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.

 

 

 

 

To Cap Council Rates or not-that is the question.

As I sit down tonight and over the weekend to deliberate on the agenda of a special council meeting set for next Wednesday night that is the question I ponder. Whether there is a justification for an outside body to cap Council rates or not.

This meeting has been called outside our normal schedule of council meetings because it is that time of year again. The time when we start to consider our draft annual business plan and budget.

Goyder - Steven GriffithsThe time when media attention is focused on rate increases and curiously not annual business plans. It has come early this year with the private members bill by the Hon. Steven Griffiths on rate capping tabled in State Parliament.

We heard from politicians, from experts and the public itself.  There may be a reasonable argument for rate capping and it is appropriate that we have a discussion about it. Is the debate I ask focusing on the real issue though?

I suggest it is not so much rate increases and whether they are too great or not but the manner in which they (but more importantly) the annual business plan they represent are endorsed. The LGA have argued against a body such as ESCOSA overseeing rate increases and that the current realm of public consultation is better.

I am not convinced using ESCOSA is an economically viable approach to ensuring rates are kept in balance. Why? This adds yet another layer of bureaucracy that has to be paid for, probably via the rates. It will likely increase the cost to council too because now they will have to prepare an annual presentation to ESCOSA as well as the public. That is of course unless the bill seeks to exclude the public from the process.

Unlike assessing rate increases for power or water ESCOSA would have to assess each council’s program noting there are vast differences between councils, how they are run and the programs they provide for their own communities. To treat all councils otherwise with a generic rate increase would not recognise these differences. It may be well more than some councils need but place others in financial hardship, particularly over the long term.

Equally I question the LGA claim however that our communities are consulted. This can on the surface be challenged. In the 5 years I have been present to watch our own community consultation I have seen no more than 5 people attend the public forum we provide to allow the public to contribute. On one occasion there was only one. This is hardly public consultation and difficult I would suggest to defend.

Having said that a large portion of our annual budget will have been set by decisions made by council in the months and meetings and indeed years gone by. Many of the projects being included in the current budget will have had large public consultation prior to being endorsed for implementation and prior to them being considered in a budgetary process. So arguably there has been prior consultation albeit on a project per project basis and not with consideration of how do we pay for it or which do we give priority to.

When an annual plan is put to the public whether to one or hundreds or thousands my experience is that there is no choice, no opportunity to prioritise. This should be given some thought by the local government industry. Provide choice with evidence of how much each initiative or project affects the rates and we would then have a considered input from the public from which councillors can then make decisions rather than them have sole prerogative on the priorities.

 

Council Rates verses Council Services

Council rates verses council services is always the question at this time of year. As always the press has been beating up on us for what they call a cash grab.

 

We are an easy target at this time of year and the impression is we are making money out of our rate payers just for the sake of it.

What is not reported on however is what Councils are providing for the rates they collect in favour of we waste money on a range of services that are not needed. This year Unley has been targeted in the rantings of the press as  planning to increase its rates revenue by 59.1 per cent over the next decade.

On Monday night we deliberate on our business plan and the rate increase needed achieve it. We look like we are going to hold it down to 3.5% this year, down from the 4.10% we felt may have been necessary before putting the final touches to our budget. Not only therefore is the figure quoted by the press incorrect but the article also did not differentiate between rate increases and rates growth (through new development etc).

While rates are subject to fluctuation, the most accurate and current predictions for the next decade are:

• A rate increases of 44.2 per cent (providing additional revenue of $15.2m)
• Rate growth of 5.95 per cent (providing additional revenue of $2.1m)

The other side of this equation of council rates verses council services of course is what level of services should we provide. This year we surveyed our ratepayers on this very question and Council receives this report on Monday night.

Reading through the report I draw the conclusion that our community is very positive about both performance and the service offering provided by Council and overall, there is a strong sense of value for money indicated by both the residents and businesses community.

