the-end-to-the-magic-puddingCouncil has voted to continue to increase rates at a level above inflation.
Rates have risen from 1.5 per cent of average family incomes in 2001/02 to 3.2 per cent in 2014/15.
Council’s finances are sustainable, when it charges rates high enough to cover expenditure.
This may be sustainable for council, but not necessarily for the community.
Average family incomes are only $980 per week and we have nearly 30 per cent of people earning less than $500 a week.
For the latter the proposed rates represent 6.2 per cent of their income paid either through rates directly or through rents.
Council’s rates in real terms have risen by 7.9 per cent per annum for the past 10 years and will rise by over 7 per cent per annum in the next 10 years.
Families, farmers and businesses in difficult times pull their belts in and seek smarter ways to do things.
Councils with their rating power have addressed difficult times primarily by increasing rates.
Councils with 3.5 per cent of government revenues and 30 per cent of assets and 6.1 per cent of government expenditures are being wedged by the State and Commonwealth through cost shifting and through reduced financial assistance grants.
The argument should be to ensure an equitable share of federal and state grants to support our local effort and to be more strategic in our business approach.
An argument was put forward by some of my fellow councillors is that it is either a choice of increasing rates above CPI or cutting services.
I don’t believe we have just an either or approach.
This is not smart business or good management and leadership.
It shows little imagination or learning from other organisations, where a successful focus has been out on using new digital technology, productivity improvement, shared services and a business approach to running services.
Turning council around is like turning a large ocean liner around; it takes time and a large circle.
Council to its credit has begun the process of taking a more strategic approach, with some areas showing dramatic improvements, but it has a long way to go.
If it is genuine in this approach, there are more than the either or options.
Such thinking is really old fashioned and out of date and penalises the community.
There has indeed, as our Mayor said, been great distraction, noise and misrepresentation in the budget discussions. The question is by whom? More civility I believe is required and mutual respect in debating in council.
Council should be a democratic forum for debate and dialogue with people’s opinion respected.
In my opinion the $34m unallocated in years 13-15 has a significant and material impact on the level of rate increases.
Advice from council finance area suggests that $1.7m is required to set aside annually to provide for these funds.
In my opinion a reduction in funds going to cash reserves could easily have financed a further 1 per cent rate reduction closer to CPI inflation figures. Council’s budget already funds 100 per cent of asset renewals and has funds set aside for all major capital projects on the agenda.
If council had agreed to a 1 per cent rate reduction, it would not have a material effect on services and infrastructure renewal or cash reserves.
I am not adverse to establishing reserves for defined purposes, but importantly they should be openly debated, subject to a business case and be transparent.
In reality, council is already setting aside 1 per cent annual for reserves. There is not yet anything on the table that would require such a large additional cash reserve fund of $34m.
All we have been offered as reasons for it is platitudes and obfuscation. The only thing mooted in the wings is a new council administration centre.
Even this, if it were proceeded with, would not cost $34m.
Before we commit to this we need a community dialogue about; firstly should we commit to this in the current circumstances; secondly that we should be discussing also the option of a decentralised model with small council service centres, like other rural councils, in Korumburra (in conjunction with the propose hub), Foster and Mirboo North and not just one central edifice.
This would restore in my opinion a greater sense of ownership and connection with council.
If we continue down the track of having rate rises above inflation, the average family could be paying up to 5 per cent of their income on rates in 10 years.
This is not sustainable.
This is rivalling the rise in power costs to over five per cent of incomes.
At some point we have to draw the line and start to be strategic in our approaches and not just tap the magic financial pudding by excessive rate rises.
Cr Andrew McEwen, South Gippsland Shire.