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ACTIVE COMMUNITY TEAM - MEDIA RELEASE
RATES CAP - RATEPAYER BONANZA OR COUNCIL DISASTER?
"We don't want skyrocketing rates, but most people accept that costs arising from inflation must be covered," stated Mrs Kerrie Christian, Active Community Team candidate in Ward One, "and we believe that overall rates should not be increased by more than CPI."
"The Active Community Team is committed to a fair deal for ratepayers," continued Mrs Christian, "and that includes retaining the pensioner rate rebate."
Whilst the Active Community Team welcomed the relief to individual rate payers with the rate cap imposed by the NSW Liberal Government, concern was expressed at the long term implications of such ceiling.
"The reality is that this action of the NSW Liberal Government must mean either a cut in services, or increases in charges, with a potential blowout of Wollongong Council's projected deficit," commented Mrs Christian, "and that action of the NSW Liberal Government has serious implications for basic services like roads, kerbing and guttering in the long term."
Rate capping was used by Margaret Thatcher on Local Councils in the UK as part of her privatisation drive. It resulted in disastrous effects in depressed industrial centres similar to Wollongong. Such areas felt the effects because they were heavily dependent on welfare and community services, because of high unemployment levels.
"There is a need for changes to the system of council rating," agreed Mrs Christian, "but this latest position of the Liberals is simply trying to avoid the issue."
Contact : Mrs Kerrie Christian ph 671488 (h) 757423 (w) Authorised : Mike Dwyer ph 672111
19 January 1991
The Editor,
Illawarra Mercury,
Sir,
With the deadline for the first instalment of Wollongong Council Rates approaching, we now have people whingeing about those ratepayers in the northern suburbs who have protested their $2000 rates bills. Not all in the northern suburbs are recent residents and more able to afford such bills.
The older residents are now facing statements like "If you can't afford the rates on the house where you've lived for thirty to forty years, then you should get out and go somewhere else".
What sort of society have we become?
It was claimed recently by Mrs B Lucke that those of us who advocated a rating system based on ability to pay were in fact resentful of others who were better off. This is ludicrous!
What about those who advocate Greed Inc, who practice tax avoidance - the big business concerns, multi-national companies, the privileged residents of Sydney's North Shore? Is it fair that because of their activities that the tax bill at all levels of government is increasingly borne by lower and middle income earners?
The principles of looking after the disadvantaged and of contributions based on ability to pay are nothing new. They are at¨ least 1900 years old - I would suggest that Mrs B Lucke consider sources such as even the New Testament for verification.
It's time we dropped Greed Inc. and started looking after those less fortunate. That includes setting Council Rates in a manner that takes account of people's ability to pay.
(Mrs) Kerrie Christian
ph 671488
COUNCIL RATES & MANAGEMENT ISSUES - July 1991
COUNCIL RATES
- general rate
- special rate
- local rate
- loan rate
- differential rate
- rural differential rate
- minimum rate
1990 RATING INQUIRY RECOMMENDATIONS
- 60% flat charge per residence
- 40% on existing land value basis - AD VALOREM
- Poll Charge rejected - in NSW council services are property related and not personal services mainly
Councils face reducing income, ie grants from state & federal gov'ts
BUT increasing expectations of community facilities
AND they have limited powers to raise revenue
CRITERIA FOR LOCAL TAXATION
- practicality
- equity
- accountability
- administrative efficiency & simplicity
- consider overall tax system
- finance control
- tax neutral - not distort geographic distribution of economic activity & allocation of resources
PROBLEMS - FEDERAL & STATE LEVEL
* progressive tightening of fiscal policy
* monetary policy directed towards private investment
* winding back of federal gov't deficit
* Conservative Philosphy
- remove rate pegging
- review rate concessions
- full cost recovery - USER PAYS
- ensure differential rate revenue does not undermine tax efficiency & equity
- gov't business undertakings to operate on a fully commercial basis
- disposal of surplus or underutilised assets
PROBLEMS WITH THE RATING SYSTEM
- limited capacity to increase rate revenue
- inequity in distribution of benefits from local services financed by rates
- burden supposedly falls on owner occupier
- rates unpopular with electorate
- difficulties in determining valuations
- rate pegging
- exempt properties
- pension rate rebates
LAND VALUE
- UCV - Unimproved Capital Value
- Land Value - modified UCV
- CIV - Improved or Capital Value
- NAV - Net Annual Value - rent concept
- AAV - Assessed Annual Value - improved value concept
DIFFERENTIAL RATES
A separate differential rate, instead of the standard rate, can be made for specified localities within both residential & non-residential categories eg on coal mines, industrial land Administration - advertise in newspapers, with map & description & proposed rate.
