On Tuesday night, Kingborough Council will meet to pass its 2015-16 Budget. You can review the agenda and report here.

The report proposes a general rate rise of 4%.

The justification for this is in Council’s long-term financial plan (LTFP) which directs a 4% rate rise every year until 2020-21.

That means a family paying $1,500pa in rates this financial year will be paying over $2,000pa by the end of the LTFP.

My number one priority is to ensure Kingborough Council is in a solid financial position but I do not agree with Council's plan to achieve a surplus solely through rate rises.

Council expenditure has not been adequately scrutinised.

The LTFP assumes Council will deliver almost no efficiencies and no new savings.  It will continue to run all of its existing programs and projects, own and maintain all its existing assets and employ the same number of staff (around 180).

Expenditure assumptions include:

  • Employee costs are assumed to increase by 4% every year.
  • Depreciation costs increase by an average of 2.3%.
  • Materials, contracts and other costs are expected to increase by 2.5% per year on average.

Essentially, Council has decided what level of expenditure it believes appropriate over a 10 year period and plans to simply adjust its revenue (rate rises) to match its desired level of spending.

Can you think of any other organisation that is allowed to behave like this?

Can you imagine being able to direct your employer to give you a payrise whenever your expenses go up?  It'd be nice, but it doesn't happen.

Kingborough Council can do this because it is a monopoly. After residents buy a property in our municipality they cannot choose what Council collects their bin. If they’re in our municipality, they are forced to use our services, irrespective of the price.

But the difference between Councils and other government monopolies is that Councils aren’t regulated like – for example – utility companies are by the Economic Regulator. Kingborough Council isn't required to justify its rate rise to anyone but itself before it makes its decision.  That's something that has been addressed in other States by making Councils justify any rises over CPI. 

But it's not just the LTFP that is causing these excessive rate rises.  Over the past 12 months, Councillors have shown absolutely no appetite to make hard decisions on expenditure.

Since I joined in November, Council has not voted for a single significant cost saving measure. Instead, it has voted:

  • To continue to run losses on its Kingborough Family Day Care program for a further three years.
  • To substantially change its events policy so that Council will now become a primary provider of community events.
  • Against ending the ‘Kingborough News’ propaganda machine.
  • Against tightening Councillor expenses.
  • To double one project’s budget allocation midyear.
  • To pour $95,000 into upgrading the Kingston wetlands car park in 2015-16. The wetlands is an area that has undoubtedly improved environmental outcomes, but has been an absolute white elephant when it comes to public amenity. Its ‘sculpture park’ could be mistaken for a rubbish tip filled with unwanted household items and the wetlands itself is infested with rodents.

I believe balancing the budget is essential for the long-term financial sustainability of our municipality. We are a wealthy municipality and there is no excuse for running ongoing deficits. However, asking for a 4% rate increase every year for a decade without examining expenditure is lazy public policy.

If Kingborough ratepayers are to avoid continued rate increases, Council must take action to reduce expenditure.

Councillors must show some leadership. The current climate sees Councillors provide essentially no strategic direction to Council. Instead, staff reports are rubber stamped and the status quo continues.

That’s why I will be calling for a review of the services provided by Council and an audit of its assets and associated running costs. It is important that in doing that we are being truly consultative in order to find out what the community wants.

While there is core group of residents which readily engage with local government, there will always be vastly more residents whose only engagement with Council is the put the bins out or pay their rates. Council must get better at engaging these people so that we can understand what they want their Council to look like.

It is unfortunate that this large section of the community who prioritise lower rates over an expansion of services has such low representation around the Council table.

Finally, it is important that Council takes note of the economic conditions it is setting rates in. The Consumer Price Index (CPI) in Hobart for the 12 months to March 2015 was 0.9%. That should be a guide to Councils about what sort of rate rise is in line with community expectation. I don’t believe 4% can be justified for that reason alone.

We see other levels of Government tightening expenditure, yet when Kingborough Council finds itself squeezed, it simply increases rates.

I will not be voting for a 4% increase in rates and I sincerely hope I will find support amongst my fellow Councillors tomorrow night.