16 May 2025
The Independent Pricing and Regulatory Tribunal has formally rejected North Sydney Council’s proposed special variation and minimum rate increases, blocking a move that would have lifted general residential and business rates by between 87% and 96% over two years.
The decision—outlined in IPART’s 2025–26 special variation determination—means North Sydney can only apply the state-wide rate peg, rather than its proposed 87.05% general income increase over two years. A parallel application to increase minimum rates—by 95.7% for residential ratepayers and 95.8% for business ratepayers—was also denied.
IPART chair Carmel Donnelly said the decision followed a formal assessment process against Office of Local Government criteria, with input from community submissions.
In its detailed findings, IPART found that the council had failed to clearly identify the purpose and need for the proposed increase in its Integrated Planning and Reporting documents or consultation materials. While the council cited financial sustainability concerns, it did not make clear that the intention was to generate large surpluses and accumulate reserves. Many submissions expressed confusion, assuming the increase was mainly to fund the North Sydney Olympic Pool redevelopment.
The council was also criticised for not properly exploring alternatives to the rise. Its long-term financial plan did not clearly present a baseline ‘rate peg only’ scenario, nor did the consultation process offer one as a comparator. IPART also found that while the council’s financial metrics indicated some level of need—such as a negative operating performance ratio and poor short-term liquidity—its strategy to build up ongoing surpluses and achieve a sustained OPR of 17% was neither clearly communicated nor justified.
IPART concluded that the impact on ratepayers was not reasonable, citing inadequate treatment of cost-of-living pressures, failure to properly assess impacts on business ratepayers, and a hardship policy in need of improvement. While some residents expressed openness to a more moderate or staged rate increase, the scale and speed of the proposal over just two years was widely criticised.
Further, IPART found that North Sydney Council’s claimed $4.85m in annual productivity improvements were overstated, with many savings simply reallocations within the budget rather than genuine efficiencies. Only 0.4% of total expenditure was attributable to cost savings—well below what would be expected of a metropolitan council—and no forward strategies or savings targets were provided.
By contrast, neighbouring Northern Beaches Council received partial approval for a proposed 39.6% increase over three years, with IPART allowing a cumulative 25.2% increase across the first two years. Federation, Gunnedah, Shoalhaven and Upper Hunter councils all received full approvals for increases ranging from 12% to nearly 70%.
For 2025–26, rate peg limits across NSW councils range from 3.6% to 5.1%, with some receiving an additional population growth allowance of up to 3.8%. North Sydney will be allowed to increase rates by 4.0%.
North Sydney Council’s bid was mired in significant opposition from the community, business groups and a minority bloc of councillors. Just 0.6% of public submissions to the council supported the proposal, with residents warning of economic hardship and damage to local business recovery. Separate polling commissioned by the council found only 5% support for the preferred two-year option—a result dismissed by council officers in favour of the larger increase.
The justification for the increase—framed by council executives as a response to a structural financial crisis—was also challenged. Several councillors questioned the credibility of the fiscal narrative, noting that the same long-term financial plan used to support the SRV showed the council returning to surplus within five years even without the increase. Others pointed out that only around 10% of the additional funds raised through the SRV would be allocated to the North Sydney Olympic Pool redevelopment, undermining arguments that the rise was needed to fund over-runs on that specific project.
Business representatives warned that sharply increased commercial rates would deter investment and slow the recovery of North Sydney’s CBD office and retail sectors, already struggling with elevated vacancies and shifting work patterns.
The council voted 7–3 in March to endorse the SRV, despite strong and vocal opposition from the public gallery. More than 200 residents attended the meeting, packing the council chambers and overflow room to oppose the proposal. Speakers criticised the proposed 87% increase as excessive and unjustified, warning that it would hurt renters, families and pensioners already under financial pressure. Several questioned the legitimacy of the council’s claimed financial crisis and accused council staff of mismanagement and poor transparency. One speaker described the hike as “out of touch with reality,” while others raised concerns about the failure to properly consult residents or provide a compelling business case.
Amid the backlash, IPART extended its community consultation period. In the end, the Tribunal opted not to approve either the general income increase or the accompanying minimum rate rise—leaving the council limited to the standard rate peg increase for 2025–26.