Results of Councils’ Rates Variation Applications

The ESC just released their decisions of the rates variation applications submitted by a number of councils. They are:

9 out of 79 councils (11%) applied and 67% of applicants received approvals. This shows at least 89% of councils have the capacity to lower rates –  if we include the 3 unsuccessful rate variation applications, the real figure is 73 councils or 92% can afford lower rates for their communities.

The full report of the rational decisions and underpinning reasons are found in Overview-of-Local-Government-higher-cap-decis…pdf (159kb)  and there is the Q&A resource    Approving higher caps – Questions and Answers.

We anticipate several councils and highly possibility peak bodies will be spilling “blood” in the street, with ESC the main target.  If and when this behaviour reaction realises, then a lot will be revealed about and confirm the good governance culture of our councils and their peak bodies.

The decision report is rational, of high professional quality and based on very clear decision criteria that were well communicated upfront before the rates variation process commenced.  Applicants also had many opportunities to consult with the ESC, to ensure their applications meet the criteria.

Bagging Rates Capping

Whether it is an oversight or politically incited process, the current legislative inquiry into the rates capping policy has allowed more opportunities for councils and their peak bodies to  engage in political leverage to:

  • bag the policy’s implementation;
  • justify publicly service cutting in councils and
  • winch about laborious cost-benefit justification and compliance effort in apply for rates variation.

Ratepayers Vic, via one of our members, presented insights of why do we have rates capping. The key contributing reason comes from councils’ common budgeting approach, which discourages collaborative community engagement and participation in budget planning. It is no wonder why ratepayers have no confidence that their councils are making the right financial decisions every year.  This is how the budget planning process typically work in your council:

This process is the primary reason we have rates capping today.  Moving to a participatory and zero based budgeting process will improve community confidence in council’s financial planning, while removing the need for rates capping.

To access:

  • RV’s presentation to the legislative inquiry into rates capping, please click here.
  • The official transcript of the presentations and Q&A dialogue is presented, please click here.

 

Rates setting without complying to ATO ruling

Taxation ruling ATO ID 2012/87 defines a general rate (as a tax) as “a compulsory extraction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered”. This distinction makes “rates as taxes” and “rates as fees for service”, mutually exclusive.  Thus, in setting rates, Municipal Councils must be cognisant of the nature of the economic goods that are to be supplied. A range of different rates, licence fees and charges are able to be levied, all with their individual requirements on those who should pay the fee for the delivered services. Public goods, which are paid for from the Consolidated Fund, need separate identification. Hence, taxes raised to support the payment for public goods, are identifiable by being raised in the same manner as the Fire Services Levy.

A good governance watch Bayside ratepayer found that this ATO did not apply in his Council’s financial management and rates setting. Read about the discovery in the two reports:

  1. COUNCIL RATES PAPER
  2. The Comprehensive Income Statement.

Residents in dark on rates hikes

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

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”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”.

 

Out of Control Budgets & Rate Increases

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!

MAV’s Defined Benefits Super Accountability – the shits starting to hit the fan!

A Ballarat Councillor is saying “Councils around the state have been hit by a shortfall due to liabilities to the former Local Authorities Superannuation Fund defined benefit scheme.

Cr Harris slammed operating fund Vision Super and the Municipal Association of Victoria for underestimating the liability in what he called an “incompetent process ……………

…….I have talked openly with Councillors about withdrawing from the MAV, as I think this has been an incompetent process and I still don’t have any concept we are being represented effectively……….

…………..Council might take the decision to downscale the organisation, but there’s no way to mitigate the need for the one per cent rise.”

The Municipal Association of Victoria was not available for comment yesterday.

To read the full article, click here

Another good article to read, click here

Ararat Rural City Council will circulate a petition for ratepayers to sign calling for the abolition of municipal rates.

“Cr John Cunningham moved that Council initiate a petition to be served to both the State and Federal Governments objecting to the continuation of municipal rates, that the petition be made available for ratepayers to sign at all council service points and that Council write to all councils in Victoria, the Municipal Association of Victoria, the Minister for Local Government, Shadow Minister, the Federal Treasurer and the Prime Minister calling for the abolition of rates and stating that Council supports a rise in the GST to specifically fund local government.”…. read more

Share your budget review experience …

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.

Being ripped off with rate hikes?

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.