Budget lifted 0.15% to cover Waste to Landfill Levy

Budget lifted 0.15% to cover the Waste to Landfill Levy was the decision last night by Council. A unanimous decision made after much reasoned and considered debate last night.

Deputy Mayor Peter Hughes presented Council with an alternative budget position at our traditional budget meeting.  An alternative to the one we presented you just a couple of months back. His alternate motion was to lift the rate increase from 2.1% to 2.25%. An increase of 0.15%.

We learnt last night the impact of the 40% waste to landfill levy on our budget. The levy would add $ 115,000 to our costs. Lifting the rate will cover around half this.

The Budget lifted 0.15% will raise an extra $ 57,000. With some 26,000 rate payers this means an increase of $ 2.00 for the year to each ratepayer.

With such a small individual contribution we could have considered passing on the whole impact. We chose instead to show some leadership and restrict the impact on you.

Like last year, with the China Sword, we opted to share the impact. We are committing ourselves to finding $ 57,000 of savings over the year.

We would like to think we are showing, yet again, our ability to set responsible and considered budgets. Being financially responsible as I promoting during the last election campaign. This, in the face of a Government promoting otherwise while throwing significant last minute surprises at us.

Even with the extra, the rate increase is 0.65% below what it could have been under the government’s proposed rate capping agenda.

I am proud of this Council.

It is showing itself to be a Council that takes their responsibility seriously. Just seven months in, it is a council that is following in the footsteps of the Unley Councils of recent times.

We are a Council I believe you can rely on to take the responsible decisions. To be fiscally responsible.

A rate rise of 2.1% is set to be approved by the City of Unley

The City of Unley will approve their 2019-20 budget at this month’s formal Council meeting. I expect us to approve a rate rise of 2.1% at this meeting.

A 2.9% increase would have applied under the Government’s proposed rate capping. This demonstrates, with many councils following our example, that councils are responsible and able to manage their financial affairs.

In theory therefore the rates you pay will increase likewise by 2.1%.

Changes in property values, if consistent across a local government area, do not change what council rates you pay. It is therefore incorrect to say an across the board increase in property values means Council makes a killing.

If you have read my last blog post however, you will know that this year changes in property values however will be erratic to say the  least. This means some of us will pay more, some less.

Two factors influence the calculation of the rates you pay. The budget set by Council and the capital value of the property you own, as set by the Valuer General.

The process of assessing rates for an oncoming year commences with Council setting their budget. The valuer general then advises council what they have calculated is the total value of all rate-able properties in the council area.

The budget is then divided by the total property value to strike what we call “the rate in the $”. In my time on Council, this “rate in the $” has gone down each year.

When the value of your property (as valued by the Valuer General) moves at the same rate as the collective or total then your rates will increase by the amount of the budget increase set by council. If the value of your property increases less than the collective, your rates will increase by less than council’s budget increase. Likewise, if it escalates above the collective, then your increase will exceed the council budget increase.

Hopefully you appreciate a rate rise of 2.1%, and the services they provide you.

Valuer General to cause stress to rate payers in Unley

Many City of Unley rate payers will be distressed when they receive their first rates notice for 2019-20.

 

Office of the Valuer-General

Office of the Valuer-General

Not I must say because of anything Council has or has not done. Their grief will be due to changes to the way their properties are valued by the Valuer General.

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While Council looks set to strike a 2.1% increase, the rates you pay may not reflect this. Changes in property values could show a different picture. We could see rates increase or decrease by up to 50% and more.

In other words, changes both ways. Significant changes.

Yes. There will be winners and losers. Some rate payers will be paying more than they traditionally have. Some significantly more.

Others, on the other hand, will be paying less. Some significantly less.

I expect Council will wear the brunt of any anger that may occur. This, even though the Valuer General is accepting the responsibility.

You will be receiving the rates notice from us. You must pay us. Many don’t recognise the value of your property is not set by Council, but by the Valuer General.

Concerned about the significance of the changes, the Valuer General briefed Council last week.

The Valuer General have advised they will be writing to all those property owners whose valuation will increase by 15% or more. There will be many however under this threshold that won’t know until they receive their first rates notice.

This is all (would you believe) due to an attempt to make the valuation of properties fairer. The Valuer General is changing how they calculate the property value. Factors not previously considered will now be used when assessing a property’s value.

These changes will affect mainly commercial properties, not residential properties. I expect therefore that changes in residential property rates thankfully will be minimal.

