Study shows no benefits in rate capping

A report by Professor Brian Dollery of the University of New England has indicated that rate capping by councils does not produce improved efficiency in local government.

With funding from the LG Research & Development Scheme, Professor Dollery undertook a comparative analysis between NSW and South Australian councils looking at whether rate capping in NSW has produced measurable differences in equity, sustainability or efficiency relative to South Australia.

Professor Dollery said his research showed that there is no evidence in NSW that rate capping improves efficiency in local government.

“In fact, rate capping leads to a decline in the financial sustainability of councils, and particularly smaller councils,” he said.

“Councils with capped rates have higher levels of debt and larger infrastructure backlogs than those without rate-capping, and also have higher fees and charges that they pass on to their communities.”

“South Australian councils perform better than NSW against a number of criteria, including financial stability and efficiency.”

The study is available here.

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