Hard to justify dramatic rate increases
THIS month, councils set their rates for the year and the outcome will reveal how effective elected representatives and managers have been in managing the affairs of their city or municipality.
Yes, costs for councils are rising, as they are for everybody, but council rates also contribute to household costs and councils need to recognise the financial pressures confronting their ratepayers.
While it is true inflation is low, so too is the growth in average wages and many Tasmanians are on fixed incomes or benefits that show little or no increase. In such a climate, rate increases should be no greater than the rate of inflation, that is, the Consumer Price Index, or CPI. This means that, taking account of cost increases, a council should have the same amount of money next financial year as it had available this year to pay for services, infrastructure, facilities and community development.
That is not an unreasonable expectation and any council that seeks to impose rate increases higher that CPI must justify this to ratepayers.
Brighton Council has already committed to its budget for the next year, keeping its rate increase in line with the rise in the Hobart CPI of just 2 per cent. The increase for householders amounts to $17 a year, or a little more than $1.40 a month.
This is the 23rd consecutive year Brighton has kept its increase at or below the rate of inflation and council is particularly proud of this. It has been able to do this when other sources of revenue, particularly many state and Commonwealth government grants to local government, have reduced or disappeared.
Brighton’s budget has been framed after accepting a 33 per cent reduction in the council’s dividend from TasWater, a situation confronting all councils, improving TasWater’s capacity to address statewide water and sewerage infrastructure upgrades.
Rather than develop a grabbag of spending and then determine a rate increase to fund this, Brighton’s approach is to apply CPI to current revenue and then develop the budget based on that figure.
For 23 years, this has enabled Brighton Council to deliver the full range of services, maintain and develop infrastructure, employ talented and hardworking staff and develop the municipality as a great place to live, raise a family and increasingly, work.
It is not rocket science, but it is what ratepayers expect.
It’s called living within your means and it is what householders do every day of the week, every week of the year.
I would argue no council should be increasing rates higher than the annual CPI.
My personal view is that few adopt this approach and certainly none has done so for anything like the 23 years achieved by Brighton.
In the five years to 2016-2017, Brighton’s rates rose by a total of just 6 per cent, well below the average of all Tasmanian councils of 14 per cent, with two councils increasing by 24 and 28 per cent.
It is difficult to see how this can be justified and aldermen, councillors and management must be required to explain the reasons.
Reports of the Tasmanian Auditor-General consistently list Brighton as or among the best-performing councils in the state. As well as the lowest rates, Brighton has the lowest per capita number of employees and employee costs as a percentage of annual operating revenue. At 23.1 per cent it is a full 10 points below the average of 33.1 per cent.
As well as efficiency of council operations, strong financial management, the success of its MicroWise business and commitment to shared services with other councils, Brighton ratepayers continue to benefit from the full range of services at the lowest cost.
It is an approach I believe that should be adopted by all Tasmanian councils. Tony Foster, Tasmania’s longest-serving mayor, was elected mayor of Brighton in 1993 and has served continuously since.