg.

Council worked with an independent expert Professor Joseph Drew and his team of professors on our drive towards financial sustainability. 

Following independent research and community consultation, Council resolved to apply to IPART for a 39.9 per cent 1 year permanent Special Variation (SV) for the 2026-27 year at its meeting on 14 January 2026. 

There are still steps to be undertaken before a rate increase applies. IPART follows its own process on reviewing applications which you can read more about here.

The latest report from the Office of the NSW Auditor General published on 28 January 2026 found that Cessnock City Council has insufficient revenue to cover expenses, causing a decline in available cash balances and limited own source revenue capacity. You can find the report here.

Council is encouraging the community to keep informed and participate in IPART'S public consultation process, expected to open around February/March 2026. This is a great opportunity to review Council's application and share feedback directly to IPART.   

IPART has provided fact sheets that answer frequently asked questions about special variations here, and about council rates and other charges here. You can also subscribe directly to IPART's mailing list for updates here.

Council will continue to update this webpage where we provide answers to frequently asked questions, supporting documentation and a link to the ongoing "Ask a Question" tool on our Together Cessnock webpage (this page) and Council's primary website here.