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.

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