What is IPART? Could there be a Stalinist-Type Plot to Have Ratepayers Controlled by a State Politburo?

by Reuben Rose

This last week, as I made the round of local clubs for the local candidates’ “meet and greet” and was prompted to upload my digital ID: see our Back to Basics substack

I realized that election campaigns are not easy, and there are many unforeseen barriers. It is quite a challenge to simplify a message that people remember and that tells them what your campaign is about in an easy-to-understand way.

Our core message Back to Basics is a shorthand way of saying that what we need our local council to do is to focus on the important local functions which include: fixing the roads, collecting the rubbish and living within its budget.

Our local council was recently presented with a grandiose plan to build a new council headquarters with a projected cost of more than $40 million (sure to blow out to double that). This is just one of the ideas that the managerial class promotes and would undoubtedly be a significant additional cost to ratepayers.

As our team has made our way through the bureaucratic jungle of state and local government “newspeak”, we arrived at IPART. What is IPART? Well - it’s a type of “Big Brother” or perhaps “Big Father” and appropriate for Fathers’ Day. Now read on!

IPART – The Independent Pricing and Regulatory and Tribunal

Figure 1. Home page from the IPART website

Raising rates on houses and lands is a political hot potato, so the New South Wales State Government has established an “independent” bureaucratic group called IPART. This is a group that was formed by the state government to take the pressure off the politicians so they can blame the “independent” group for an “approved increase” in taxation. IPART says that it is:

 “led by the Chair of the Tribunal and supported by two other permanent members. The Tribunal is supported by special purpose committees which are delegated by the Tribunal to carry out specific tasks. The Tribunal is advised by a Secretariat consisting of highly experienced economists, financial analysts, lawyers, engineers, and other professionals. The Secretariat is headed by a Chief Executive Officer, supported by an Executive Leadership team, who is delegated to ensure effective management of IPART.”

If Joe Stalin was still alive, he would be proud of this “tribunal”, which seems to take the residents of NSW into a government-regulated and bureaucratic morass, from which there is no way out! Positions on IPART are undoubtedly well-paid and so I am sharpening up my resumé in case I miss out on the local council.

The Black Box Produces a “Rate Peg”

So, immediately, you can see that the whole “rate fixing” process is an impenetrable bureaucracy that has created a “black box” where rates are approved via a process that lacks any transparency and which no one can understand. It may be a bit like the U.S. Federal Reserve, which is not federal and is not a reserve!

Now IPART has an amazing tool called a Rate Peg to determine council rates across the state. This is described as follows:

“IPART has set the rate peg for the 2024-25 financial year using our new rate peg methodology. The core rate peg for the 2024-25 financial year for each council (i.e. before applying the population factor) ranges from 4.5% to 5.5%. IPART’s rate peg takes into account the Base Cost Change (BCC) by council group (metropolitan, regional and rural), in addition to a population factor based on each council’s population growth and an Emergency Services Levy (ESL) factor to reflect annual changes in each council’s ESL contributions that differ from the changes to the council’s BCC.”

Below is IPART’s promotional video from four years ago. Whatever the video says, in practice there seems to be some type of “Robin Hood” system in place as in our region, Jindabyne ratepayers have had substantial increases in rates over the last few years, despite the rate peg setting increases at 4.5%-5.5%.

Clear? No – because they have applied “our new rate peg methodology,”, i.e. a black box that we cannot understand. The “rate peg” is designed to keep us in the dark.

It appears that a Robin Hood or perhaps more appropriately, a“Robbing Hood” methodology has been applied, where some areas where land prices have increased at a greater rate are “robbed” to subsidise those areas where prices haven’t increased. The increases are obscured by IPART’s “rate peg,” which no one can understand, but I think that the essential message is: “We’re from the government, and we’re here to help”! President Ronald Reagan told us more than 50 years ago that these words were : “the nine most terrifying words in the English language“!

Local councils can apply to IPART for a “special rate variation” to tax ratepayers at a higher rate. What do you know? Our council, the SMRC, applied and was successful!

Of course, there was no chance that an application for higher taxes to an “independent” group of government bureaucrats would be refused. And so the local ratepayers suffer as the council bureaucrats grow fatter.

VOTE 1 (above the line) For Group F - To See Change

What I’ve realized is that it is almost impossible to beat the system, but elected councillors do have some power to change the direction of the council. Council staff are under the thumb of state government bureaucrats, and council staff try to push the elected councillors toward decisions that give the government more power.

We, as a community, need to take back control of council policy and direction and have them work on the issues that we’ve identified as critical to ensure that the council meets the needs of ratepayers. You can read more by looking at our website.

However, here are some of the “fixes” that we believe need to be implemented:

1. A new group of independent councillors is needed to provide leadership and direction to the council management. Repeated surveys of ratepayers have shown that only 2-3% of ratepayers have a high level of satisfaction. Without a change in councillors who are determined to bring a change in direction, the council's poor performance will continue.

2. A new communication approach is a must. Poor communication is the No.1 issue residents identified in surveys. However, we don’t need a bigger communications team. We need to engage with the community via various ratepayer working groups to provide input to priorities and advice on complex issues. Improved face-to-face communication and better IT systems for interacting with the public are also needed.

3. Transparency—full transparency is needed rather than secret councillor briefings, restrictions on who can provide a public presentation, and close guarding of financial information. Everything should be transparent. Transparency always provides greater confidence, and ratepayers can clearly see where problems lie.

4. A review audit and high performance culture – essentially a root and branch analysis is required to see if the structure, staffing, resources, and budget allocation are “fit for purpose”. A detailed examination of cost centres is needed to determine where savings can be made. The solution to poor management cannot be imposing more costs on ratepayers by special rate variations. 360° reviews of senior staff, staff surveys and performance reviews must be embedded within the council management system.

5. Priority setting. Not everything is a priority. Surveys, for example, indicate that road repair and maintenance have not been appropriately prioritised. Councillors' role is to set clear goals and priorities and for council staff to deliver on these. These goals need to be simple and clear to the staff and ratepayers.

6. Complete costing analysis of major projects. Councillors need to have a sceptical view of the costing of major projects and the hidden issues that result from various government “grants”. These often come without a maintenance budget and so ratepayers are saddled with ongoing costs that have not been budgeted.

7. A “can do” mentality. Talking to many current councillors has shown us that there is a “it can’t be done, because of the government” mentality. There are always constraints within any system but council MUST have a “can do” mentality. Council staff must be directed to fix problems and take the initiative to help ratepayers.

Figure 2. Reuben Rose Team (Group F) brochure for election day