Council rates rort - rates impost up 41% in 5 years

6 November 2004

Residential property council rates have exploded at more than double the inflation rate across the Adelaide metropolitan area in only five years, delivering councils an extra $147 million each year from ratepayers.

A report commissioned by The Advertiser newspaper shows rates have risen an average of 41.46 per cent since 2000, giving councils a total take of $503,076,311. Inflation for the same period was 17 per cent.

At the same time, councils' total revenue has increased 38.92 per cent ($207 million) to $739,609,770 while their wage bills have jumped 39.87 per cent ($74.8 million).

The figures have prompted the Institute of Chartered Accountants of Australia to call for greater scrutiny of council expenditure.

The ICAA and auditors KPMG conducted the report on behalf of The Advertiser, using budget information supplied by the 17 metropolitan councils.

Federation of Residents and Ratepayers Association president Kevin Kaeding said he was surprised at the extent of the rate increases and called on councils to keep future increases to CPI levels.

"This is forcing people on fixed incomes, like pensioners, out of their homes and there needs to be some dramatic changes sooner rather than later," he said.

ICAA regional manager Mark Jones said that the figures raised serious questions for councils to answer to maintain the faith of ratepayers.

"The bottom line is that total rates revenue has increased by more than double the CPI in the same period and people are entitled to be asking who is monitoring local government costs in the public interest," he said.

Mr Jones said such large increases in revenue had serious implications especially for people on fixed incomes such as pensioners.

"When you consider these costs that people have had to pay, along with the other costs of living that people have had to meet such as electricity, water and gas, rates increases are another large bill that people have no control," he said.

"The more marginal people in society don't have the capacity for these bills to keep going up and up and up because they can't afford them."

The council with the greatest percentage increase in rates revenue over the five years was Charles Sturt, with 55.96 per cent. Charles Sturt Council Mayor Harold Anderson said rates had increased so dramatically over the past five years because the council had chosen to run on a low deficit.

"We have bitten the bullet to ensure our infrastructure is in a good condition and we are relying on rates to cover the costs," he said.

The greatest increase in overall revenue was recorded by the most populated council area, Onkaparinga, with a 53.06 per cent increase.

Onkaparinga Council general manager organisational services, Terry Crackett, said cost shifting from the State and Federal Governments was continually forcing up costs and rates.

"When the State or Federal Government changes legislation, it can often mean additional staff for us which we have to pay for," he said.

"If government withdraws from a service, the community often still expects that service to be funded and provided."

Responding to the report on behalf of all councils, the Local Government Association said a recent report by the Centre for Economic Studies had shown local government had imposed the smallest tax increases of any form of government.

The study showed that over 35 years to 1998-99, local government tax in Australia had increased 50 per cent above inflation, compared to a 160 per cent increase in state taxes and a 262 per cent increase in federal taxes.

LGA president John Legoe said that, generally, metropolitan council finances were well managed. Metropolitan councils were responsible for $5.5 billion of community infrastructure and the level of deficit budgets showed how councils were not over-taxers, but did not have enough to spend on maintaining or replacing that infrastructure.

"Local government debt is very low in relation to this infrastructure funding gap, but we only have one tax and council rates are highly visible and complex to manage with uneven property valuation growth in recent years," he said.

Mr Legoe said councils did not get a fair share of Commonwealth revenue or state funding: "If communities want roads, drains, libraries, ovals and senior citizens centres maintained and service standards increased, then they need to be paid for somehow."

Mr Kaeding said ratepayers were concerned with waste and overspending in councils, especially the salaries of senior executives, which could be more than $300,000 each year.

"It is quite disturbing that people who can't pay their rates have to move out or wait until they die to pay their bills – that is cruel," he said.

Mr Jones said the ICAA hoped the report should encourage South Australians to take a closer look at the operation of their local council.

He said ratepayers should apply the same scrutiny to council budgets that they did to those of the Federal Government.

Mr Jones said the report should also make South Australians ask whether rates increases have brought better services and amenities. He said: "Ratepayers are entitled to ask whether the windfall from rates revenue has been used effectively and efficiently."

The State Government imposed a two-year freeze on rates from 1997-98 to encourage support for council amalgamations.

Reproduced from The Advertiser newspaper.