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.

20160714_133932[1]

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.

 

And I know I am right.

And I know I am right is how Cr Michael Hudson from our Parkside Ward sums up a recent blog post on his Grumpy In Unley website on our current proposed rate rise.

 

Consistent to his views in the time I have been on council and I suspect way before I joined council he believes that Council is always exposing itself to too high a level of debt. As reported in this week’s Eastern Courier he made sensational claims at last weeks council budget meeting of us “cooking the books” in order to look good by keeping the current rate increase low.

Before going to bed he wrote a blog which you can read here. https://grumpyinunley.wordpress.com/2016/04/20/unleys-rates-rise-maze/.

dollar-sign-on-treadmillExpecting a backlash from Council in that blog he indicated that he will use the defence of truth to justify his outburst and subsequently leaving the room. “His” truth as identified earlier in this blog.

It is unfortunate that “grumpy” as he likes to be called left the meeting. By doing this he failed in my opinion to meet his obligation to you to vote on the budget and what goes out to public consultation.

It is unfortunate also that he was not in attendance at two meetings convened earlier this year to hear from an independent consultant who we commissioned to provide opinion on our financial status and management.

Councillors as a group are far from financial wizards. Hearing from an independent expert in the field was an opportunity I for one was happy to embrace. Having said that I was pleased to receive congratulations from this expert that we are financially sound and are managing our assets well. His take on our finances helps me to make a decision with more confidence than I otherwise would.

We, or at least I, were reassured that our policy of always using loans to fund capital works is appropriate. I was also reassured that our level of debt, based on recognised accounting practices, is appropriate. The independent members of our audit committee who are well respected in the financial industry are likewise supportive of our approach. I expect they would feel Grumpy’s comments are an unwarranted and unfair blight against their reputation.

Grumpy is right that our level of debt is budgeted to increase and up some $ 5m in the last 3 years from $ 8m to $ 13 m. Notably the work scheduled for Goodwood Road to take advantage of the current State Government PLEC works takes up $ 3.3m of this. Also notable is the advice we received from the independents noted above that our self imposed maximum lending rate of 80% of rate income (which equates to $ 30m, double our current projections for debt limits in the ensuing years) is an appropriate and manageable limit. Curiously the chart he uses to back up his argument also shows our debt this year is budgeted to be leas than it was 10 years ago, and next year marginally above it.

Finally; the annual business plan and the financing of that plan including a proposed 2.2% rate increase is available for you to look at and comment on. The opportunity for the issue of debt to be robustly discussed both internally and within the community is available now as it goes out for public consultation. This is your chance to contribute to ensuring the rate increase we are proposing is appropriate or not, and that our debt level you can accept or not.

Waiting for your input once the consultation is up on our website.

And that is my truth, and I know I am right.