Holroyd residential ratepayers will be hit by big increases after the Independent Pricing and Regulatory Tribunal (IPART) approved a council request to lift rates 44.22 per cent over five years.
IPART approved Holroyd Council's application to increase general income above the rate peg amount of 2.3 per cent.
The increase, which will generate $33.8 million extra over five years and see residential rates increase in 2014-15 by $62, will help fund roads, bridges, outdoor spaces and stormwater infrastructure.
Holroyd mayor Nasr Kafrouni referred questions on the rate increases to a council spokeswoman.
"Holroyd is the fifth lowest-funded local government area in the Sydney metropolitan region, leaving our city with a $97.1 million funding gap over the next 10 years," a council spokeswoman said.
The spokeswoman said if Holroyd's rates didn't move towards the region's average, its service and infrastructure would be "far below those of the region".
IPART chairman Peter Boxall said Holroyd's long-term financial plan was considered and also whether the impact of the increase on ratepayers was reasonable.
"Although these increases are significant, we have determined that they are reasonable under the criteria given the need for the revenue and that current residential rates are below those in similar council areas," Dr Boxall said.
He said Holroyd was able to meet the approval criteria with a "clear need" for more revenue and by appropriately consulting with its community.
Holroyd was one of 32 NSW councils that applied for a special variation, with 28 applications approved in full, one declined and three partially approved.