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Lower rate cap means ‘more money for roads’

The decision of the Independent Pricing and Regulatory Tribunal [IPART]to cap local government general rate increases at 1.8 per cent for the 2016/17 financial year could result in about an extra $1million being spent on roads, a Clarence Valley Council media release states.
The council has applied to the IPART for a special rates variation (SRV) of 6.5 per cent over each of the next five years.
It is a condition of the application that additional revenue raised above the annually set rate peg must be spent on roads.
The council had assumed that the annual rate peg limit over those five years would be set at 2.5 per cent, which meant that 4 per cent of the revenue raised in the SRV would be spent on roads.
With an 1.8 per cent general rate increase, 4.7 per cent of revenue raised would be spent on roads.
The council’s corporate director told councillors at last week’s meeting that that 0.7 per cent would compound to $1m in revenue over the five-year period.
“In the first year, we’ve adjusted our estimate [for a 1.8 percent increase] … years two, three, four and five [are] based on the 2.5 per cent increase,” he said.
However, this will mean that a similar amount would have to be found in savings “in other council functions”, according to the council’s general manager, Scott Greensill.
“The IPART resolution to restrict increases in the general rate to 1.8 per cent for 2016/17 means things are going to be fairly tight in a lot of areas, but I’m sure members of the public will welcome the additional spending on our road network,” he said.
At last week’s council meeting, councillors endorsed the council’s revised delivery program, asset management strategy and operational and long term financial plans, as a result of the 6.5 per cent SRV being adopted instead of the 8 per cent originally proposed.
The revised documents also account for the rate cap being lowered.
Councillor Jim Simmons said he couldn’t support the revised documents because he didn’t “speak in favour of the [6.5 per cent] SRV”.
Councillor Karen Toms said she agreed with Cr Simmons.
“We now have an amount that is 0.7,” she said. “It mightn’t sound like a lot … but I think we should lower the 6.5, at the very least, by that [0.7 per cent].”
Councillor Margaret McKenna said she didn’t agree with the 6.5 per cent increase, “but we made a decision … to apply to IPART for the SRV”.
“The resolution before us today is about getting the forms right and getting the final version of the figures out there,” she said.
Councillor Andrew Baker said: “I think not lowering the 6.5 to 5.8 is defeating the purpose of the rate pegging system.”
He said that the council had “managed to beat” the IPART-set 1.8 per cent: “We’re going to keep 2.5.
“I think it’s a bit of a confidence trick … it would give some small relief to ratepayers and demonstrate… that we weren’t all about taking any amount we could find.”
Councillor Craig Howe said there is “no confidence trick”.
“It was clear in our debate … that it was 6.5 per cent inclusive of rate pegging instead of 4 per cent above rate pegging for this very reason: if rate pegging fluctuates, so does the SRV.
“…it’s a positive because there’s going to be more money to spend on [roads].
“There’s also going to be pressure on us, staff and councillors, to find more savings in the general fund.”
Mayor Richie Williamson said the council’s plans would have to be amended in line with whatever rate cap was set each year.
“I don’t think there’s anything sinister about amending your plans once you know what you have to comply with.”
He spoke about the importance of maintaining the valley’s roads and said that future savings would be found in the heavy fleet strategic documents and consolidation of the depots.
“And we will find savings in the consolidation of the depots,” he emphasised.
He said that the exhibition period for the documents [December 10 to January 29] was not ideal (as did Crs Toms and McKenna), but noted “that we don’t get a lot of input” from ratepayers in May each year when the council exhibits the next year’s budget and operational plans.
“I encourage everybody in the community to have their say.”
Councillors Williamson, Howe, McKenna, Lysaught, Hughes and Kingsley voted in favour; Crs Baker, Toms and Simmons were opposed.

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