A far cry from what the press is attempting to have you believe.

A big thank you to those who participated.

Trouble Paying your Rates

This is a post blog I find I must write even though I am enjoying the heat of Darwin while holidaying. I had intended to simply cool out if that’s the right word but the chance that some of you are having problems paying your rates means helping to ease any stress you may have experienced making you current rate payment.

 

I have received information that our web payment portal which is run by the NAB bank has failed. And I understand that fixing it has proved more difficult than first thought.

Please be assured that Council is working overtime to solve the problem at our end. We have removed the portal and replaced it with a temporary portal. This means you can now make credit card payments, whether via the website or by phone.

You may also experience doubling of credit card charges applicable to the payment. There is two ways of getting these reversed. The first and fastest is to speak direct to your bank. The second is to wait onus to provide a credit.This will have to wait however  on the portal being backup and running.

Check our website for more information.

See you all next week when I get back from thawing out in Darwin.

Pay for use Parking Trial approved by Council

At last Monday night’s Council meeting we approved a pay for use parking trial for a section of Bartley Crescent Wayville and Railway Terrace South Goodwood.

 

The concept of pay for use parking is a hybrid between two competing challenges that council has grappled with for some time.

The first of these is the concern we have that our residents in the northern reaches of our City, those near public transport routes, of the habit of people outside our council using our streets as a park n ride to access the City of Adelaide. Access to residents properties and the ability of their friends and acquaintances to park when visiting has been a challenge we have yet to solve.

Commuter parking in residential streets is inconvenient for residents and for the delivery of council services such as street sweeping and waste collection. There are areas of the Council where commuter parking has occurred historically with minimal impacts. The main problems occur when parking spills out of these areas and onto narrower residential streets.

This trial, it is felt, may well address these concerns.

Another challenge is the ever increasing pressure to keep rate rises in check and reduce the burden on our rate payers. A recent survey has identified that 70% of cars parking in these streets are outsiders to the City of Unley. Pay for use parking is certainly one answer to reducing the rate burden.

Pay for use parking, based on the figures we have, will be a charge primarily on people who are not our rate payers. These people, if not put off by the charge which is minimal (a maximum of $ 4.00 per day during the trial), could potentially make a significant contribution to our income and impact on the rates.

By my calculations if 80% of commuters continue parking in these locations income derived could equate to up to 1% of rate income.

Of course if they move on then these streets will have less parking in them and our residents will feel some release of pressure on their parkign needs.

Annual Business Plan goes out for Public Consultation

Yes. It is that time of year. The time when Council presents to the public it’s draft annual business plan and therefore the proposed budget. This of course informs the pending rate increase.

 

The purpose of the annual business plan is to let you know about:

  • The services provided by the City of Unley
  • Proposed new initiatives and projects, and
  • The draft budget

Council seeks to achieve a reasonable degree of rate stability over time while ensuring ratepayers are paying for those services and infrastructure maintenance obligations they require.

For more information and for a link to an electronic copy of the plan go to this link to our website.

If you care about your neighbourhood I encourage you to look at the business plan and provide your comments and observations though the mediums explained on the website.

You will see from the plan that to fund the plan we are proposing a rate increase of 4.1%.

Outgoing LGA President has his say on Pensioner Concessions.

Outgoing LGA President, Mayor of Prospect David O’Loughlin, has served a parting salvo at the Government as he attempts to clarify the media campaign on pensioner concessions that the State Government has been waging now for some time, using our taxes to fund it.

 

His media release is reprinted here in full. It is I believe a good article from someone who actually ran in Adelaide for the Labor party.  It is good to see him standing up for Local Government and for pensioners.

He raises the spectre that I had not picked up on before. And that is that not only has the government determined they would remove the pensioner concessions  and blamed the federal government wrongly (remember the Federal Government were only subsidizing this concession to the tune of 10%. Not only are they spending tax payer money on an advertising campaign designed to shift the blame.