A fairer system of valuation that will not be seen that way this year.

Externally imposed Rate Capping is Dead

Labor warned us a day ago. They confirmed today that they would join the cross benches and vote the Government’s bill down. Externally imposed rate capping is dead as a result.

 

Rate Capping is DeadSo up go the headlines. Rate capping Dead. No, externally imposed rate capping is dead.

The fact of the matter is, the Government’s Rate Oversight Bill is doomed.  As I have explained before the Government’s bill was not so much about rate capping as it was about an external body setting a cap on council rates.

This is good news for the local government industry. With due respect to ESCOSA, the body earmarked to be the oversee-er, you (the local community) are the best overseer there can be in keeping rates down.

Good news in that the government has never been clear on what how the rates should be capped. We were led to believe by the CPI.

By doing so we were told the average rates would come down $ 500.00 . That claim by Minister Knoll was probably the trigger for the bill’s failure.

If this were true, with 26,000 rate payers, the City of Unley revenue of some $ 40m would reduce by  $ 13m. An extravagant claim by the Government. That Councils are so extravagant they can reduce their rate based revenue by a third. I defy anyone to shave $ 13m of the Unley budget and honestly believe that the Council would survive.

The bill is yet to be voted down in the Parliament however. Until the fat lady sings as it were.

All that aside, it is comforting to hear that the opposition appears to be heeding the call of our Local Government Association’s assessment of how the sector CAN be reformed. The sector can do with reforming. The Government could do well to jump on board and grab the agenda back.

85% of people agree with rate capping according to the Property Council. Who would have thought?

The debate on rate capping continues in the media, with the Property Council again taking the lead.  They conducted a survey showing 85% of people agree with rate capping.

 

Oh Really? Who would have thought that? Honestly. You don’t have to be Mandrake to understand that 85% of people agree with rate capping. Who wouldn’t.

This of course was a limited and a very simplistic a survey however.

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The question they should have asked is who is better placed to cap rates? Councils or a third party, namely ESCOSA.

 

The Bill before Parliament is not about rate capping. It is about shifting responsibility for setting rates from Council to a third party, another Government body.

 

Why not make Councils responsible for rate capping. In other words, it can be legislated. Just as other financial ratios Councils have to comply with are legislated.

Financial ratios such as:-

✔an operating surplus ratio.

✔a net financial liabilities ratio.

✔an asset renewal funding ratio or,

✔other rate related requirements.

Ratios as we are already required to do under sections 5(1), 6 & & of the Local Government (Financial Management) Regulations 2011.

 

The City of Unley voted against the Government’s Bill. This reads as we are against rate capping. Fact is we are not, as demonstrated by over the last 6 years.

We believe that setting your rate first and then cutting your cloth to suit is good policy.

Councils are better placed than a third party to do this. Using ESCOSA or other organisation to provide oversight to determine what the rate should be is on the contrary, bad policy.

It is bad policy because they do not have a relationship with you. They are also not accountable to you.

There is therefore no reason why the regulations could not be altered to achieve the government’s push for rate capping.

 

That is of course assuming their real intention is actually rate capping, not using rate capping as an excuse to control councils.

 

See Saw Margery Daw

See Saw Margery Daw Jacky shall have a new master. Jacky shall earn but a penny a day.

The seesaw is one of the oldest ‘rides’ for children, easily constructed from logs of different sizes. The words of “See Saw Margery Daw” reflect children singing this rhyme to accompany while playing on a see-saw.

This children’s nursery rhyme is being played out currently by our leaders. I refer to the rate capping saga that is being played out before us right now.

See SawAt one end of the see saw we already know is South Australia. At the other end we now find is New South Wales. Amazingly as the South Australian Government seeks to follow the lead of New South Wales and introduce rate capping we see New South Wales potentially going the other way. So. See saw Margery Daw is the game being played.

A year after the NSW Government scrapped its council amalgamations policy, the Committee for Sydney has released a report. Would you believe, a  report that is calling for the capping of council rates to be scrapped.

The report, A New Era for Local Government, calls for the end to ‘rate capping’. IPART (their equivalent of ESCOSA) sets the maximum amount NSW councils can collect in general revenue through an annual peg. It describes the annual rate peg as “a blunt instrument, with little economic rationale behind it, and which hinders local institutions on which much of our civic life depends”.

It is also calling for the establishment of a Council of Metropolitan Mayors to work alongside the Greater Sydney Commission and the introduction of a new fund to pay for local infrastructure.

