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Extract from the Age, February 21, 2013: Richard Willingham reported:
VICTORIA’S nearly 80 local councils do not properly consider the impact that rates increases have on residents, with ratepayers not afforded transparency on how and why councils set annual rates, the Auditor-General has found.
An Auditor-General’s report tabled in Parliament on Wednesday said the current rating framework lacked ”clarity, detail and direction”.
Victoria has 79 councils that all rely on the revenue generated by property-based rates and charges to provide services to local communities.
The report found that there was a ”limited assurance” that all councils ”systematically and rigorously” considered the information needed to understand the impact of rates proposals on their communities
”Councils primarily rely on their annual budget development process to engage ratepayers about rating decisions,” the Auditor-General said.
”While they do respond to ratepayer submissions as part of this process, they do not always adequately explain how they have considered their issues in the rate-setting process.”
In 2011-12 councils generated operating revenue of $8.18 billion, with rates and charges making up $4.09 billion.
The Auditor-General found that between 2001-02 and 2009-10, mean rates per property assessment in Victoria increased by an average of 6.3 per cent a year, outstripping Consumer Price Index rises.
The Auditor-General found that the state Department of Planning and Community Development did not proactively support or guide councils and could not provide assurances that laws for councils on rates were being applied.
It recommended that reporting of data should be improved and standardised so that it is consistent across all councils and easily interpreted by residents.
”Council engagement and communication with ratepayers on rating decisions and rate matters varied significantly in depth and quality. Councils do not provide sufficient or consistent information to ratepayers about their rating decisions,” it said.
The report also identified the major drivers of rate increases in 2012-13, which included the carbon tax, maintaining services and cost shifting by other levels of government.
Local Government Minister Jeanette Powell said the report showed the importance of the decision to develop a mandatory performance reporting framework for local councils.
“The policy development will help councils to develop a more strategic approach to the use of rates and provide the public with a better understanding of how their local council is performing,” Ms Powell said.
She said Local Government Victoria will release an updated rating strategy guide after the ministerial guidelines for differential rates – some councils charge pokies venues double rates to fund problem gambling projects – are finalised.
Shadow local government minister Richard Wynne said rates are a substantial impost on every household and that it was ”incumbent on all local governments to be as transparent as possible in informing ratepayers on how rates are collected and what they are used for”.
The Municipal of Victoria (MAV) reported (29 June 2012) that:
Victorian council rates will rise an average $75 or 5 per cent this coming year to help cover growth in community service demands, hikes in Government levies and the impact of the national carbon price.
Cr Bill McArthur, President of the Municipal Association of Victoria (MAV) said that as the economy had slowed, councils were under more strain to increase community services to meet local needs.
“The Local Government Cost Index has forecast it will cost an average 3.9 per cent more this year to provide the same level and mix of services as last year. That’s around $58 per ratepayer to maintain the status quo.
“Council budgets must also address cost pressures not included in the Cost Index such as growing service demands, declining government funding and rising State levies.
“When money is tight, we tend to see a higher reliance on free and low cost council services and programs.
“Local government’s contribution to vital community program such as aged care, youth and family services continues to grow as funding from other levels of government fails to keep pace with service delivery costs.
“For example, over $120 million a year is now tipped in by Victorian ratepayers to top up under-funded Federal-State home and community care programs to meet the rising demands of our ageing population.
“Budgets also facing growing pressure on municipal waste management costs due to the start of the carbon price, stricter Environment Protection Authority standards for landfills, and rising State landfill levies.
“This year councils will redirect an average $20 from each household ($49 million) to pay the State’s landfill levy. If you’re in one of 25 metropolitan areas, an average $28 ($39 million) will also be paid from your rates towards the State’s fire services levy.
“Add to this a median increase of $22 facing ratepayers due to the carbon price impact on councils, and most of this year’s rate rise will be eaten up by external costs that councils can’t control,” he said.
Analysis released by the MAV in March estimated a median rise in council costs of 0.8 per cent due to the carbon price. Excluding any mitigation programs to reduce council emissions, if carbon price cost increases are collected through rates it would equal a median rate rise of 1.5 per cent – around $22 per ratepayer.
Cr McArthur said a common misconception was that rates should rise in line withCPI, which measures a common basket of household goods and services not construction, material and wage costs facing councils.
“Councils need staff to deliver over 100 community services and maintain $60 billion in local assets.
“It’s never easy striking a balance between keeping rates affordable and delivering everything that communities have come to expect. When councils ask what services they could reduce, communities generally want all the same services but at a lower cost.
“Councils have been successfully lowering costs using joint procurement, surplus asset sales, planning reforms, restructures and other efficiency programs. Significant savings are being realised and councils must continue to demonstrate how they’re reducing unnecessary expenses.
“We’re mindful of the tougher economic climate and payment options and deferrals are offered for those facing genuine hardship. Get in touch with your council if you need to discuss your situation,” he said.
Rates data for 70 of Victoria’s 79 councils is available at www.mav.asn.au
Last night on channel 7 today tonight – Council Rates through the roof
Budget management has a lot to contribute to rate increases – fixing budget and service management deficiencies, the manageable causal sources of rate hikes, is the first priority. This means fundamental reforms in budget methodologies, keeping to core services for rate charging, not overspending given state budgets for other services, changing work culture to spend what is affordable, increasing performance accountability & reporting, etc. Ratepayers have yet to see the new emerging trend in councils creating debts for the community, which is being revealed more into public eyes by the extraordinary blowout of Council employees’ defined benefit superannuation liability!
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We encourage ratepayers to log their budget review experiences and leave an audit trail of transparency and accountability issues. We will publish this audit trail in this website – the information will be used as evidence to assist RPV’s discussions with the Minister of Local Government and also to help the Auditor General Office access case studies for their on-going audit reviews of Local Government functions. The first audit trail is the Monash case.
Rate hikes are happening in many Councils across the country. We review a few budgets in several cities and are finding a common pattern – there is no transparent sound justification underpinning annual rate hikes. Some Councils are also misleading ratepayers in budget review – Councillors already agreed on rate increases and consequent budgets when Council allow the process of public review to occur. The process is not democratic nor is transparent and is most misleading.
A Press Release has been issued to highlight the major concerns discovered in the review of several councils’ financial management and rating practices. A recent April 2012 audit report on council’s performance reporting practices is currently available on the VAGO webpage and the issues reported also impact rate pricing and confirm some of our investigation findings. Also see pages inquiry projects and election matters.
Have you experience similar situations like in Patchy jobs – video about “workers resurfaced an entire road except for where one car was parked – and left ratepayers to foot the bill for the crew to return and finish the job.” Another case of lacking accountability for operating efficacy, which will contribute to rate increases.