They are actually doing the exact opposite of what they are legislatively have to do. But wait there’s more. In true Yes Minister form they also refuse to legislate Local Government’s obligation to print the concession son the rates notice.

This is almost a “Oh Mr Haaaart”

If Local Government were to screw up in not doing  what they are legislatively compelled to do, under the same governments recent ICAC an associated legislation we would probably be found guilty of maladministration and dealt with punitively.

Confused …..read on. If you remain confused after doing so or become more confused sorry. Just recognise who is doing what here.

 

Rates confusion looms

 

Outgoing LGA President Mayor David O’Loughlin has a nightmare vision of thousands of pulped Council rates notices.

 Currently the Rates and Land Tax Remissions Act and regulations require the State Government to fund the concessions but Treasurer Tom Koutsantonis has said they will not do so after 1 July – yet the laws remain unchanged.”

 “Under current legislation Councils by law are required to print State Government concessions on rates notices,” Mayor O’Loughlin said.

 “The Treasurer needs to tell Councils now if he is going to put up legislation to axe concessions before the rates notices are printed.”

 “If legislation is introduced after rates notices are printed Councils will have no option but to pulp them.

 ” It’s a scenario which could see at least 160,000 notices pulped and reprinted across the state, adding to ratepayers’ costs and community confusion. ,” he said.

 “Councils are already asking the LGA how to prepare next year’s rates notices and we just can’t get a clear answer for them.

 “Even if we could rely on what the Treasurer has said, rather than the unchanged law as it is today, we have the Opposition committed to disallowing any change to the regulations in the Upper House with strong support from the cross-benchers.”

 “So we could have a change to regulations one day, which Councils must comply with upon gazettal, being disallowed the next time parliament sits – and that is far from every day, so confusion could reign for weeks.”

 “Some Councils have already started consulting communities on their 2015-16 Budgets as they are required to do and will make decisions about their budgets before the State Budget is brought down on 18 June.”

Mayor O’Loughlin said many Councils issued rates notices at the start of the financial year on 1 July to maintain Council cash flow.  Any delays, could lead to short term borrowings to cover operating costs, adding further burden to local ratepayers.

“So a Council which holds off on sending out rates notices to avoid having to pulp them, will lose out anyway.”

Mayor O’Loughlin said this year’s rating cycle could be a complete shemozzle unless the Treasurer acknowledges the Opposition and cross benches will block his changes to the legislation, he acknowledges the anxiety he is creating for pensioners across the state, he acknowledges the administrative burden he could impose on Councils and he makes an early announcement on the Government’s position.

“But far from this, the State Treasurer, Tom Koutsantonis’ latest tactic is to suggest Councils fund the State concessions themselves – without admitting that all it would do is shift the cost to local ratepayers so the  State government keeps their money and the local ratepayer cops in it the wallet,” Mayor O’Loughlin said.

“We have clearly told the Treasurer that Local Government neither determines who is entitled to receive a pension, nor do we provide welfare payments to them.”

“It makes no sense for all three levels of Government to provide welfare payments and pensioner concessions are entirely the province of State governments. Any further complexity simply adds red tape and further bureaucracy for no gain to the taxpayer.

“In addition, any shift of State obligations to Councils will simply result in mum and dad ratepayers paying higher rates to fill the gap abandoned by the other spheres of government.”

Mayor O’Loughlin said shifting the pension concessions burden to Councils would hit the poorest Councils and those with high number of pensioners, the hardest.

“It is vital for the concessions to be funded at the State level to ensure equity across the State.”

“It is equally important to have consistency across the nation, with no other State or Territory government seeking to pass the cost on to local Councils. To date the Treasurer has made no argument as to why South Australia should be any different.”

 “We are already the lowest funded Council jurisdiction in the nation, receiving less State or Federal funding per capita or per kilometre of road length or under any other key measure than any other State or Territory. Under what circumstances does the Treasurer think he can justify making a bad situation for SA Councils even worse?”