Catch this, a levy on local rates to support local councils generate a pool of funds to expand and improve open space or maintain civic infrastructure, like roads and libraries or support town centre renewal. In other words, to allow Councils to catch up with their need to upgrade infrastructure.

Externally imposed Rate Capping I believe to be poor policy.

Externally imposed Rate Capping I believe to be poor policy. Poor policy that you will (in time) pay dearly for. I expect that your other representatives will also view it as poor policy. We will need to wait on Monday’s special council meeting to know however.

Balancing the BudgetThe Rate Oversight Bill being considered by Parliament is aimed at shifting oversight on Council rates. From you to another arm of state government.

We are accountable to you. They are not. Do you want a single philosophy (rate capping) decided by a body, not accountable to you, to determine what services are provided you by your local council.

We will consider this at Monday night’s special council meeting. In so doing we will not simply vote yes or no. We will consider and make public our reasons for our decision.

I for one continue to be concerned that the Bill is bad policy. I say this even though I and Unley support the rationale of setting the rate first and cutting your cloth to suit.  Council and its community are surely best placed to provide this oversight.

My primary concerns I have shared with you last night. Some of my other concerns, which I am sure we will discuss on Monday night, I put on record below.

Grant Funding

South Australian Councils receive the lowest per-capita share of state government funding in the country.

I ask, is this State Government ready to put their hands in their pockets to bring us in line with the rest of the country.  We have yet to hear from them on this.

I doubt it. It is more likely there will be a continuation of cost shifting to local government (see next).

Cost Shifting-Overview

As the Government promotes their intention to avoid you paying more than you need to for the services provided by your local government we must all ask what guarantees they are going to provide against cost shifting. Cost shifting is a practice for governments of both persuasions have thrust upon local government.

Mandatory Fees and Charges

Many of our services are subject to a fee for service. An example of cost shifting is services such as Development Assessment. As I indicated in a recent post, rate payers subsidise these services and substantially. This will be even worse since the larger development projects are now being assessed by the State Commission Assessment Panel.

Is this fair?

Will the new government and future governments ensure we can truly get cost recovery for this service? I doubt it. I doubt it very much.

Social Housing

One of the most significant cost shifting is (by default) the transfer of management of social housing to community housing providers. When the previous government did this they also legislated that these providers receive a mandatory 75% rate rebate on council rates.

A reduction in their costs but a reduction in our revenue. The loss of this income has been transferred to you by way of rate increases above CPI.

The current government has made no offer to reverse this.

Not a huge impact on Unley but for some councils prohibitive. Of course, much of the medium density housing is expected to be social housing.

Solid Waste Levy

Rate payers through their councils pay the State Governments solid waste levy. To fate, to the tune of $118m. Very little of this money has been used for the intended purpose which is to improve recycling.

And catch this. The rate has increased 1450% since 2001. 9% this year. Compare that to the amount your council rates have increased.

To date of course, there is no indication from the government that they will peg these astronomical increases or (better yet) remove the levy. Perhaps ESCOSA should be commissioned to set these rate increases rather than the government.

No! What we have learnt from them is they believe we should be able to absorb the increased costs we are to be burdened by due to the recent China refusal to take that same underfinanced recycled material.

Finally

I wonder too about such things as:

  • As intimated above, if the government is serious about ensuring value for money for rates and taxes maybe they should be mandating that ESCOSA, as an independent body, be given the responsibility for capping such things as state government taxes, levies, fees and charges.
  • Should ESCOSA have the power to fine councils for inadvertently breaching the cap, and to name and shame them publicly. Inadvertently. Fined. Shamed. How punitive is that.

All in all then, unless there are arguments that sway my current paradigm, I struggle to see the Government’s proposed legislation as anything other than poor policy. If it is passed then we are going to be severely challenged in complying.

A reminder. The special council meeting will be held in our Civic Centre, commencing at 7.00pm.

Is externally imposed Rate Capping Good Policy or Bad Policy?

Yes or No! Is externally imposed Rate Capping Good Policy or Bad Policy?  That is what I and my elected member colleagues will be considering at Monday night’s upcoming special council meeting.

We will be responding to the LGA’s request to determine if we accept or not the Government’s Rate Capping Bill, the Rates Oversight Amendment Bill.

Is an externally imposed Rate Capping Good Policy or Bad Policy? Readers of this blog site would be well aware of my views on rate capping from previous blog posts. There are many, most recently the one you can find here.

