Runaway rise stirs debate
THERE has been plenty of conjecture this week over supposed 22 per cent rate rises (over four years) for the shire. Below we print two letters to the Gazette exploring this issue.
I am amazed and concerned that budgeted steep increase of rates and council charges has stayed below the radar screen of the voters.
There has been barely a whimper regarding this important subject from most prospective councillors standing for the forthcoming elections.
How many voters remember back in 2013, that the Friends Of Douglas Shire (FODS) made a “low rates” promise to keep rates low and roughly in line with the CPI (approx. 2 per cent). Back then FODS produced a five year budget for the new Douglas Shire Council which provides for increases in rates and utility charges of no more than CPI in each of the five years.
Guess what? At the latter part of 2015 Mayor Leu and the majority of the DSC council- lors signed off on rate rises of 5.2 per cent every year for the next four years, until 2020.
They also approved a 3.6 per cent increase in fees and charges over the same time period. So what are the implications to me the ratepayer. It means a combined increase in the cost of living for DSC ratepayers over 22.5 per cent.
It would seem the only way to fight these exorbitant increase is to elect a council that will deal with inaffordable rate increases and charges. Therefore in the interest of transparency I challenge all prospective councillors to publicly state their position in relation to the projected DSC Budget before March 19. The general public should be afforded more debate and scrutiny on these important financial issues, so that the voters can make an informed decision on voting day. The Council adopted its 2014/15 budget using a 10-year budget strategy as a guide.
The strategy has set a responsible target to achieve a balanced budget in the 2019/20 financial year. That is, the Council will raise enough in 2019/20 to fully fund all of its forecast operational expenditure and the costs of depreciation of community assets.
The new Council started from scratch on 1 January 2014 with no historical financial evidence to go by. So far there has been only one complete financial year (i.e. 2014/15), from which to draw evidence as a guide to future budget planning.
From now to 2019/20 the current budget forecast notionally indicates rates revenue will increase by 5.2 per cent each year in order to achieve the target of a balanced budget by that year. These forecasts assume costs to the Council will gradually rise each year for things like staff wages, materials and services.
These budget forecasts are not set in stone. The Council has definitely not made any decisions that prescribe any future rates increases.
This is because costs will vary from year to year and the amount of income required from rates, fees and charges to cover these costs will need to be carefully assessed at the time each annual budget is being prepared. For example, in the current financial year, rates increased by just 3.9 per cent even though the forecast increase was 5.2 per cent. This is because at the time the detailed 2015/16 annual budget was prepared, using historical evidence from the 2014/15 year, it became apparent that costs had not increased to the extent anticipated in the budget forecast.
In addition, cost savings were able to be identified.
There are already indications of circumstances which may contribute significantly to the Council realising a better than forecast budget outcome in 2015/16. Lower than expected costs of materials and services will contribute significant savings.
Staff costs too are well under budget. The Council will also receive more income than budgeted this year for things like building fees, licensing fees and charges, grants and subsidies.
With time the Council will accumulate more robust historical financial information to enable it to refine its budget forecasting and strategy.
The point is the budget strategy and its forecasts are a guide only. The strategy is not an absolute prediction of things to come and it would be misleading and irresponsible to portray them in that way.
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