Ratepayers of the Bega Valley Shire can expect their rates to rise by 15 to 16 per cent in three years due to the compounding effect of the three special rate variations (rate increases) which are currently under consideration by the council. This means an average residential property valued at $185,000 paying rates and charges of $2702.51 today will in 2015-16 be up for $3112.86.
This critical piece of information was flushed out at a rates workshop organised by the council and held in Merimbula, on Wednesday evening February 20.
And it’s not only ratepayers who will feel the pinch but renters too as landlords push up rents to cover their bigger council bills.
It was also confirmed at the meeting that sewerage, water and the waste charges will all increase in line with the 3.4 per cent CPI increase for 2013-14. But it could be more if the council in April decides to whack a bit more on.
The poorly attended meeting of about 20 residents expressed strong objection to the proposed three rate increases to take effect from the start of the next financial year (July) and continue through to 2016. A show hands at the end of the meeting indicated two in favour, 14 against and four undecided.
The issue of the ability of ratepayers to afford what will be 10 years of consecutive rate hikes above the state determined rate cap, (which councils are not obliged to apply) dominated discussions. Ratepayers having to fund major infrastructure works for the airport was a clear irritant and council’s alleged poor work practices fixing road potholes got its usual airing.
Mayor Bill Taylor with input from other councillors, primarily Cr Michael Britten, and council staff put the case for the increases saying basically if the community wants improved roads, sportsfields, halls, and investment in “the slowly deteriorating” infrastructure assets the ratepayers will have to foot the bill. Even if the proposed 2 per cent variation for 2013-14 was to be deferred for a year the impact would be significant, with it costing the council $400,000 in asset depreciation and then forced into a catch up mode.
Cr Taylor repeatedly said: “They are your assets; they belong to you the ratepayer.”
For the most part he deftly fielded the questions and when unsure of the answers lobbed the question to either another councillor or a council staff member.
Merimbula business man Peter Barron got things off to a cracking start.
“You cost me eight to 10 per cent of my income a week for council services. “We can’t afford it; the people can’t afford it – back off.”
Cr Taylor said: “Yes but we must maintain the infrastructure; we are asking residents to give it the nod. We are trying to take the prudent approach. We are very conscious that the income levels in the shire are below the state average. We are very conscious of that.”
(According to the 2011 ABS Census the average annual income in the Bega Valley Shire is $44,096 compared with the national average full time wage for 2013 of $72,592. Source: Fairfax Media.
Cr Britten said: “We have a long term financial plan that starts now as to how we can get the money to upgrade the assets for the future. The whole purpose of this rate variation is number one (the 2013-14 special rate variation) for collector roads so that in a period of time they get to a standard where they won’t pothole. But if you don’t put the money up you won’t get that.”
Mr Barron said: “If you can’t afford it – you shouldn’t do it. The ratepayers can’t afford it. My rates cost me $80 a week. Electricity takes another 10 per cent of my income. Those two factors are the highest items in my weekly budget. This is the practicality of the situation. You are a government body and people cannot afford it. You just don’t get it.”
He asked the councillors present if they thought it was fair that the rates took 8-10 per cent of his income.
“It is a simple question. What is your answer?”
“If it maintains the infrastructure we have to live with, the answer is yes,” Cr Britten said.
“I want an answer, do you think 10 per cent is a fair outgoing for a ratepayer?” Mr Barron asked to the applause of the attendees.
Cr Taylor said it wasn’t a fair question without Mr Barron providing additional personal information.
“We are very conscious of the effect of the Global Financial Crisis and very conscious that the Australian dollar is massively overrated, that’s what causes to shops to empty in the main streets and farmers hardship, council is not in control of those things. What we are trying to do is focus on our responsibilities and keep the assets you own in a state of repair,” Cr Taylor said.
Former councillor Fraser Buchanan said that there had been continual increases in rates above rate-pegging in recent years plus the compounding effect of these, and council was now proposing further additional increases for the next three years.
“Where do you reach a point that makes it too difficult for the people to pay?” Mr Buchanan asked.
“I wonder how many people have had pay rises to meet these rate increases. I suggest unless they are in local government, no-one. The people in private enterprise have to cop it on the chin. They are absorbing more and more expense all the time and not getting any increases in their income. Where is the point you recognise it is above and beyond the ability to pay?”
Mr Buchanan said he wondered why the council was not applying for a regional development fund to upgrade the airport as the Eurobodalla Shire had done for the Moruya airport.
“Why should the ratepayers have to pay $6 million for a regional development infrastructure project when there are federal funds available?”
Cr Taylor explained that the council had put the Eden Port forward as a project for that funding.
Member of the Bega Valley Shire Ratepayers Association Geoff Jones, of Merimbula, spoke about the compounding effect of the special rate variations and used the airport SRV to illustrate his point.
He said the SRV to raise funds for the airport a couple of years ago started off at $333,000.
“By year 20 (the life of the SRV) you will receive $800,000 a year. You want $6 million, but you will actually achieve $9 million from the compounding effect that the ratepayers are paying. What you are doing is by putting in these long-term applications it is having a compounding effect.”
Cr Taylor said that was prudent planning and the extra $3 million raised would go into reserves.
Council’s treasurer Lucas Scarpin said that Mr Jones was right in his calculations
“All the special rate variations are the same and the (CPI) index does accumulate.”
He said the $9 million raised over the 20 year special rate variation amounted to $450 for each ratepayer over that term.
“It sounds like a lot of money but when you break it down it is reasonable,” Mr Scarpin said.
Retired economist Bill Curran said when the sports levy was first mooted the council sold the idea to the ratepayers on the basis it would be for five years.
“Those five years will be up next year and now you are bringing it back again, so it’s a sales pitch.”
“What we are selling to you is better facilities over the long term,” Cr Taylor said.
Mr Curran said the effects of the Global Financial Crisis could continue for a few more years and while there had been a lift in the stock market it was not a leading financial indicator “so one shouldn’t expect council’s finances are going to show any marked jump this coming year,” he said.
Mr Curran went on to say: “So if you’re in a situation of a marked downturn in revenue surely your sound financial management would be to defer, put off as much as possible in this downturn in the expectation you can catch it up when it gets better.
“The council seems to go against that. It is saying we are in a bad financial state now we have to pick it all up, borrow a lot of money for the expenditure of revenue each year.
“This is why people are saying, ‘Hey right now we can’t afford it.’
“You should know the people can’t afford it – there is plenty of information out there including information that will tell you if you go above people’s capacity to pay you are in deep doo-doo.”
The president of the Merimbula Chamber of Commerce, Natalie Godward, and vice president Debbie Isles spoke in favour of the proposed rate increases saying that the airport was critical for tourism and that it was important that infrastructure assets were repaired and improved.
In closing Cr Taylor said: “We are here to maintain your assets, for you to use and to pass them on for future generations; this is what the plan is all about. This is our financial responsibility. I can only say to you if you want roads, your halls and sporting facilities – this is what it will cost.”
Cr Taylor said he could sense a tension between the level of services and the ability to pay.