As I noted in my last blog post, on Monday night I will be called upon to vote on whether or not the City of Unley opposes the Government’s Rate Oversight Bill or not. A Bill designed to provide 3rd party oversight into the setting of local government rates.

 

ESCOSA

ESCOSA logo

 

The Bill nominates ESCOSA as that 3rd party. This is the body that has provided oversight into the massive hikes in costs to the community of water and power since around 2000. SA Power prices we all know are the highest in the world. Not sure therefore of the wisdom of this.

So. Is External Rate Capping Good Policy or Bad Policy?

As I have often said Unley understands the value of rate capping. Self imposed rate capping that is. Striking a rate first and then cutting your cloth to suit is a sound financial strategy.

We have been doing this for some 6 years. When we undertake a new project we consult extensively with our community. More than most and definitely more than the legislation covering us requires. At budget time when we are prioritising these projects, we consult again.

I am far from convinced that the State (through ESCOSA) setting a rate cap is in your best interest. On the contrary, if the State were to mandate all Councils follow our lead I would be in support.

They will determine what the rate rise will be for an industry they have no knowledge of. An industry that already has, I believe, strong oversight. Oversight provided by you, by way of public consultation and by way of the ballot box every 4 years. Oversight not available in the power or water industries.

At what cost?

This then is my primary concern. At the very least their Bill will add a cost burden on you through your rates because we will have to pay ESCOSA for their overseeing of us, just as the Power industry and the water industry does. The Government will not be funding them. And, we do not yet know what this cost will be.

To add further salt on the wound, if you & your council believe there is a project worthy of us applying  for a variation we will be asked to either consider not doing something else we currently do for our community or convince them that you understand the implications of doing it. At a cost by the way for them to assess the variation, catch this, of $ 40,000.00. You heard that right. Add $ 40,000.00 on top of whatever the project cost is for them to assess its merit.

How do you feel about this prospect?

Please watch out for further questions and concerns I have on your behalf.

 

Rate Capping passes the Lower House and awaits the Upper House.

Rate Capping passes the Lower House and awaits now reaction of the Upper House. The Local Government Industry in the meantime, is assessing the Bill presented to Parliament by the Government.

 

Rate Oversight Bill

RTe Oversight Bill

The Rate Oversight Bill which presents rate capping and which can be found here seeks to place authority in a (3rd) independent party for setting future rate increases in local government.

The Government is doing this to restore faith, they tell us, in Local Government. That said polls suggest that Local Government is the most trusted of the three levels of Government. That said, is this good policy or not. Is it bad policy.

While it has passed the lower house, where the Government has the numbers, its passage through the upper house does not look all that promising for those keen to have rate capping. Opposing the legislation are Mark Parnell (the Greens) and Frank Pangallo (SA Best). John Darley is leaning towards accepting but is unsure. The Labor Opposition are likewise yet to determine their position, even though it has passed the lower house. In both cases I suggest they are awaiting the response to the Bill from the Local Government Industry.

Is it good policy or not. What is the view of the Local Government Industry and indeed your own local Council, the City of Unley?

We will be considering this on Monday night at a special council meeting, convened to consider this very question. I invite you to come along and hear the debate. The venue for the meeting will be the Unley Civic Centre. It will commence at 7.00pm. The agenda will be available on line from Thursday here.

There are a number of questions in my mind that concern me, particular given the evidence overseas and interstate when rate capping has been introduced. I will reveal these in a subsequent blog post. Watch this space.

 

Unley Community has been a shining example for all Local Government Communities

The City of Unley Community has been a shining example for all Local Government Communities. 117 of our citizens have contributed to our 2018/19 budget. 29 of those attended our public meetings.

Thank you for your contribution.

This follows the example set last year. It is inspiring given in my 1st 3 years as a Councillor we had 1, 2 and then 4 people respectively attend our public meetings.

You have answered my call to stay with us in this climate of rate capping. Rather than rely on the Government to rate cap us you have taken the responsibility to encourage us to include what you want.

Last year your input impacted on the then proposed rate increase of 2.8%. You wanted more and to achieve it we lifted the increase by 0.2% to 3.0%. This was still inside the rate cap we work on which is CPI plus 1%.

At our workshop on Monday night we had some tough decisions to make. Once again you wanted us to include more, and without suggesting cutting anything to accommodate the cost of the initiative you wanted.

