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Off the Bench: Why council rates should be capped


A rates cap to curb the “sometimes staggering” increases levied by SA councils in recent years should be part of a drive for greater efficiency in local government, argues Liberal MP Stephan Knoll in InDaily’s Off the Bench opinion series.

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‘To make no decisions and trying to continue in the same way as today will simply set local government on a path of steady decline’ – Greg Crafter, Local Excellence Expert Panel chair

Decisions are best when they are made as close as possible to those affected by the decision.

This is a fundamental tenet of Liberal belief across our movement, and decentralisation is a key concept in the way Liberals seek to deliver government to South Australians. Belief in a decentralised system is also why we are strong supporters of local councils, the tier of government most close to their communities.

Our understanding of the value of local government, and the candid statement made above by the chair of the Local Government Association’s own review of the sector, is why we believe it needs to undergo solid reform.

This is also why we need to place a cap on the significant rate increases we have seen across councils over recent decades.

If elected in 2018, a Liberal state government would seek to change the way councils go about increasing their rates by having increases set by an independent commission – the Essential Services Commission of South Australia. This cap would be set based on changes to the cost structure of local government and would provide a mechanism by which councils could apply for an exemption to that cap depending on individual circumstances.

This measure will not interfere with councils that balance their needs versus the needs of ordinary taxpayers. It is designed to curb the sometimes staggering increases we have seen in recent years.

Some local councils look at how much they want to spend and then work out by how much they want to increase their rate income

Labor and its member for Light Tony Piccolo (former mayor of the Town of Gawler) and the independent member for Frome Geoff Brock (former mayor of Port Pirie Regional Council) recently voted against a Liberal proposal in parliament to introduce a cap.

When looking at the record of the two gentlemen, we can potentially see why. Over Mr Piccolo’s time as mayor, rates increased by an average of 6.1 per cent, whereas inflation ran only at an average of 3 per cent; for Mr Brock, the average increase was 6.76 per cent against inflation of 3.1 per cent.

These sorts of increases are unsustainable. We need to change the conversation.

Governments, families and individuals should spend based on what they can afford and how much they earn, but parts of local government reverse that process. Some local councils look at how much they want to spend and then work out by how much they want to increase their rate income, without real regard for what that means for their residents.

We need to look at how local government can do what it needs to better and more efficiently, and what the State Government can do to help that. Whether it be finding ways to save money, reduce costs or remove regulation, our focus should be on doing more with what we have.

This ideal fits with the core Liberal value of smaller government.

We have been vocal in our opposition to this State Government’s continual increase in the tax burden, whether it be the carpark tax, Emergency Services Levy (ESL) increases or the removal of pensioner concessions. We have been steadfast in saying enough is enough – and the same must apply to local government.

Council rates are levied against property. This group of taxpayers has been disproportionately punished over recent years as it has also borne the brunt of excessive ESL increases and exorbitant water charges.

The structure of local government does not provide for the adversarial two-party system that dominates the other spheres of government. The adversarial approach ensures there is a high degree of scrutiny and accountability, so the public can feel more connected and confident in the process.

Local government does not have the checks and balances in place for that function to be performed. It is one of the reasons why voters feel disconnected and why turnout at council elections is only around 30 per cent. It is why we need rate capping to help change the conversation.

This issue is not unique to South Australia. New South Wales introduced rate capping in 1977 and the system has continued under governments of both persuasions.

The newly installed Labor Government in Victoria introduced its own scheme on July 1 this year in response to average rate increases across the state of 4.98 per cent in recent years.

Here in South Australia, the unweighted average increase over the past four years was 5.55 per cent.

This has all happened at a time when inflation has been running at about half those rates.

Rate capping is an idea that has its detractors; elected members in councils have been vocal in their opposition. But at least we have put our idea on the table and are willing to work towards a better local government sector.

We would like to see an efficient, accountable and strong local government sector delivering the high-quality services ratepayers need.

We will not, as the sector’s own review into local government says, allow councils to follow a path of steady decline.

Stephan Knoll is the Liberal member for Schubert. On tomorrow’s InDaily, Labor MP Chris Picton will argue the case against rate capping.

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