Cost shifting

The recent solid waste levy hike is another example of a government caught in a quandary because of a huge GST revenue gap.
With $500m lost as a result of the shortfall, holes in the budget must be plugged.
But passing a significant portion of that financial pressure onto councils is a prime example of cost-shifting that inconspicuously passes costs on to taxpayers, all the while putting councils in the frame.
Several SA councils have already increased their rates in the wake of the levy increase and the Adelaide Hills Council joined those ranks last week, passing on the cost through a $10 increase to the fixed charge component of rates, in addition to its planned 2.8% rate in the dollar increase.
The State Government’s levy hike put the council in a lose-lose situation.
Absorb the fee and the Government assumes the council has enough fat in its budget to handle such cost-shifting.
Pass it on and face the backlash from residents who face more financial pressure in a difficult economic climate.
The cost-shifting exercise is particularly distasteful in the wake of the State Government’s pre-election campaign aimed at putting a cap on the amount by which councils can raise rates each year – a proposal that the Government seems disinclined to let go, despite the Bill having stalled in Parliament.
But to make matters worse, the revenue raised by the new fee – the burden of which will be carried in part by Adelaide Hills ratepayers – will mostly go towards shifting sand between metropolitan beaches – some 20km from the nearest Hills resident.
The Local Government Association and individual councils – including the Adelaide Hills and Alexandrina councils – have called for the Government to use the revenue to promote recycling and find innovative new ways to deal with waste.
These calls have a lot of merit.
Credit must be given to the Government for being upfront about where the money will be spent – and for using it for environmental purposes.
But if revenue is to be raised from increasing the waste levy, the Government should use it as an opportunity to tackle the major and growing environmental problem that is our State’s waste.