Most of you were looking for even more environmental initiatives than we have already included. That said some of you weren’t too aware of what initiatives we had included. Next year we will need to be a lot clearer in detailing this.

A small handful of you wanted a reduction in rates and for us to focus on roads, rates and rubbish.

The budget will be finalised when Council meets formerly on the last Monday of this month. When we meet we will have to consider whether to include some of the extras being requested or not.

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If they are to be included we will need to consider whether to reduce our projected surplus, whether to reduce other services and/or to increase the rate.

Wish us well please in our deliberations.

LGA Rate Capping Stance Prompts Call for LGA to be Dumped.

Everyone knows the State Government wish to impose rate capping on Local Government. We also know that the Local Government Association (LGA) has consistently opposed this.

Now some elected members are nervous of retribution by the State Government because of the LGA campaign.

Many are calling for the LGA to withdraw its campaign. Some for the sacking of the LGA. Others, including from within Unley, are calling for their Council to cancel their membership.

Hang on guys. We do not yet know what the Government is proposing or what form rate capping will take. We do not even know whether it will be approved by Parliament. When we do know then we will be able to direct the LGA to lobby on our behalf.

The question of LGA membership or the future of the LGA I addressed this morning in my LGA Lunatic Asylum blog post.

The question of rate capping remains however whatever happens in the LGA arena.

In my opinion, and from what I believe should be an Unley point of view, I still do not see a need for a State induced rate capping. I have written several blog posts covering this.

Let us recognize that Unley DOES have rate cappingRate Capping.

For the last six years we have set our rate first and adjusted our budget to suit. The cap we have set is CPI plus 1%.

During this time our rates have increased 25% compared to an average 41% in the rest of the industry.

This year we expect to be well inside this, maybe CPI plus 0.3%

.If other Councils were doing this then I venture to suggest the Government would not be threatening to impose an external cap.

Would it not be great if most Councils followed Unley’s lead? We would not be having any arguments now. Not rate capping. Not cancelling membership of the LGA etc.

Please stay with Us is the second message coming from this years budget consultation

Please stay with Us is the second message coming from this years budget consultation. Your participation is needed next year as well, and beyond. Not just so you can own the budget but ….

 

You should stay with us because ratepayer involvement in the budget process can only bring about a better budget. A budget owned by our ratepayers. If you agree with this I simply ask you to please stay with us.

I cannot guarantee what impact you have had over this years budget but I can say I believe your councillors, your elected representatives, have heard you. Watch out for changes to the budget when it goes before council on that traditional last Monday of June.

Here is the second reason to stay with us.

As you know next March is an election to detrmine the next State Parliament. At this point in time it would appear that the Liberal Party is in the box seat; their election to lose as it were.

The Liberals rate capping pledge will be the Sword of Damocles sitting over our heads. Their belief is that Councils are not capable of determining a budget in your best interests. They believe that a centralised (sounds like something the Labor Party would do) bureaucracy is better qualified to detrmine what your local needs are.

Councils take their budgets out to you for your input. This will not happen under the Libs scheme.

As I am sure we will see at the end of this month your input will influence the final budget outcome. Interestingly the focus of our community was not on rate capping, unlike what will be the focus of the new bureaucracy. The communities attention was focused on the priorities of programs in the draft.

I finish this blog as I started it. Please stay with us.

Particularly if you would prefer to be a contributor rather than hand it over to the State Government’s new department. Who would you prefer?

Increasing Rates Diminishing Services

Increasing rates diminishing services is the catch cry of a today tonight storey on Channel 7 tonight.

3robrogers_potholeslalom_robrogersA damming story aired tonight on the popular Channel 7 program about Council rates rising but services provided reducing. Two councils, Salisbury and Charles Sturt, were the focus of the story. Interestingly these are two of the State’s largest municipalities.

Thankfully the City of Unley did not feature. Unley is one of the smaller.

Two primary concerns were highlighted by the program. The first was maintenance of verges. Fixing pot holes in roads was the second.

One resident in Salisbury expects that verges should be cut by Council. The street shown on TV was one where there is a fence on the property boundary. This conflicts with those suburbs where there is no fence and where everyone appreciates the verge is the responsibility of the home owner. Here in Unley we have been giving residents the option of a green verge on the condition it is looked after by them. The alternative is for a dolomite verge.

Road potholes in Unley I don’t believe is a problem. If anything I believe we may have been over-serving in road replacement.

