ON AVERAGE, ratepayers across South Gippsland Shire can expect their rates and charges to increase by 4.13 per cent overall in the 2014-15 year. Rates alone will rise 5.5 per cent. However, key changes, including the phasing out (over two years) of the flat rate Municipal Charge and the reduction of waste services charges by 16 per cent, will see benefits, in general, for owners of lower valued properties, while owners of higher valued properties will pay more.
The 2014-15 Budget was adopted by Council at the meeting last Wednesday, along with a Rating Strategy that was prepared for the period 2014 to 2018, through an extensive public consultation process, with the aim of achieving a more equitable distribution of the rate burden. The main beneficiaries, farmers, are assigned an 80 per cent differential rate in 2014-15, falling to 70 per cent in 2015-16, though lifestyle properties are excluded. Making up for this to some extent will be differential rates in the Industrial and Commercial categories – set at 102.5 per cent in 2014-15 and 105 per cent in 2015-16; while the Cultural and Recreational category will have a differential rate of 43.75 in 2014-15 and 50 per cent in 2015-16. Owners of vacant land will be strongly encouraged to develop their land by rate differentials of 175 per cent in 2014-15 and 200 per cent in 2015-16.
Cr Don Hill argued in vain for an even higher differential, insisting that the scheme was far from equitable and farmers would still be hard done by. Other councillors pointed out that the Rating Strategy Review Steering Committee had included community representation and this was the formula it had come up with so it couldn’t be fairer.
“The process has been brilliant,” said Cr Lorraine Brunt. “There is no strategic reason to further slug owners of vacant land. The incentive to develop vacant land is already there.” Cr Mohya Davies said that owners of vacant land were already angry about the differential, while Cr Nigel Hutchinson-Brooks said, “The umpire has spoken.”
All councillors voted to adopt the Rating Strategy, with the exception of Cr Hill, who abstained from the vote.
Introducing the Budget, the mayor, Cr James Fawcett, described budget preparation as “one of the most important jobs we do as Council” and said it involved an “extraordinarily lengthy process, starting with the Rating Strategy”. He acknowledged the Budget had its critics, saying there had been “a tremendous amount of noise” – from Councillors, as well as from the public in letters to the press and submissions to Council.
In attempting to answer what was, he said, “a common refrain – why do we have rate rises?’” Cr Fawcett said that the CPI, which averages out at 2.7 per cent, was a driver for each budget, and then there was a need to add an element of growth. “You must recognise that growth does have costs with it.” He asserted that Local Government was effectively at the bottom of the heap and could not resort to passing on costs – or burying them in paperwork – as the federal and state levels are wont to do. “We have to demonstrate to you, the community, what the tax hike will be each year.” The vast majority of local councils, he said, with the exception of Melbourne City Council, which can draw upon the huge revenue it collects in fines, must increase rates each year.
At 4.13 per cent, the overall rates and charges increase is more palatable than the 2013-14 rise of 6.48 per cent. The following years’ rises are projected to be 5.29 per cent in 2015-16, and 4.83 per cent in 2016-17, and trend down over the following four years to 3.89 per cent.
“Each year we’ve beaten the projected rate rise by a sizeable amount. Hopefully, this will continue,” said Cr Fawcett.
Cr Davies expressed her support for a Budget she described as “responsible”. She said Council’s prudent and transparent financial management compared well with other shires, with low outstanding borrowings and the capacity to meet unexpected expenses in future years without borrowing.
Cr Jeanette Harding also supported the Budget, saying that although a few locals had queried the rate rise with her, they were unwilling for Council to reduce its services and appreciated that the money for the services they expected had to come from somewhere.
Cr Hutchinson-Brooks said that his recent attendance at a local government forum had reinforced his strong belief in the importance of working with other municipalities to lobby for a greater share of government revenue. The capping of Federal Assistance Grants (or FAGs), announced in the latest Federal Budget was, he said, yet another cross for local government to bear. As so often, it was unexpected, and it showed the prudence of putting money away to tide Council over unforeseen events.
“We had to borrow around $4 million last year for the super fund. The defined benefits super scheme could still come back and bite us…This is a responsible budget that we need to have in the current climate,” he said.
United in opposition to the Budget were Crs Andrew McEwen, Bob Newton and Don Hill. Cr Newton said he had grave concerns about the capacity of many ratepayers to pay rates if they continued to rise. Cr McEwen said the proposed rate rise was “over and above what is required” and accused Council of treating the community like the proverbial magic pudding.
The fiercest opposition of all came from Cr Hill. “It’s OK to borrow if you need to,” he argued and then leapt onto what has become his hobbyhorse of late [see report of May council meeting in ‘Councillors blue over budget blue yonder’ in The Mirror 11/6/14], railing against the incorporation of an unallocated $34 million in the 15 year budget at the expense, he said, of today’s ratepayers. “We’ve got an over-inflated rate rise to cover costs in future that will not be required,” he exclaimed.
Cr Hill attempted a PowerPoint presentation of an alternative long term financial plan, minus the unallocated $34 million, but was given short shrift by a clearly exasperated mayor, who said “I don’t accept your figures.” A heated argument ensued between the pair, with Cr Hill goading Cr Fawcett by referring to a “slush fund” and suggesting the budget process was not transparent, and Cr Fawcett describing Cr Hill’s figures variously as “naive,” “misleading” and “an absolute nonsense”. The mayor cut short Cr Hill’s presentation, saying, “I find your tone offensive to all of us.” He added: “You have almost singlehandedly wrecked the Budget process.”
Shortly afterwards the Budget was adopted, with support from Crs Fawcett, Davies, Brunt, Hutchinson-Brooks, Harding and Kieran Kennedy. Crs Hill, McEwen and Newton voted against it.