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.

 

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.

 

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%.