Council Cost Index

Since 2006, LGAT has published a Council Cost Index (CCI) to better reflect the cost increases associated with the delivery of local government services, recognising that the Consumer Price Index (CPI) alone does not reflect cost increases across the range of council services. Wage costs, construction and maintenance costs, and the CPI are the most significant components of operating costs for councils across Australia, and Tasmania is no different.

Using this composition of local government costs, a modified index has been adopted for Tasmanian Local Government.  From 2013, this was based on consideration of the wage price index, road and bridge construction index and the CPI for Hobart. Unfortunately, the ABS do not keep specific indexation data for roads and bridges in Tasmania, so the Australian construction index was used.

In 2026, a detailed review of the LGAT CCI was undertaken, assessing the contemporary cost drivers of Tasmanian councils, other jurisdictions' council cost indexes, and the best-fit data sources available for Tasmania. This resulted in the CCI being amended to be:

• 25% Tasmanian Public and Private Wage Price Index,

• 30% construction - made up of 75% South Australian roads and bridges index and 25% the Tasmanian non-residential construction index, and

• 45% CPI for Hobart.

The previously utilised ABS construction index represents an amalgam of all construction movements in the country.  This index does not accurately represent the specific topographical issues that exist in Tasmania, the relatively small competitive market, and also that councils undertake a combination of civil and building construction activities and maintenance.  Accordingly, the ABS construction index has been replaced with the South Australian roads and bridges index (75%) and the Tasmanian non-residential construction index (25%).

The Council Cost Index provides an aggregated picture of cost movements at the state level. The mix of construction and non-construction activity varies from council to council. Similarly, there are parts of Tasmania where construction costs have been increasing faster than the state average. Such factors are all relevant at the local level when determining the level of rate increase necessary to provide the desired level of service.

Released March 2026

The Council Cost Index for this year:  3.55%*

*The CCI is a lag indicator, utilising the ABS data release in March, which measures cost drivers for the preceding year to February.

The CPI index saw a sharp rise in the month following the March release, due to the significant increase in fuel prices resulting from the conflict in the Strait of Hormuz.

If the April update of the CPI was used, then this would result in the 2026 Council Cost Index increasing to 4.01%.