 “Councils are currently holding community consultations on their budget deliberations, if we don’t get a straight answer shortly this issue could become an administrative and legal mess which will add significant cost to Councils and their communities.

 “The State Government should come clean, let communities know what they are doing and have the guts to explain and defend their decisions to taxpayers, pensioners and ratepayers alike. Alternatively, they can treat these concessions as they do for others for energy, transport, water and other costs to pensioners and get on with the job of funding them properly, including the introduction of annual indexation so pensioners do not miss out as time goes on. He said

Should Councils fund Pensioner Concessions

Reading the “Conversations” lead article about Pensioner Concessions in this weeks Eastern Courier by Deputy Editor Chris Day has prompted three thoughts for me.

The first of these thoughts was remembering a statement by world renowned motivational speaker Zig Ziglar about the recession of from memory the 70’s. Zig was commenting on the media’s promotion that we (the world) were in recession. In his own inimitable way he joked you have to believe everything the press says….let’s face it they (the press) have accurately predicted 23 of the last 2 recessions. He went on to say that eventually they will get it right.

The next thought I had was I joined Unley Council so I could be part of the solution rather than the problem, to be in a position where I can influence the outcome.

Do we get it right. maybe, maybe not. When we do we are surely part of the solution. When we don’t we are clearly part of the problem. Either way we at least we are trying to be part of the solution and I would hope we get it right more often than not.

I find that the press focuses on when we get it wrong, even anticipating us getting it wrong (as in the current article). They rarely offer solutions and simply imply we cant get it right. In my opinion this approach means they are part of the problem.

The third thought is that the criticism of Council Rate increases has started early this year. Even before we (Councils) have a chance to start looking at our budgets they have determined what we will do and that it is wrong.

Sitting behind the editors chair and simply casting aspersions on each section of government without offering solutions I respectfully suggest makes Chris part of the problem.

He has commented on the role of both the Federal & State Governments in that the Feds have funded pensioner concessions on Council rates for a long time and the State last year. As councils are faced with whether of not they can or cant pick up the tag of Pensioner Concessions he chooses whilst acknowledging the Federal & State roles to focus on Councils above the other two tears of Government.

He does this with claims we are always crying poor and we lack (as a collective body) the discipline to trim our own spending.

So if I read his article correctly he believes we should be cutting rates and covering the pensioner discounts as well.

You can read hos article on page 14 at this link to the Eastern Courier current edition.

Here is my initial consideration of Unley’s situation before our staff present the actual numbers.

We would have to find in excess of $ 500,000 if we were to subsidize Pensioner Concessions. With a budget of around $ 35 million this means funding the concessions would require an increase of around 1 1/2 %. This by itself is in excess of the CPI. If past practice is anything to go by, increasing our rates this much is likely to be criticized by the press in general and therefore this writer.

For rate payers who see similarly  I question you….. would you be prepared to pay an extra $ 20.00 per annum on your rates to subsidize the pensioners. I believe we have 25,000 rate payers and if this is the case that is how much each of us would have to pay to look after those most in need.

Needless to say Unley Council has yet to consider this challenge and I will wait with interest to see how my colleagues feel. Needless to say I also anticipate the negative press whatever we do.

Hopefully they will move from being part of the problem to being part of the solution.

 

 

 

 

Rates Out of Control Take 2

Following on my first two blog posts on this topic I again challenge the concept of why the media has a fixation on our rates should be aligned to CPI.

The capacity to pay the rates is the substantiation that the media promote for keeping them aligned to CPI.

Forgetting my argument about what services to keep and what to get rid of, what new services to provide and what not; all of which I believe is the most important part of ensuring we area sustainable, let us examine what the capacity to pay is.

Yes, I absolutely agree our ratepayers must have the capacity to pay and if they don’t this too is unsustainable. I ask therefore what is capacity to pay and how can it be measured.

