Rates policy leaves hole
Over half a million dollars will have to be found for the City of Karratha’s 2015-16 budget following the State Government’s direction for the City to reduce rates on FIFO camps.
The decision to take the revenue hit came after weeks of fruitless negotiations with the minister and Department of Local Government as the department tried in vain to find a rational excuse to reduce FIFO rates but not general community rates.
From the various discussions it became clear that the department does not have a good understanding of how FIFO works because they made numerous incorrect assertions about what impact FIFO has on the local community and how the City was planning to collect rate revenue from these facilities.
While the department had approved the identical council rates methodology for the previous three years, in 2015-16 it is requiring ordinary mums and dads to pay proportionally more and FIFO camps less.
Under our proposed model, a FIFO bed would pay approximately half the rates of a bedsit, or a third of a one-bedroom apartment — we do not think this is an unreasonable amount.
While we normally have our budget finalised before the end of the financial year, the Valuer General this year did not finish his task until late July.
This, coupled with the highly variable and somewhat questionable nature of the valuations, has placed us slightly behind where we like to be in terms of budget adoption.
We will be continuing discussions with the Valuer General because we believe that some of the valuations are not accurate.
For example, one particular 1500-bed FIFO camp has been prescribed a gross rental value of $20.
To clear the way for this year’s budget to be passed and to reduce the City’s interest loss, council finally acquiesced to the minister’s demands for lower camp rates.
This was after we had voluntarily reduced the rate yield from 21 per cent in 2014-15 to 19.3 per cent proposed for 2015-16.
The approved FIFO amount is now 18 percent of the total rates. We do not intend to increase rates to our other ratepayers so will be searching for savings through a decrease in new capital projects, reduced services and salaries, plus withdrawal from our reserves.
While this unwarranted State Government adjustment to the council’s 2015-16 rates does have an impact on its finances, the City remains in a strong financial position.