Ratepayers who are Centrelink pensioners presently received a $250 concession on their general rates plus $145 for their combined water and swerage bills.

But this system costs Albury Council $670,000 a year because the council must pay 45 per cent of the mandated rebates.

The NSW Government funds the balance.

The council supports a recent recommendation of an Independent Pricing and Regulatory Tribunal (IPART) panel that “social welfare should not be a local government responsibility”.

Instead, the panel suggested pensioners should be allowed to defer payment of rates up to the amount of the present concession, or any amount determined by the State Government.

The council agrees and the panel said the liability should be charged interest plus an administrative fee.

It would become due when the property ownership changes and a surviving spouse dies or no longer lives in the home.

At present rates, the liability could grow to at least $4250 over 10 years or $8500 over 20 years, plus interest and fees.

A report prepared by council's chief financial officer Justin Finlayson on the issue has been endorsed by councillors.

“The proposed rate deferral scheme has merit with respect to asset-rich and cash-poor pensioners, provided the scheme is wholly funded by the State Government,” the report said.

“If the State Government chooses to retain a pensioner rate concession their amount should be indexed in line with the rate peg.”

The report also backs a shift to assessing council rates on capital improved value instead of the present system based on unimproved value or land value only.

Wodonga uses the capital improved value system and would mean big commercial buildings, shops and homes would pay higher rates than at present, and smaller ones less.

At present, a street of properties all the same land size would pay the same rates, but using capital improved value the individual rates would be assessed on the combined value of buildings and land.

Albury argues each council should be able to choose its valuation method.

Any change would not be made until 2018 at the earliest.