As I indicated in my first post on this subject CPI is not a measure of capacity to pay. It is a measure of what a package of goods and services have cost the community in the last 12 months.

What the true measure of your ability to pay is what has happened to your pay packet or your pension.

CPI has risen according to my information 31.3% in the last 10 years. In that time wages rose 43.6%. So in spite of the media’s take that we are finding it harder to make ends meet and are in a worse position than the past, these figures indicate that we are in fact better off. That basket of goods and services from my first blog post on this subject is taking less of our pay at that rate.

But what about those on pensions, they are doing it tough. My research indicates that pensions have risen 57% in that time. This suggests pensioners are significantly better off notwithstanding what we all may have felt.

The recent article of course will show that rates generally have exceeded even these increases. Thankfully Unley is one that has risen the least in that time, up 55.2%. Our rates therefore have risen 11.6% more than wages in that time but less than pensions by 1.8%.

Keeping rates within the capacity to pay is a challenge and truly, I think we have done reasonably well.

I trust our rate payers appreciate that whatever our rate levels have been that they have been provided value in that the community has benefited in a tangible way with improved infrastructure and worthy and valuable services that all go to an improved living environment here in Unley.

Rates Out of Control Take 2

Following on from this mornings blog post I wish to make some other observations about Council Rate Increases and how they should be rated.

This morning I questioned why they are always compared to CPI by the media.

I wish to throw two thoughts out there for people to consider. The first, which I cover in this blog post, is what backs up the level of rates Councils charge. The second I will cover in another and separate blog post.

Council rates provide the opportunity to provide services to the local community. Without rates we do  not provide rubbish collection, library services or community centres. We don’t provide facilities for our community sporting groups to provide exercise and activity opportunists for or community. The list goes on.

Each year Council considers a business plan for the coming 12 months and a long the financial strategy. This plan determines which services are to be provided and is put out to the public for their input.

The plan composes all the programs that Council considers should be part of creating and sustaining their community and providing an environment for good living. This is all about identifying what we can do for our residents and businesses, costing them out so we know the impact on our resources.  We then debate which programs should have the highest priority and whether or not we can implement them.

And I must say that this year we had real problems determining which programs were worthy of continuing or starting afresh and/or which programs should be slowed, stopped or not even started. A debate over programs all of which will enhance the livability of the neighbourhoods we serve.

Now…Unlike Federal & State Governments we take this plan out to our people for their input. Residents and businesses get the opportunity to advise us which programs they would continue or which ones they would axe. If they do not like the amount of rates they are more than welcome to suggest which programs to keep and which to get rid of.

The final rate increase is set only after this procedure has been completed, the public have had their say and we as elected members make our final determination of which programs to proceed with.

This years plan has been available for public scrutiny for a month or more now and public submissions close tomorrow. It can be found on our have your say webpage

Rates Out of Control

Everywhere you look at this time of year the media pushes excessive rate increases by councils. Inevitably it is focused on the rate increases exceeding CPI. This identifies that the writer believes that rate increases should be in line with CPI.

This is simply demonstrating a lack of understanding of the nature of CPI and its appropriate use. So I ask those raising this argument….. what is CPI and how does it relate to Council rates?

CPI is a historical measure designed to identify the increase in price of a basket of goods and services that people consume.

The total basket is divided into 11 major groups, each representing a specific set of commodities:

  • Food and non–alcoholic beverages
  • Alcohol and tobacco
  • Clothing and footwear
  • Housing
  • Furnishings, household equipment and services
  • Health
  • Transport
  • Communication
  • Recreation and culture
  • Education
  • Insurance and financial services
None of these goodies feature in the basket of goods and services that impact on Councils. Indeed as an analogy the same can be said for the building industry of which I am a member.

Builders and councils to some degree share a similar basket of goodies in that they consume in reasonable quantities such things as concrete and bitumen, and brick pavers. 

