Presidents August 2006 Report

Ratepayers across the state are being crippled by the excessively High Council Rates some in excess of 10% . Several factors have led to this unbearable situation

1.    The current building boom has place enormous strain on council’s Budget and available funds Council’s cannot keep up with the cost of the infrastructure needs. Land developer contributions are not high enough and Council says they cannot change the current charges without the Minister's approval.

2.    This year the state Government will receive $8.5 Billion in GST from the Commonwealth, expected to rise to approximately $10 Billion next year. GST is of course untied meaning it can be spent wherever the States desires. Here lies the problem.

COMMONWEALTH INQUIRY INTO COST SHIFTING

3.    According to the Hawker Cost-shifting inquiry report, Commonwealth Grants and transfer payments to local Governments via state Government have increased by an average of 4.5% per annum while State Government to Local Governments have only increased by 0.4%per annum over the past 25 years.

Financial Capacity

4.    Local governments collectively receive an average of 3% of national tax revenues generally through the collection of rates. Local Governments are experiencing a steady decline in funding from the State and Federal Government at a time when the State Government has experienced a windfall from GST revenue and has increasingly introduced compliance requirements. Current cost shifting by State Government to Local Government has been characterised by intrusion into local affairs, introduction of more and more compliance requirements and lack of indexation of the funding that does exist.

KEY ISSUES

The use of the Consumer Price Index as a basis for increases in grants is problematic due to the fact that Council’s costs increase in line with increases in adjusted average weekly earnings. As a result, the real value of grants is continually eroded in real terms. The combined impact of increasing state requirements and decreasing state support is having a devastating effect on local communities. The capacity of the State Government to mandate spending or compliance issues without a corresponding transfer of revenues or taxing authority is a cause for concern. Within this context, Council’s believes there should be better opportunity for public debate on the impact of proposed legislation and the possible cost ramifications.

It is understood that the Municipal Association of Victoria is responding to all the Terms of Reference from a sector-wide perspective.

Ratepayers Victoria Association calls on the Federal Government to ensure that Local Council's receive a greater share of the GST and Federal Government Grants that are supposed to flow on to local Council's

Unless State and Federal Governments address these issues, Ratepayers across Victoria will face extreme hardships and may lead to the down fall of Governments.

Jack Davis J.P. President RPV

RATEPAYERS VICTORIA, Inc. A0040924M - PO BOX 1057 Huntingdale, Victoria 3166