Clarence Valley Council has backed the NSW Government’s proposal to “provide councils with the flexibility to raise additional revenue to address specific infrastructure back log and renewal projects”.
The projects would need to be partly funded by the state and/or federal governments.
However, while it would be a special rate variation of sorts, any revenue raised would not be included in the council’s general revenue.
The council’s position is revealed in its response to the draft Local Government Amendment (Rates) Bill 2021, in reference to the NSW Government’s Towards a fairer rating system consultation guide, which discusses a raft of rating system changes.
Local government submissions closed on February 5.
Minister for Local Government Shelley Hancock wrote in the December 2020 guiding document: “The Government is committed to providing greater flexibility in the current rating system to improve distribution of the rating burden in local communities.
“This will make rates fairer and help councils cater for population growth and infrastructure costs.”
The IPART’s (Independent Pricing and Regulatory Tribunal) June 2020 review of the local government rating system put it this way: “Introducing a new type of special rate for joint delivery of infrastructure projects.
“Income raised from this special rate would be on top of general income within the rate peg and would not require approval from IPART.
“Such a special rate category would make it clear that councils could co-fund infrastructure or services that are the responsibility of state or federal government, as long as the projects benefit the local community.”
Councillors discussed the matter at a workshop on February 9; however, they had no input into CVC’s responses to the initiative, which had already been submitted.
On the infrastructure issue, CVC staff wrote in its response: “This change will provide councils with the flexibility to raise additional revenue to address specific infrastructure back log and renewal projects that are partly funded by the state and Federal Government.”
However, staff also advised councillors in its ‘background’ comments that “higher tiers of government in Australia have recently argued in favour of increasing council levied rates as part of Australia’s tax mix, particularly since the Henry Tax Review in 2010”.
“Some in the local government sector have welcomed the idea of increased own-source revenue,” staff wrote, “however, others have argued that an increase in rates ‘cost-shifts’ financial responsibility to local governments and might lead to smaller grants from state and federal governments.”
This staff comment has changed from the 2019 observation, when “council had concerns that the levying of a special rate for infrastructure jointly funded with other levels of government will be used as an instrument to cost shift more infrastructure responsibilities to local government.”
The Independent spoke with CVC’s general manager, Ashley Lindsay.
I: What types of infrastructure would be considered if the draft becomes law?
AL: It could be upgrade of a pool, Grafton pool for example, or it could be other major works or CBD works.
I: Would it mean CVC had unilateral power to levy ratepayers without their consent for a particular project?
AL: No, no … [we would] need to consult with our community, [we] can’t just go out and do it.”
To this end, before the special rate is levied, the draft legislation states councils must include the following information in the draft operational plan for the year in which the levy is proposed: (i) the anticipated benefits to the council’s area or local community; (ii) the basis of the council’s opinion, under subsection … (iii) the estimated cost of the intergovernmental project (both for the year and in total); (iv) the estimated contributions to the intergovernmental project, including financial and in-kind contributions, to be made by the council and each project partner (both for the year and in total); and, (v) the amount of money estimated to be levied by the rate (both for the year and in total).
“Details of these rates are to be included in the Draft Operational Plan,” staff write in their report to council, however, “neither Ministerial nor IPART approval are required”.