I trust the writers of these articles would not be saying the increase in the cost of housing should be limited to the CPI. We are surely not expecting that builders should adjust their prices to reflect bananas when they are purchasing bricks and timber. 

If this is the case then why do commentators tend always to suggest that Councils should adjust their rates by the CPI. 

Indeed councils have seen (and certainly Unley has) a wage enterprise bargaining over recent years that see their employees wages increase by well over CPI. Wages are a large part of the costs that council endure and this must impact on the rates to be paid by rate payers.

More to the point much of what Council must budget for are projects that, after extensive public consultation, they believe are needed for the betterment of the community. And each year rate payers are given the opportunity to input into the business plan that identifies what projects Council are looking to implement.

Rate payers have the opportunity to suggest which projects the believe are important and which projects should be mothballed.

I await the submissions that Council will receive and if like the last three years I have been involved I do not expect many representations.


Council Rates-It’s that time of year again.

Yes! Its that time of year again, when councils determine the level of service and the projects it wishes to undertake in the next twelve months and therefore the rates that need to be collected. 

This year the services and programs we expect to approve will require rates to increase 4.95% and you can have your say about this.

The rate rise proposed is in keeping with what most councils appear to be determining, with a handful less than this and a few proposing more than this.

Unley Council has been deliberating for some time now and has had difficulty in determining the budget for this coming year. Expenses in some areas, like rubbish collection, water and electricity (all of which are significant contributors to our expenses have increased dramatically. Wages have risen under our enterprise bargaining from memory over 3%.

Another significant contributor will be the cost of running the upcoming council elections (budgeted at $172,000) which will consume approx. 0.5% of our total budget.

For a better understanding of where the funds we raise will be committed I suggest you check the Council Web Site. 

We have determined that we will maintain all existing service levels. Having said that we are examining all existing services to determine if they are still relevant today.

Continuing along from the initiatives we have seen over the last three years Goodwood South (soon to be renamed Clarence Park) rhave fared well again with some of the initiatives of what we will be getting for our rates, over and above the standard range of services including the following:

ü  Council contribution to the undergrounding of the power lines for Goodwood Road between the tram crossing and Mitchell Street $300k
ü  Development and commencement of implementation of the Customer Service Framework $77k, which I am sure many of you will be pleased to hear.
ü  Goodwood Oval/ Millswood Sporting Complex Improvement Plan-Design Documentation $50k
ü  Cromer Parade Landscape Reinvigoration Project $20k
ü  Forestville Local Area Traffic Management Study $40k. Not our ward but very much important for those in Goodwood South who travel through Leah Street, Forestville.
ü  Implementation of Local Area Traffic Management Studies recently held in Black Forest $50k
ü  Footway replacements in Cromer Parade and Lynton Ave, Millswood; Birkdale Avenue and Hammond Street, Clarence Park.
ü  Road resealing in East Avenue Clarence Park (from the tram to the rail line); Arundel Avenue, Millswood.
ü  Gym equipment in Page Memorial Park.
This is not final yet and can change. We are seeking your input to the development process of this budget through a public consultation process.
The process provides you with the opportunity to have your say on the level of service and the activities undertaken by Council before the final budget is adopted in June 2014.
I encourage you to take part and we look forward to your input.
You can make a submission by:
Ø  Visiting Your Say Unley on the council’s website at: www.unley.sa.gov.au
Ø  Writing a submission and sending it to: 2014-15 Budget Consultation                                       City of Unley. PO Box 1 Unley SA 5061
Ø  Emailing your submission to: [email protected]

Council Rates to be Capped

Councils going cap in hand to the Government for funding is more to the point Mr Stephen (want to be Premier) Marshall.

Your statement of capping council rate increases is nothing but a populist election announcement. It is one that now has caused much angst toward you in the Local Government Industry. The arguments against such a measure have been adequately discussed in the media so I will refrain from a me too blog post.