Removing trip hazards in footpath has been my bane. We have in my opinion too many trip hazards in our “brick” paved footpaths. That is a story for another day as we review what footpath service level we are prepared to accept. This is a debate we are currently having and I expect to report further on this sooner rather than later.

I ask you, what is the answer where or when Councils are under performing?

What do you expect from council when it comes to mowing verges, repairing pot holes in roads or eradicating footpath trip hazards? Do you agree with the topic of this article………increasing rates diminishing returns? What about my opinion on Unley. Is it accurate or do you believe Unley is as guilty as the two mentioned in the program?

Walking the streets of Unley I am forever reporting what I see. I often wonder how long the issue I have found, a trip hazard or whatever, has been there. I also wonder if the people who live in the adjacent house or work at the adjacent shop or office have reported it or whether they think Council should simply be ware without being alerted by them.

Help us to be better than those being complained about. Reporting what concerns you to us rather than to a TV station or the RAA would help.

You can do this by ringing 83725111, be emailing us at [email protected] Another way is to report it via our website at https://online.unley.sa.gov.au/ePathway/Production/Web/Default.aspx?js=-1154500411

Better yet how about downloading the My Local Services Web App for your smart phone.

Help us to help you and stay in front of such bad press.

 

State Government 2016-17 budget in black courtesy of Local Gov.

It has been just short of a week since the State Government 2016-17 budget was handed down. This was amid wide acclaim for bringing in a surplus that has previously escaped them. Thanks that is to councils and rate payers.

While the Treasurer trumps his State Government 2016-17 budget surplus of some $ 250 million many in the community are bemoaning council rate increases.

The facts are the State is doing well but mainly on the back of imposts and charges being collected via property taxes. Much of this is collected by Council.

Yes! As the Opposition promote rate capping because Councils can’t be trusted the state government, although ruling out a land tax, are using council rates as a stealth alternative.

Unprecedented increases in the Solid Waste Levy will see around $35 million per annum paid by councils by 2019/2020. This is despite the state government refusing to release $90 million of previously collected Waste Levy funding. More than a third of this was contributed by councils and rate payers. Councils have contributed $110 million to the Waste Levy over the past ten years and will contribute another $122 million to state government coffers over the next 4 years.

The state government is taking more and more property taxation – local government’s traditional and only tax base. The attached graph illustrates that the State is now raising 56% of property taxes to local government’s 44%. As I have noted in recent blog posts on rate capping less than 4% of tax nationally is collected by Councils. Adding to this state and federal budget decisions are squeezing council budgets from every direction and forcing ratepayers to pay more in rates.

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State Government 2016-17 budget

Curiously the rebate offered by the Government last year in lieu of the rebate deducted from council rates previously, is offered to help you (if you qualify) with a subsidy to help pay such things as your water and other utility rates, but NOT council.

Lower Rate verses Lower loan funding the question in Unley’s budget

Council on Monday night will consider as part of the rate budget how much loan funding we should use to fund council programs.

 

loan approvedWhen we as individual property owners need to improve or redevelop our property we will be faced with how to finance any such project. Like I suggested in my last blog post he larger the project the more likely we are to finance it by way of loan funding. This is because the larger the project the more likely it is we cannot fund it without loan funding.

The same applies to council. Indeed I would suggest the longer a newly created or improved asset we purchase will live the more we should consider using loan funding for it.

If we build an addition to our home the chances are we are going to use loans to fund it, assuming we can service the loan. If we can’t service the loan we cant pay cash and we should not be undertaking the project. Coucnil does have an option though. Almost like winning the lottery and being able therefore to pay cash Council can pay for it now by simply saying to current rate payers we are going to lift your rates.

I put it that each component of that addition a home owner will do to their home will invariably be loan funded rather than by using cash. That means the curtains you might pay for by cash in a room in your existing house, or the re-tiling you might do in your existing bathroom, or the pergola you might put on the rear of your house will funded by loan funding if part of a larger/major redevelopment.

Councillors can be emotionally frightened of debt and that is to be expected and understandable. They are people just like you. They could easily take the increase the rates approach. Let’s face it (as noted above) we have a captive audience.

I for one am satisfied that the “curtains, tiles and pergolas” that have been included in larger projects like the Goodwood Road redevelopment and the Cycle Path can and should be included in the loan funding for those projects.

Why would we bother to pull them (things like street signs, line marking etc) out and pay cash for them. To pull them out and account for them separately will actually add to our administrative costs.

