By Councillor Peter Harle.
In 2008-9, Council applied to IPART – (Independent Pricing and Regulatory Tribunal) for a Special Rate Variation (SRV) to increase the “average” rates by 9%. That increase was to be used on infrastructure only. IPART allowed Council that special rate variation but limited it to 5 years. Over 5 years Council collected around $5.6M per year and all of that was/will be spent on roads, parks and related infrastructure.
The original intention of the SRV was to permanently incorporate that rate increase to make up for the CPI “rate pegging” that has been applied to all Councils in NSW since 1977. Previously, the rate peg was set by the Minister for Local Government and subject to political bias rather than economic factors. Since 2011/12, it has been set by IPART under a delegation by the Minister for Local Government. However, the previous 30 years of rate pegging, set at the whim of the incumbent State Government, has resulted in a substantial backlog of infrastructure for most Local Councils. Liverpool City Councils’ backlog is somewhere between $200M and $300M, depending on how it is analysed.
Councils are also affected by both State and Federal Governments shifting some of their costs onto local Councils, such as; child care, pensioner rate rebates, Rural Fire Service contributions, waste tipping fees, CO2 taxes etc., on top of the increased fuel costs, road base materials, bitumen, gravel, sand, electricity etc., all of these, on average, are higher than the allowed CPI increase. The result is that after 30 years of rate pegging there is a substantial accumulated reduction in effective rates that no other state in Australia suffers.
The Liverpool City Council Website’s Rate Survey may need a little more explaining despite the fact that it meets with IPART requirements. The information on Councils Website is identical to the information sent to each ratepayer.
In options two and three there will be a CPI rate increase as determined by IPART in December 2013.
In the information package sent to each ratepayer and as per Survey on Councils Website it is/was stated as:
“While Council will apply the regular 3 per cent annual rate peg increase, this is just to stay in line with the Consumer Price Index (CPI) and meet regular increasing costs to the broader economy”.
Note: the actual allowed CPI increase for 2014-15 is 2.3% as announced by IPART on 5/12/2013. However, Council prepared its documentation and survey based on a 3% CPI increase for its proposed option 1, as originally recommended by IPART and prior to the actual value issued on the 5/12/2013. Hence Council is asking for an extra 0.7% on top of the 2.3% as recommended by IPART, but only in option 1.
Following are Councils options as described in its survey. Depending on the results of the survey, Council will decide which of the three options it will apply. Note; Councillors may have differing points of view resulting in a mixture of the options as described below.
Council Option 1: Maintain Services – Keep the existing special rate variation (SRV) and maintain current services, road works and infrastructure delivery. The average house is currently paying $1.75 per week or $118 a year due to the Special Rate Variation via this option. In addition, Council is also proposing a 3% rate increase, based on current rates payable, the increase in your rates next year in comparison to this year is 62 cents per week or $32 per year.
Council Option 2: Reduce Services – Lose the existing Special Rate Variation but increase the rates by the 2.3% CPI rate increase as proposed by IPART. This will result in reduced services, road works and infrastructure delivery to the community. The average house will save $1.13 a week or $59 a year through this option. Note: This option is to remove the 9% Special Rate Variation. For most ratepayers, that will result in a reduction in their rates. To Liverpool Council, that means a loss in rate revenue of around $5.6M each year, it will also result in reduced Council services to the community.
Council Option 3: Increase Services – To road works and infrastructure delivery to the community. This means keeping the Special Rate Variation and increase average rates by 2.5% in the first year (2014-2015) plus another 2.5% in the second year (2015-2016) plus the 2.3% CPI increase for each of two years. This will cost the average rate payer an extra $2.73 per week or $142 in the first year. It will be a further $1.19 per week or $62 in the second year. (Note: this also incorporates the allowed CPI increase of 2.3% for each of the two years.)
This option is to continue with the Special Rate Variation of 9% (already incorporated into your rates for the past 4 years) and increase average Council rates by 2.5% in 2014/15 and a further 2.5% increase in 2015/16. (Plus the CPI increase for each year, meaning (2.5% +2. 3% CPI) for 2014/15 + (2.5% + 2.3% CPI) for 2015/16 equals a total of 9.6% over two years. That also assumes IPART will allow a CPI increase of 2.3% for 2015-16.
Councils comparison of the three options:email@example.com Mobile: 0412 736 956 Office Phone: 02 8090 2646 Clr Peter Harle JP