What I do want to do, prompted by an article in the Advertiser this morning, is address the misconception about what to expect from rate rises this coming June/July. This mornings article by Emmie Dowling provides the statistics of house price movements in the last 12 months.

Emmie’s article may well read “Council rates in 5061 set to soar” if the comments of the majority on talk back radio were accurate

The perception out there clearly, judging by the sheer volume of comments received, is that council rates go up in accordance with property values.

WRONG, WRONG, WRONG!

Yes, Council Rates are calculated using the property value as the trigger. But the rate that is struck to then calculate the rate payable is struck by council to allow for covering for the budget they have determined they need to function in the coming 12 months.

Your property value, according to the market, may have increased in the last 12 months around 10%, as Emmie has advised us. If the Valuer General has caught up with this then the property value for the purpose of assessment will have increased by a similar margin. If not then your value will stay the same until the Valuer General has caught up.

The Valuer General then provides Council with a purported value of all properties in the Council area.

Council may determine their budget is going to increase by say 5%. What they will do, based on this determination of their budget and with the total value of properties provided them, is strike a rate in the dollar to apply to those property values to allow for the income they need.

If property values have increased beyond the budget increase they have determined then the rate struck will be reduced to hold the actual rate receipts to the amount budgeted for.

Given that all properties do not change in value by the same amount, even in the same street then you may be paying more or less than the 5% Council need extra that year.

So back to you Mr Marshall. What are you going to cap. The rate the Council strikes, the budget they create and therefore what they spend, the property values that is the province of the Valuer General or all of the above.

Looks like the need to create yet a new department to police all this.

And make no mistake this will not control how much your individual rate will increase.

The issue that you should be looking at Mr Marshall, or you Mr Weatherill if you get back in, is find a fairer way of determining council rates because this I do agree with the public on.

Property Values are not consistent, from house to house in a street, or from year to year for a given house. The determination of a property values fluctuates, and at the end of the day you cannot know what the value of a particular;r property is until sold, and then only at that day. It is unfair and discriminatory against someone who may be assert rich and cash poor.

But that is a blog post for another time, short of me saying find a fairer system that is NOT based on a floating valuation.

Rates Double Inflation

The usual media reporting about council rate increases has been active for last month and a bit.

In our own case criticized for a rate increase double that of CPI or inflation. This is the measure by which we judge the fairness or otherwise of course of price increase.

I have blogged in previous years about the Consumer Price Index being the wrong measure to judge how much the rates should increase.

The CPI is a measure to establish how much the general range of goodies that we all have to buy each week increased or decreased (as happens rarely). Council does not purchase food and the other components of this consumer shopping basket, except for fuel of course. We purchase bitumen and concrete. We pay wages and these have increased more than the CPI.

But the media cry will be, and fair enough, this should be about the rate payer’s ability to pay the increase. Lets face it, if bitumen has gone up more than you and I as rate payers can afford then we will have to stop upgrading our roads, let them go to rack and ruin.

This has prompted me to check wage movements in South Australia because surely our capacity to pay should not be measured against the CPI but in wage movements. Remember CPI is how much more we are spending on a group of commodities we all consume.

So what did I find. Surely by co-incidence I found by going to the Bureau of Statistics webpage that our rates match recent wage movements.

Yes the increase in full time Adult average weekly ordinary time increased 4.5% between Novemebt of 2011 to November 2012. I got that from the table on this page

http://www.abs.gov.au/ausstats/[email protected]/Lookup/6302.0main+features7Nov%202012

What I have not been able to do is find out what increases have applied to the various pensions. Google did not help me. I will endeavour to find out and quite frankly if adult ordinary wages have increased 4.5% then the Government is surely duty bound to ensure pensions have kept pace with this and not simply adjust by the CPI.

So I finish by asking a question. What is a fair increase in light of this?