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| Rethink on rates is needed |
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By INGRID HARRISON THE predicted large increase in rates for many council ratepayers would be unnecessary if the three Eastern Shore councils had the courage to adopt neighbouring Brighton Council’s flat rate system. At the time of printing, Clarence City Council had not determined its rate increase but had predicted rises of as much as 20 per cent while Sorell Council was quoted as saying it was looking at rate increases of up to 10 per cent. While our elected aldermen and council officials will seek to blame substantial rises in property valuations for anticipated increases of up to 20 per cent, that is hard to justify with inflation running at less than three per cent and the local government cost increases at not much more. It already seems certain that Clarence will continue to use property valuations to set rates with all ratepayers receiving a letter at the end of June claiming that the recent revaluation of properties in the city would not result in a windfall for Council. Well it may not net a windfall, but it is certain to bring inequities. Our neighbours to the north, Brighton Council have opted for a fairer, more equitable system of rating by adopting a new system for the municipality this financial year. Brighton is minimising the effect of the inequitable Assessed Annual Value system (AAV) where rates are levied based on residential property values. At the same time Brighton managed to keep its average rate increase below inflation, at 2.3 per cent. The more equitable system means that households in Brighton will pay the same general rate for providing council services to their properties, with each service fully costed and then divided by the number of users to calculate a fixed fee. For example in Brighton, a garbage service costs an average of $135 a year per service, so each ratepayer pays $135 for each wheelie bin they have. Brighton does not believe wheelie bin collection should be determined based on an often unrealistic valuation of how much a resident may be able to rent their property for (the AAV). The same applies to water and sewerage services and this user-pays principle also applies to water meters through a consumption charge. Brighton Council has adopted this concept because it rightly sees itself as a service provider, not unlike Telstra or Aurora, and believes that residents should not pay a greater general rate simply because their valuation says they may be able to rent their property for more. AAV is flawed as it represents the rental income on a property, or four per cent of its capital value, whichever is the greatest. It has nothing to do with the cost of providing council services to that property which is a fairer system for all. Councils that rely on the AAV system are doing so because it really is the easy option for them. The AAV system favoured by the majority of councils has significant anomalies. For example a pensioner living in the family home may find over time, that his or her home has significantly increased in value due to its location. It attracts higher rates simply because the pensioner could potentially rent the family home for more, even though his or her income has dropped and there is absolutely no desire to move out and let the property. Another family may improve their property by adding a garden, paved outdoor area, carport or improvements, and would find themselves penalised by higher rates for their efforts. Contrasting this, a family of four living next door will pay similar rates although the demands on council services will be significantly greater. The AAV is neither a reflection on a resident’s ability to pay, nor the cost of providing services, and therefore is inequitable. As well as introducing its revolutionary flat-rate system based on its own modeling and technology system which Brighton has offered to share with other councils, it has also undertaken to keep its rate rises at or below the rate of inflation for the next 10 years. That is a challenge to all councils that have introduced or are contemplating significantly higher increases. However, in the 26 June letter to ratepayers Clarence City Council warned that the recent revaluation in Clarence was likely to result in significant changes in rates for many ratepayers. Council’s letter was at pains to point out that a revaluation does not increase the rate revenue pie, but rather redistributes the rate burden among individual properties. However Council should be reminded that the rumoured rate increase in the order of 20 per cent will give Clarence a significantly bigger pie. Ratepayers looking for a fairer system rightly expect our councils to at least consider flat rating and even if they maintain the old AAV system, will expect any rise to be kept in line with inflation and applied fairly.
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