The Property Council’s call for rate capping in Tasmania ignores the wealth of independent and academic analysis of rate capping in other states, which demonstrate that rate capping results in long-term adverse effects for communities.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
There is clear evidence that, rather than yielding the efficiency dividends claimed by the likes of the Property Council, rate capping comes at significant unwarranted complexity, costs and constraints at both state and council level.
Unintended consequences include excessive cuts in expenditure on infrastructure, leading to mounting asset renewal and maintenance backlogs, as well as the potential shift of the cost to the next generation.
For example, the New South Wales’ state government’s independent Fit for the Future review panel concluded that rate capping is very costly relative to the low benefit it delivers.
Additionally, Professor Brian Dollery’s close examination of the outcome of years of rate capping in NSW found no evidence to support any claim that rate capping enhances municipal efficiency.
This is an important consideration when considered in relation the recently released State of the Regions report which highlights the importance of infrastructure investment in driving liveability and prosperity, particularly in non-metropolitan areas.
Rate capping simply is not needed.
While many services provided by councils are legislatively mandated, there are also distinct differences in services reflecting both needs and preferences of local communities.
What councils are providing will vary according to demographic factors including population size; geography, including scale and the quantum of roads; a council’s financial circumstances; the offerings of other levels of government (and conversely, service gaps); and the community's ability and willingness to pay.
In Tasmania, there has been significant investment in improving councils’ approach to long-term financial and asset management planning, including legislated requirements.
This work was led by the Local Government Association of Tasmania at the request of councils.
The outcome is improved transparency, accountability and efficiency.
This is on top of the long history of independent scrutiny by the Auditor General, as well as a legal requirement to fully fund the depreciation of assets, meaning that councils are already working in a transparent and robust way when it comes to setting budgets and rates.
It is through those processes and in consideration of strategic goals (developed with the community) and the community’s ability to pay, that rates should continue to be set.
Providing the minister an unfettered power over councils’ financial management practices and assuming a one-size-fits-all is not the best approach.
Because councils undertake their activities at the local level, the efficiency and value of what they do is far more visible and open to scrutiny and feedback.
The ratepayers, who are also the electors, ensure that councils are, necessarily, constantly vigilant to opportunities to improve productivity and rescue costs.
No one likes paying more than necessary but councils strive, through transparent consultative processes, to get the balance right between services and revenue-raising.
- Dr Katrena Stephenson is the Local Government Association of Tasmania CEO