Council Rates Rise !

 Electing members of the local council to govern the locality where we lived was the most basic form of democracy.  We put in their hands the decisions on what sort of  services our council would provide and paying for those services is reflected in the annual council rates bill.

Unfortunately, some councils have been spending beyond their means and have accrued vast debts which are spinning out of control.  The state government stepped in and forced council amalgamations on the basis of achieving economy of scale..  It was reasoned that mega councils could achieve labour saving equipment and a workforce that could cut costs significantly.

Individual councils adopted very different methods of setting the rates that would apply and one of the common relief strategies was to charge the lower rate on suburbs containing the lower socio-economic class of citizens and where house selling prices were below the city average.

Ability to pay was the criteria used.  Most cities developed along the lines of the more affluent suburbs with their bigger houses paying higher council rates and consequently gaining more parks and better facilities than their poorer cousins.

We now face the situation that some councils are on the verge of bankruptcy.  In one recent emergency, a council had insufficient funds on hand to pay its own staff and appealed for an emergency loan from the state government.  Others have work backlogs than are measured in decades and have applied to the government for permission to move beyond rate pegging in a desperate search for more money.

The state government is now imposing a demand that each council rating system adopt a common approach to setting rates.  Under this system, rates will rise sharply in those poorer suburbs and the government has insisted in a four year time scale to achieve rate parity and ease the burden on individual ratepayers.

One of the inevitable outcomes of a sharp rise in council rates in the poorer suburbs will be a rent increase to recoup the added cost. We will be in danger of dispossessing the low paid workers who are essential for keeping the inner city working if rent rises drive them to live on the city perimeter and face an impossible commute to get to work.

Council rates have a big influence on buying decisions when it comes to real estate.  It is certainly a factor the banks and other lending institutions take into account when assessing the applicants ability to service a mortgage at their particular pay level.

Unfortunately, much of this council mess can be attributed to ratepayers electing councillors with grandiose ideas that are impractical in fiscal terms.  Those promised improvements attract votes and often very unsuitable people find themselves in power with disastrous outcomes.

That will only improve when we stop voting along political lines and start evaluating each individual contestant on their ability to deliver what they promise.   That is the only way to achieve rate stability  !