Why your rates can rise more than the rate peg, even when the council obeys it

Every year a number gets published, this year 3.2 per cent for Central Coast Council, and every year people read it as the most their own rates can go up. It is not that. The rate peg is set by IPART, not the council, and it caps the council’s total general income, not your notice. IPART states the consequence itself: This means it is possible that your rates may increase by more than the rate peg. Here is how the number is built, what it does not cover at all, and the three legitimate ways your bill can outrun it.

26 August 2026 · IPART pages and the 2026-27 rate peg information paper, read 26 Aug 2026

Ledger-style graphic for a council money story: the rate peg and what it caps

Who sets it, and what it actually caps

Not the council. IPART, the Independent Pricing and Regulatory Tribunal, sets a rate peg for each of the NSW councils every year. In IPART’s words it is The rate peg is the maximum percentage amount by which a council may increase its general income for the year, and For most councils, general income consists entirely of rates income.

The word doing the work there is general income. It is the pool, not the individual bill. IPART is explicit: The rate peg applies to general income in total, and not to individual ratepayers’ rates.

What the peg does not touch at all

This surprises people every year, and it is stated plainly: The rate peg does not apply to stormwater, waste collection, water and wastewater charges. Those are separate lines with separate rules. If a new stormwater charge appears on your notice, the rate peg has nothing to say about it, and the council has not breached anything by adding it. We covered the new stormwater line when it arrived.

The three ways your bill can outrun the peg

One: the council can shift the burden between categories. Within the capped total, councils may increase categories of rates by higher or lower than the rate peg, and Councils have discretion to determine how to allocate the rate peg increase between different ratepayer categories. Residential, business and farmland are separate categories. A council can stay inside its cap while moving more of the load onto one of them.

Two: land valuations. Rates are calculated off land values, and those are revalued periodically by the Valuer General rather than by the council. IPART names this directly: Individual rates are also affected by other factors, such as land valuations. If your land value has risen faster than the average across the local government area, your share of the same capped pool goes up, and nobody has done anything irregular.

Three: catch-up. A council that took less than the peg in an earlier year can come back for it. If it does not apply the full increase, it will be able to catch up on the shortfall in general income over any one or more of the next 10 years. Ten years is a long memory, and it means a restrained year can be followed by a larger one that is still entirely within the rules.

IPART sums the position up in one sentence: It is a matter for each Council to decide how the rate burden is spread amongst its ratepayers.

How the 3.2 per cent was built

The peg is not one number, it is a stack of components. For Central Coast in 2026-27 the published row is a core rate peg of 3.0 per cent plus a population factor of 0.2 per cent, giving the 3.2 per cent final figure. The core peg itself is built from a base cost change of 3.0 per cent, an emergency services levy subsidy catch-up of 0.2 per cent, a productivity factor of zero, and an election-cost adjustment of minus 0.2 per cent.

The population factor exists because more people cost more to serve. IPART sets it to give councils the income needed to maintain income collected per person (before inflation) as populations grow, and it works one way only: our methodology does not reduce council income when population falls.

The number IPART says you should actually watch

Here is the part almost no coverage carries. IPART itself says the headline figure is not the best guide to what happens to ratepayers: The core rate pegs provide a better indication of the average impacts on ratepayers than the total rate pegs because they exclude the population factor.

So for Central Coast the number to hold is 3.0 per cent, not 3.2. The difference is small here, and that is itself worth knowing: the population top-up only covers growth that has not already arrived as new rateable properties, and on the Coast most of it already had. Statewide, The core rate pegs for 2026-27 are lower than those for last year, at 2.5 to 4.2 per cent against 3.6 to 5.1 per cent.

If the council wants more than the peg

It has to ask. Under the Local Government Act a council may apply to IPART for a special rate variation, which is a public process with a decision published. That is a different thing from the annual peg and it is where a genuinely larger increase would have to come from. Our reporting on the council’s ten-year financial plan covers what it currently assumes.

Our view

Labelled as opinion, on the material quoted above. The design is defensible and the communication is not. A cap that applies to a council’s total income while being reported as a cap on your bill will produce an angry phone call every single year, and the answer the ratepayer gets, that the council is within the peg, is true and sounds like a dodge. IPART has written the explanation clearly on its own website. It is simply not where anyone looks, and it is not on the notice.

The fixable part is the notice. A rates notice that showed the ratepayer’s own land value movement against the average for the area would answer the question before it was asked. That is a council decision, not an IPART one, and nothing stops it.

What this page does not tell you

It does not tell you what your own rates will be, and it is not advice about your notice. Figures are for Central Coast Council for 2026-27 and change every year, so check the current determination before relying on a number here. We have not sought comment from IPART or the council, and this is a reading of published documents. Nothing on this page criticises any individual, councillor or officer.

Sources

IPART, The rate peg (read 26 Aug 2026): the definition of the rate peg as the maximum increase in a council's general income, that general income for most councils is entirely rates income, that the peg does not apply to stormwater, waste collection, water and wastewater charges, that the peg applies to general income in total and not to individual ratepayers' rates, that councils may move categories above or below the peg and have discretion in allocating the increase between ratepayer categories, that individual rates are also affected by land valuations, the ten year catch-up on any shortfall, and the existence of the special rate variation path under the Local Government Act.
IPART, For Ratepayers (read 26 Aug 2026): that IPART sets the maximum increase councils can apply to their general income, the catch-up provisions, that it is a matter for each council how the rate burden is spread amongst its ratepayers, and the statement that your rates may increase by more than the rate peg where a council has redistributed rates or is catching up.
IPART, Information Paper: Rate pegs for NSW councils for 2026-27 (PDF, 30 September 2025, downloaded and read 26 Aug 2026): the Central Coast row giving a base cost change of 3.0 per cent, an emergency services levy subsidy catch-up of 0.2 per cent, a productivity factor of 0.0 per cent, an election-cost adjustment of minus 0.2 per cent, a core rate peg of 3.0 per cent, a population factor of 0.2 per cent and a final rate peg of 3.2 per cent; the statement that core rate pegs are a better indication of average impacts on ratepayers than total rate pegs; the statewide core range of 2.5 to 4.2 per cent against 3.6 to 5.1 per cent last year; and IPART's description of the population factor including that the methodology does not reduce council income when population falls.

How we did this. Every quotation comes from IPART, the body that sets the number, rather than from a council announcement reporting it. The Central Coast components were read from IPART's own table in the information paper rather than from any summary, and the downloaded file matched the copy this masthead already held, byte for byte. Where this page describes a mechanism rather than quoting it, that is signalled. We have deliberately not calculated any example rates bill: the inputs that decide an individual notice are the ratepayer's own land value and category, neither of which is in these documents.

Spotted an error, or has IPART set a new peg? Tell us and we will check it against IPART and log the outcome here.