Why? Councils a better judge of relative quality & land amenity than Valuer General; or vacant land unsuitable for building
EXEMPT LAND - Crown land
- Commonwealth & State property
- church lands
- schools
- cemeteries, public reserves, hospitals, charities
ALTERNATIVE SOURCES OF INCOME
- Poll Tax
- Accomodation & Tourist Taxes
- Entertainment Taxes
- Business License Fees
- Retail Sales Tax
- Tax Surcharge on income tax
- Land Tax
- Betterment Tax
- Entrepreneurial Activities
HISTORY OF RATING IN NSW
* 1840 - Parish Roads Act
* 1858 - Municipalities Act - property rate based on assessed annual value, borrowings limited to 3 years' revenue
* 1867 - Municipalities Act - borrowings limited to 5 years'revenue
* 1906 - borrowing up to 10% of UCV of all rateable land
* 1919 - Local Government Act - borrowings limited to 20% of all rateable land
* 1967 - Rating Inquiry
* 1974 - Local Gov't Act amended to give lower rural rates; differential rates introduced
* 1976 - rate pegging & not just current valuations introduced
* 1978 - differential rates extended to levy greater amount of rates on land used for commercial, industrial, professional, business but Minister's consent required
* 1983 - rate pegging for individual properties introduced
* 1988 - Local Gov't (Rates & Charges) Amendment Act
- return to current valuations
- control total rate increases & not individual increases
* 1989 - Local Government Rating Inquiry held
* 1990 - " " " " Report issued but not
implemented
- restrictions on differential rates eased
PENSION RATE REBATE HISTORY
* 1950 - NSW Gov't began to subsidise, up to 50% of the amount that councils chose to voluntarily write off rates for invalid & old age pensioners
* 1966 - extended to other pensioners
* 1967 - Royal Commission of Inquiry into Rating, Valuation & Local Government Finance
* 1972 - Mandatory Rate Rebates - rebate to pensioners mandatory for all councils, with Pensioner Health Benefits Card to qualify; councils could give an additional voluntary rebate
* 1972-82 - Gov't reimbursed councils in full for their mandatory reductions in pensioner rebates
* 1983 - Gov't reduced contribution to 50% of mandatory reduction & councils obliged to fund remaining 50% of writeoff; but Gov't would contribute to any voluntary rebate
* 1989 - previous rebate system abolished and maximumrate rebate increased to a maximum of $250 for general rates
MANAGEMENT APPROACHES
Corporate Management - team approach to determine, achieve & review a council's objectives, in short & long term, through commitment & concerted effort by elected members & staff. The system provides a flexible means of assessing available options, methods of attaining objectives & obtaining the best output from resources
Traditional - demarcation along professional lines, engineering, planning, finance, community services etc with little interaction across departments and sense of being part of teh one body serving the ratepayers & residents
COMMUNITY INVOLVEMENT
Approaches - public relations, consultation, participation
Public Relations - one way flow of information
Consultation - two way flow of information but community involvement is restrained & reactive
Particpation - a real chance to particpate in decisionmaking
- Committees of Management, Steering Committees, resident involvement in local environment planning & design, community workshops
Problems - council staff attitudes because of the following: difficulties in getting community involvement because council staff become isolated within their departments & professions;
may not be interested in work of other departments of council or needs of city's residents;
market research on customer satisfaction is foreign;
public relations, rate payer enquiries & community consultation are an unwelcome distraction from running efficiently;
community consultation may result in conflict or only the vocal few are heard
BUDGETTING APPROACHES
Traditional - year to year approach
- line budgetting - estimates - each object of expenditure required for successive year
- doesn't look at costs, outputs, performance
Stewardship - accounts for public money - a traditional approach
- custodianship & safeguarding of assets
Zero Based Budgetting - operations planning & budgetting process
- description, justification, resource requirements performance indicators
- too much paperwork & unwieldy
Management by Objectives - setting of hierarchy of objectives towards which a council's performance can be geared; development of a long range plan with corporate objectives, deelopment of department and personal objectives in accordance with this plan & continuous performance evaluation to see how objectives are being achieved & what policy or plan changes need to be made
Program Budgetting - setting of goals, objectives, policy
- selection of specific courses of action
- system of accounting, reporting & analysis
- identifies functions & their costs
- focus on outputs, objectives & costs
Performance Budgetting - resources & output
- requires departments to organise their operations as work programmes with planned objectives & goals with measured manpower allocation & costs
- spending is not as important as what is acquired
- a good costing system is vital or this approach may fail
ACCOUNTING
CASH - recognises transactions & events only when cash has been received or paid; does not disclose information regarding costs of services provided nor adequate information re assets & liabilities of a council
ACCRUAL - recognises financial effects of transaction & eents when they occur regardless of whether cash has been received or paid
FUND CONCEPT - local governments have a series of accounting by funds - General Fund
- Special Funds
- Local Funds
- Trading Funds
- Trust Funds
Authorised Kerrie Christian
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