Thursday, December 23, 2010

LETTER TO: Valuation and Local Government Rating Review Steering Committee

22 December 2010
Valuation and Local Government Rating Review Steering Committee
Local Government Division
GPO Box 123
HOBART TAS 7001
Dear Committee Members,
Re : Review of Government Valuation and Local Government Rating

We thank you for this opportunity to comment on the report titled Valuation and local government rating in Tasmania: a robust framework for the future dated October 2010 by Access Economics.

We note the press report published earlier this week in The Examiner Newspaper, advising that the closing date for submissions have been extended by a week. We are appreciative of this additional time to make comment on behalf of ratepayers in Tasmania.

At our meeting in Launceston with you and your advisor Mr Peter Pearce on 12th November, members of our Executive were pleased to congratulate your government on authorising this comprehensive report, which carries our Association's broad support. Whilst supporting the general thrust of the report, we argue for 50% of municipal charges to be made up of fixed charges for services.

There is no doubt that ratepayers and the community generally who contribute to rates through leases and rentals, expect local government to be a basic service provider, and that those services ought to be charged where possible on a system that reflects the user-pays principle. Particularly, residential households should not be penalised with a charging system that
reflects a 'wealth tax' for the cost of basic services.

The Terms of Reference provided to Access Economics, calls upon the consultant to assess... the effectiveness of (local government) rating processes.... and .... evaluate alternative models for ....... rating. It is therefore disappointing that there wasn't a broader investigation by Access Economics, of existing rating systems operating in Tasmania (such as the systems used by Georgetown, Devonport and Brighton) and for modelling on the impacts of any changes on a more representative range of local government areas (those modelled didn't include Launceston for instance, the largest municipality, or any of the municipalities currently using a fixed or
capped rating system).

Valuation and Local Government Rating Review Submission 2 Residential properties on 4% minimum rule after 2008-09 revaluation, were very badly affected by rate increases, and will continue to suffer these high cost penalties until the present systems are changed and returned to a rating cost akin to pre-2008 levels. These rate levels are not sustainable for such ratepayers, and whilst local government argue for their own income sustainability level, it is our very strongly-held view, that there is inadequate consideration given to ratepayer sustainability.

Councils must demonstrate more restraint with their budgets, so as to reduce rating requirements and to properly manage activities and budgets in a responsible manner to remain within budget provisions and to fully complete all works for which the budget was approved in the first place. There is a need for consultation with ratepayers BEFORE rates and budgets are proposed for council approval, and that this consultation be real and persuasive.

Budget savings must be returned to reserves and offset interest expenses and to minimise subsequent rate charges. Activities of Local Government must be restricted to more appropriate local government activities and not become to the benefit of a greater region. Local Government must not continue along a course of becoming 'minigovernment'.

Clearly the present use of AAV to assess municipal rates is inequitable and broadly unpopular, and must be abandoned. Whilst the impact of a land only based valuation system has not been fully modelled against AAV in a Local Government rating system context, it would appear from the investigation undertaken and presented, that this would be a fairer system for the second
50% of municipal charges to be directed to ratepayers.

We look forward to learning more about submissions you receive in relation to this process, and hope that we can continue to participate in a two-way dialogue to arrive at a new system for valuation and Local Government rating, at the earliest possible date.

Yours faithfully,
Lionel J. Morrell
President
Tasmanian Ratepayers Association Inc.
Copy Hon Bryan Green
Minister for Local Government.

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