Rate capping only scores quick and easy points
RATE capping has been placed on the agenda by the State Government in the past month in reaction to perceived excessive rate rises from some Perth metropolitan local governments.
It has been floated in the past as an idea to place downward pressure on rates. But the present cap in place in NSW has adversely impacted the standard of community infrastructure.
Management and maintenance of assets is greatly affected, roads and community facilities suffer, and a delay on their upkeep results in more costly replacement later.
Capping rates is a quick and easy way to score political points with the wider community.
But it does not represent sound financial management, placing massive demands on local government to deliver the many services, facilities, works and projects the community expects and needs but with less money in a tightening fiscal environment.
Local governments are highly responsive to their community needs and the days of the sector being all about just rates and rubbish are long gone.
Managing the long-term financial sustainability of local governments continues to be a challenge amidst the reduction and freezing of Federal grants, as well as increases to State charges such as the waste levy and street lighting costs, which in turn is absorbed by councils.
It is true that some smaller local governments are facing a battle to remain financially sustainable and this has led to higher rate rises, but policy levers such as rate capping also affect the bigger, viable local governments who have effectively managed and maintained infrastructure, services and programs while ensuring rate increases are minimised.
I firmly believe that local government budgeting and rating is a rigorous process that would hold up to any third-party scrutiny, but rather than imposing rate caps, the State Government should work together with our sector to achieve positive outcomes for our joint constituents, local ratepayers and residents.
Ultimately, local government scrutiny occurs every two years at the ballot box where electors exercise their right and judge the performance of their council – this is called democracy, not rate capping.
Troy Pickard, Australian Local Government