What if I told you that the average Victorian rates bill could go from $1810 to $6364 within 10 years?
What would your view of Councils be if this were the case? How would your expectations of your local Council change?
Well, it’s not just hypothetical. The Victorian State Government has commissioned (but as yet refused to release) an independent report into rate capping and how it is constraining the provision of services and jobs”. The State Government has sought the input of the local government industry but has largely hidden the process from public view. The report was “delivered” to the State government a year ago. They have deliberately refused to release it until after the state election.
The Municipal Association of Victoria (MAV), the Council's “collective union”, has lobbied extensively that Rate capping has prohibited councils from offering high-quality services to their community. It also argues that with such high population growth targets pushed onto councils by the State Government that it cannot continue to deliver high-quality services without drastic increases.
In 2018 The Victorian Auditor General (VAGO) found:
Councils Do not understand the full costs of frontline services, Projects that improve efficiency are ad hoc only, and available data for any benchmarking is inconsistent.
Alarmingly VAGO found that the government department tasked with providing guidance to all Victorian Councils does not offer any guidance on service planning, reviews, or best value practices.
Put simply Councils failed to understand what their true costs are, what is causing the costs, whether the costs are appropriate and how to manage those costs efficiently.
The State Government called for submissions to an inquiry into rate capping. In reading the submissions we are incredibly alarmed to learn that:
The ASU wants rate capping to end because:
· Councils have not shown restraint or any efficiency since it was introduced
· Wages growth is hampered by rate capping
· Women have had their wages suppressed by Rate Capping which is inconsistent with equality
· It kills jobs and is bad for communities and has no redeeming features
The MAV (MAV represents all 79 Victorian Councils) totally opposes rate capping because:
· It restricts spending and underfunds councils
· It doesn’t allow for CPI and inflation
The Australian Local Government Association also opposes rate capping because:
· Rate capping hinders growing communities to plan for new infrastructure
· Local Government should have autonomy over tax rates to the community
The most damning report is from the Australia Institute (commissioned by the Australian Services Union). The institute claims:
· The rate cap has cost 7425 jobs
· Reduced GDP by $890 Million
· The cap is anti-democratic as councils should decide their revenue increases
· Local Government wages are good value for money
What is clear here is that the most independent report into councils and rate capping comes from the Victorian Auditor General. The Auditor General states that Councils cannot manage their needs to be efficient, that hundreds of millions of assets have been left to fall into disrepair and that councils have all failed to adequately plan for their assets over time. Councils are failing miserably to do what any private or listed company would naturally do.
Clearly, councils do not have the skillsets to manage their businesses efficiently, is it because their culture is so rotten, so antiquated and so out of date that their leaders expect revenue to be a never-ending bucket of someone else money? We think so.
What VAGO and the Ombudsman have also revealed is that Councils don’t know how to define a service, don’t know how to define complaints, don’t know how to handle, categorise and resolve them and do not have any systems in place to adequately manage their assets and spending on them.
What all of this will result in is the Andrews government making a lazy political decision to end rate capping.
Instead of the Local Government Minister (Melissa Horne MP) making councils responsible to live within their means and drive efficiency out of their ballooning staff numbers, we will see rate capping ended to help the state government cost shift state responsibilities even further to councils. We will see councils given a range of say 5-15% that they can raise their rates annually without the need for external approval (as is the case now). We will see inflation and economic pressures as the reasons to do this, whilst ignoring the enormous impact on household cost of living.
A 5% increase, each year, over 10 years, represents a real increase to you of 55% in your rates bill
A 15% increase, each year, over 10 years, represents a real increase to you of 250% in your rates bill.
Sadly, it’s not an IF rate capping will end, it is a matter of WHEN.
Local Councils continue to operate with the lowest oversight of any tier of government, just as they like it. State government is keen to cost shift some of its own responsibilities amid its promise in the recent state elections of “no new taxes”. This makes the rates bill of every Victorian an easy casualty.
For decent hard-working Victorians, lazy policy means that our rates are now tipped to exponentially rise, and there will be incredible bill shock and pain ahead for every Victorian.
Don’t worry though, those local Councils who feel hard done by for being subjected to 6 years of constraint and austerity, will gladly make up for it in the end.
Time will tell, but the local government sector has totally scammed all of us.
They will have the last laugh.