It is not a case in other words Lower Rate verses Lower loan funding but budgeting for the both today’s rate payer and tomorrows rate payer to contribute based on good financial management practices. Unless convinced otherwise on the night by alternate logic I will be staying therefore with loan funding as planned and with keeping your rate increase down to 2.2%.

2.2% or 2.7% rate increase or something else the question for council

Council sits on Monday night to consider our annual business plan and budget. The focus will be whether or we adopt a 2.2%, 2.7% rate increase or something else. That is the question for council.

Rate CappingAs mentioned in my last blog post Council up to now at least seems divided on what this years rate increase should be. You would be well aware by now that we have been long considering a 2.2% increase. Coupled with that is an intent to increase loan funding by $ 3.3m to fund long term projects.

We are likely to debate on the night increasing the rate increase the rate by 2.7% and reduce the increase in loan funding we have been considering.

The theory behind this is we should not be diverting funding of today’s projects to future generations. Put them in debt so we can enjoy now. Sounds a bit like the spend the kids inheritance now statement we are all familiar with. Having said that much of what we are contemplating is to the benefit of the future generations more so than it will be for the coming generation. The challenge then is to determine how much should be paid for now verses how much the next generation should pay for given projects.

As I see it Council is no different to our rate payers. Council has an annual income, so do we. The method of creating that income and the control over how much income can be achieved of course differs but I am not going to talk about that here. Council owns “real” assets (property, roads, footpaths, parks). So do we.

When we need to improve or redevelop our property we will be faced with how to finance any such project. The larger the project the more likely we are to finance it by way of loan funding. This is because the larger the project the more likely it is we cannot fund it without loan funding. The same applies to council. Indeed I would suggest the longer the life span of a newly created an asset we purchase the more we should consider using loan funding for it, unless of course we have won the lottery and can afford to pay cash.

If we build an addition to our home the chances are we are going to use loans to fund it, assuming we can service the loan. If we cant service the loan we cant pay cash and we should not be undertaking the project.

So….2.2% or 2.7% rate increase.

Manufacturing Rate Capping

In the background of the Liberal Party rate capping threat we see councils announcing low rate increases this year. The City of Adelaide leading the way with a nil increase in rates. Is the industry now guilty of manufacturing rate capping.

Unley too is looking at a low increase, possibly 2.2% which is still in excess of CPI.

downloadThe scribes have challenged Adelaide’s proposed nil increase in the wake of also proposing a significant increase in loan funding. From a distance I question whether they are doing the right thing or playing politics.

Unley too, from within, have been similarly challenged.

Are these and other councils it must be asked, at the stroke of a key on their keyboard, using loan funding to avoid excessive rate increases.

I hope not because this adds weight to the Liberals argument. I hope not because it may show how councils will work their budgets in the wake of the potential of rate capping under a liberal government.

Some may believe this to be the case and certainly at least one of my colleagues views it this way. Such is the case at Unley that we will be looking at two possible scenarios this coming Monday when we vote on this years coming rate rise.

We had long been looking, after much work shopping and wrangling over what should be included in our budget and what should not, at an increase of 2.2%. We are now being asked by some within to consider 2.7% and reducing loan funding. One of us may likely vote against both because he relives we should be raising the rate by I believe 5% or more rather than faking with loan funding.

The debate on the night will be interesting and you might find the Unley Civic Centre the place to be for some enlightenment and/or entertainment. The question to be answered on the night will be the Unley Council’s interpretation of the nexus between rates and loan funding, which of course must be funded out of the rates.

 

Is Rate Capping Sustainable

With the Liberal State Opposition declaring they intend to keep Council Rate Capping on the Agenda for next State Election I wonder what is their approach to ensuring Councils remain sustainable?

 

In this my second blog post on the question of rate capping I ask the question how the Libs expect Councils to be sustainable.

Rate CappingKeeping rates as low as possible is a goal to strive for. They must on the other hand be struck at a level that can sustain the councils obligations to their community as defined in the Local Government Act and beyond. I say beyond because State Governments have a tendency to shift services they provide to councils.

They do this without legislating a means by which the service can be funded by Councils. This amounts to the Government cost shifting these services to councils. For instance we are regularly being asked to more in the health arena.

We have rate capping in other forms already imposed on Councils that are subsidized by rate payers. One such area is the cost to process development applications which Councils are required to do under the Development Act. As someone involved in the building industry I have long been aware that councils cannot cost effectively process development applications, particularly to the vast majority of applications they receive. These are for minor developments such as house additions, verandahs, swimming pools and the like.

