Byron GM maintains hard line on rate rise

Hans Lovejoy

Calls from local Country Labor Party branch members to crack down on holiday letting, increase commercial rates and raise paid parking in certain areas to address the Shire’s ailing road infrastructure have been rejected by Council’s general manager Ken Gainger as an inadequate revenue source.

Additionally Mr Gainger claims that most of the shire’s roads ‘service ratepayers rather than visitors.’

Council staff are suggesting dramatic rate rises to pay for infrastructure via a Special Rate Variation (SRV) that, if approved by councillors, could see a massive 60 per cent cumulative increase across the board over four years.

Special rate v levy

And while the Local Government Act (1993) allows councils to implement a special rate, the GM argues that a special rate ‘is not a levy per se,’ and would still not be enough to address the funding shortfall.

NSW Labor’s shadow minister for local government, Peter Primrose MLC, told The Echo special rates can be created under section 495 of the Act.

Mr Primrose called it a ‘betterment levy,’ and said, ‘These levies (also known as special assessments) are direct charges on owners of select properties to pay for infrastructure or services that benefit their properties.’

But Mr Gainger told The Echo, ‘[A special rate] is based on the council levying a special or higher rate upon a certain class of properties or a specific precinct because of extraordinary/special circumstances – but it is a rate nonetheless. Levying a special rate is not a solution to council’s funding problems, because if we levy a special rate on some properties, other properties pay less and the overall rates funding pool (called the notional yield) remains the same.

‘It is this rates funding pool that we need to increase through a special rate variation (SRV).

‘The fundamental problem for council is the need to grow its rates revenue base beyond that allowed by rate pegging. The only way it can do that is via a Special Rate Variation (SRV) application to the Independent Pricing and Regulatory Tribunal (IPART).

‘We shouldn’t confuse the levying of a “Special Rate” with a SRV. A SR is merely the apportionment of a greater portion of the current overall rate yield to a particular class of property or a precinct. It derives no additional revenue for Council.

‘A SRV, if successful, generates a substantial (multimillion-dollar) and recurrent source of new revenue which we badly need to fund a sustained reduction in our infrastructure backlog.

But he said ‘the creation of an “investment arm” of Council would add another layer of recurrent cost that we do not need, given our modest property portfolio.

‘It cannot be justified.’

Not a ‘cynical exercise’

The Echo asked if the rate increase proposal was a box-ticking exercise, ‘where council need to just say to the government that a rate increase has been canvassed, ie exploring of other possibilities can be ignored.’

Mr Gainger replied, ‘The SRV is by no means a cynical exercise. We are absolutely committed to following through on the undertaking that Council gave the IPART and the government in our submitted Council Improvement Plan (CIP).

‘Without a substantial rate rise, council will fall well short of at least five of the key performance benchmarks set by the government. That would see our infrastructure renewal backlog blow out and council once more become susceptible to amalgamation.

‘Council’s infrastructure (roads) problems are shire-wide and most of these roads service ratepayers rather than visitors.

‘A bed tax cannot be introduced and given that 700,000 of our annual visitations are SE QLD day-trippers who do not stay overnight, such a tax would struggle to raise $200k pa. Similarly, tinkering with pay-parking revenue will only raise marginal additional revenue.

‘Our very substantial infrastructure renewal needs can only be addressed by significant rate increases.

‘While we understand that this will never be a popular proposal, it is absolutely necessary.’

Hardship policy

Mr Gainger said a draft hardship policy ‘has been drafted for the councillors to consider. It is likely to go through a few iterations before being adopted and released publicly.’

‘Council understands that pensioners and other disadvantaged will be affected and for this reason we have prepared a hardship policy which contemplates rate relief for those people.

‘It is anticipated that increases in general rates will in part be offset by reductions in water and sewer rates to the tune of $100 per year for the average ratepayer.’

No variation not an option

As for criticism from the public that the fourth option – ie no rate variation – had been unavailable on many of the feedback forms, Mr Gainger said, ‘The primary conversation focus for the special rate variation centred on the proposed three rate- rise scenarios of 7.5 per cent, ten per cent and 12.5 per cent.’

‘In order to ensure we reached as many residents and ratepayers as possible about the proposed rate rise, the communication mix offered multiple ways for people to supply their feedback.

‘This included the quick Reply Paid feedback card, the more detailed online survey, submissions and or, part of the random telephone survey.

‘The decision not to feature no special rate variation as an “option” reflects the commitment given to the IPART and the minister in Council’s Council Improvement Plan (CIP) that council would submit a SRV to increase its rates yield.

‘It is understandable that many residents have indicated their preference for no rate rise – rate increases are never popular, but in this case they are necessary if council is to fix its crumbling road network and reduce its infrastructure backlog. The status quo is not an option for council.’

Results and feedback from the proposed Special Rate Variation (SRV) are still being compiled, Mr Gainger said, and will be reported to Council at the December 15 meeting and will be available in the agenda a week prior.