Rate capping

The State Government’s plan to scrutinise local government spending has some merit.
While most local governments manage their budgets responsibly there is undoubtedly scope for them to be more efficient with their resources.
The much publicised approach by some councils to spending (Onkaparinga) has clearly dented the public’s trust in the system and there is a perception that some councils are not good financial managers.
This is further enhanced by the constantly increasing cost of living (while wages largely remain stagnant) and it is not difficult to understand the level of discomfort felt by many who are battling to make ends meet.
However, councils are not immune to unexpected cost pressures themselves, often having to find resources to administer new State Government initiatives, which are added to their workload without adequate compensation, as well as having to deal with significant cost increases, such as those caused by the fall-out of the Chinese recycling ban.
Rate capping is likely to be a popular solution for those who fear opening their rate notice each year but it can be a blunt instrument which, if not flexible enough to allow for a wide variety of individual council circumstances, could have a negative impact on the very people it is designed to help.
While established metropolitan councils may be able to easily keep their costs relatively low, councils such as those in the Hills face special pressures – rapid growth, difficult topography, vulnerability to flood and fire and significant and expensive road maintenance and infrastructure responsibilities.
Regional councils are also burdened by having to provide the required level of services which in many cases is not balanced by high density living meaning they must be paid for by fewer ratepayers.
If rate capping is the Government’s chosen means to relieve financial pressure, these factors need to be considered when the cap is set and any negotiating system must be free flowing, transparent and not overly onerous on councils.
Perhaps consideration could be given by the State Government to increasing concessions to the most disadvantaged in the community rather than making the entire district suffer if the result of a rate cap is a reduction in established or new services.