STATUS: Unsolicited & copied to Tasmanian Ratepayer’s Association Inc.
TO:
- The Honorable Mr Peter Gutwein: State Treasurer and Minister for Local Government
- The Honorable Mr Matthew Groom: Minister for State Growth
Gentlemen,
I would like to suggest that you to look closely at opportunities that can be created by focussing Local Government on essential services and removing their 'dead hand' from entertainment, sporting and cultural activities which would significantly reduce their costs as well as opening new opportunities for the private sector.
Significant gains are possible because Councils have used their rate collecting and other powers to operate loss making pseudo-business activities which could normally be run profitably by the private sector. They have again (needlessly) demonstrated that bureaucratic methods are not adequate to stimulate business development or create profits.
Some local governments (e.g Launceston City Council) have taken on numerous non-essential activities which they appear only able to run at a loss. Examples for the LCC include sports stadiums and grounds, museums, swimming pool, a gymnasium and a crematorium that add around $28 million to their operating costs – nearly 1/3 of the total.
The means of rewarding Councils creates a conflict of interest for them because higher expenditures are rewarded with larger budgets. The more money they spend, the more positions they can justify and the higher their salaries so there is absolutely no motivation for them to reduce or control expenditures, only incentives to spend more money. This is a conflict of interest that Council's should not have, e.g. when the responsibility for water was taken from the Council, avoiding about 20% of budget expenditure, the Launceston Council still found ways to justify an overall rate increase, regardless of the impacts on family budgets.
The constantly increasing rates that result are putting needless pressure on businesses and families as well as curtailing economic activity in the area.
Consequently I suggest that you consider:
Step 1) Causing all Councils to disclose all non-essential expenses as line items in their rate notices so that all ratepayers can understand what their monies are to be used for and judge their Council's accordingly;
Step 2) After review, consider making payment of non-essential rateable components optional or removing them;
Step 3) Consider privatisating all possible non-essential rateable activities (by sale or lease), making exceptions as authorised by the State government, rather than at the Council's pleasure.
It is very difficult to see how, in today's turbulent economic conditions, Council's can possibly justify the power to seize a ratepayer's home and property to cover losses that the Council has incurred through poorly managed business operations and that provide services to only a small percentage of the community and, that could be better operated by private interests.
Removing loss-making, cost-centric Council methods by privatising the activities would have multiple benefits:
- Councils stop using rates to unfairly compete with private businesses, and
- Create new opportunities for private businesses and investment, and
- Reduce Council and State budgets (in Launceston's case this would be by tens of millions of dollars per year).
- Reducing rates would make businesses in the area more competitive by reducing their costs and increasing consumer wealth and spending (e.g. rate savings could total $500 per year per household in the LCC case).
The State government would benefit by
- significantly reduced costs;
- increased private sector involvement in local areas and more activity to produce profits and jobs;
- earning sales and lease income from transferring the chosen activities to the private sector;
- increased business and community support from significantly reduced rates;
- economic flow ons from the higher budgets available to Tasmanian property owners;
- greater State economic activity.
Best of all, these benefits would be achieved with either no, or easily offset, costs.
Rationalising Council activities in this way would certainly be resisted by Councils and their bureaucracies, however there are a number of ways to curtail that resistance and surely it is time that greater stimulus was provided to Tasmania's private sector? For too long now Council's have been in the 'saying no' business. A step towards revitalising and refocussing them on essential services would be one good investment.
With Mayors looking at a 4 year term and no apparent means for voters to change non-performing Mayors and Councils, a real change in the distribution and delivery of entertainment, cultural and similar services is indicated.
If you wish to discuss this matter further I can be contacted by email or phone.
Thank you for your attention,
Sincerely,
Mike Bolan
Complex systems consultant
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