The fees simply do not cover the cost of the smaller project and as a result you, the rate payer, pick up the tab.

Our Mayor has voiced his support for rate capping but if you read through his blog you will see he has raised the spectre of Councils finding other income sources. His thoughts can be found on his personal blog page here. They are astute observations but I venture to suggest we have a horse and cart thing here. What comes first.

Looking at other sources of revenue is a good idea but in my opinion this must come well before rates are capped or otherwise interfered with. As a public entity we must be very discerning about from where we might derive additional income to rates. Having said that the Government of the day could seriously take pressure off rates by ensuring that councils are fairly compensated for other activities they are required by statute to undertake, like the example given above.

Rate Capping Stays on the Agenda.

Their rate capping motion soundly beaten in the Parliament this week the Libs have declared they will make rate capping an election issue come March 2018. In other words Down but not Out.

Rate Capping

 

 

Are you burdened by taxes and looking for relief? If so I ask you where you think the relief should come from. Council Rates are an obvious target because they are an in your face tax. It is an annual bill you see and act on.

But is it truly the way to achieve tax relief?

This is the 1st in my efforts to address these questions.

Do you realise that taxes raised by local government accounts for only 3% of taxes raised in Australia. Surely if you want to lighten the tax burden would you not look at the larger taxes. A 10% saving in other words in council rates across the country amounts to a saving of but 0.3% of the countries tax take.

The Libs of course are maintaining that your rates should come under the same scrutiny as the State Parliament. I ask them is this a desirable replacement for the current system wherein YOU DO get a chance to have a say, and twice. Is it more appropriate that a body such as ESCOSA who have overseen extreme increases in water rates and power over the last 10 years.

I put it to all who care that ESCOSA will not necessarily keep rates down as evidenced by the increases in the state utilities over the last decade. If the Utility can convince ESCOSA that a large increase is justified then so too can councils.

Unless the Libs in Government intend to take away your right to have a say the costs of producing a budget will increase as Councils provides both you and ESCOSA an opportunity to contribute.

But only 3 or 4 people I hear from the media and the Libs attend a Council budget public forum and they are not listened too. Speaking for myself they are listened to.

This is what I have heard this year about the budget we will be voting on in Coucnil this month. The public this year has focused on the value of just one, yes one, project which will commit us if proceeded with to an investment of just $30,000.00, or 0.08% of your rates. And the feedback an overwhelming support for the project.

I said earlier you get two goes. New initiatives in our budget are put before the public not only at budget time but are put to the public by way of a specific public consultation.

This project I expect to be included in our budget. Will it happen. Don’t know and the elected members should wait to see what the public will want when it goes out to consultation as a project later this year. And when it does we may actually get a 100 or more from the immediate area impacted by the project have their say; a far cry from the few who responded to the budget consultation.

Other projects included have already been the subject of specific public consultation.

As we sit on the last Monday of this month therefore I will be voting on the budget confident that it does actually have the support of our rate payers.

 

Rate Capping by ESCOSA or Rates determined by Elected Members

 Does the Liberal State Opposition believe Councils are incapable of running a tight budget?

 

Budget balancing

Following on from my previous blog posts on rate capping I ask the question whether the Libs believe that Councils are spending the rates they collect from you frivolously or not. Do they believe they are incapable of keeping rates at an appropriate level.

Keeping rates as low as possible is absolutely a goal to strive for.

I honestly believe that with the Sword of Damocles by way of elections  forever hanging over the heads of elected members they are only too conscious of having such a focus. Indeed does this not make them the most suitable candidates for keeping a lid on rate increases.

If the ratepayers are not happy with the rate rises or believe they are not being corrected directed toward services they want they will soon vote an elected member out. This they cannot do that with the members of ESCOSA should they oversee council budgets and rate rises.

Elected members must on the other hand be forever conscious of maintaining the infrastructure of the Council region and for maintaining the services the community has come to expect from them. They must be prepared to show leadership and ensure these services are not only maintained but improved.

They likewise need to be aware of or predict what services the community does not currently have that they might benefit from. And what of those the community will in the future expect.

Such projects/services will always be the subject of community consultation. Many projects included in a budget will already have been out to the public for consultation and the elected members therefore quite aware of the communities position in respect of them. Others like the one mentioned in my last blog will be included in the budget and then get consulted on. Some of these projects may not happen and any budget allocation covering this allocated elsewhere or used to reduce debt.