Rates bills could be cut if SA councils were merged, report finds

EXCLUSIVE: Rates bills for households and businesses could be slashed — without cuts to services — if the number of councils was reduced by half, a report into voluntary mergers in SA has found.

RATES bills for households and businesses could be slashed by about $80 a year without cuts to services if the number of councils was reduced by half.

Annual savings of $65 million year could be made if the number of South Australian councils was cut from 68 to 32 — leaving nine metropolitan and 23 regional councils.

A report into voluntary council mergers, commissioned by the Property Council of Australia and prepared by ACIL Allen, provides a detailed and costed plan on the divisive political issue.

The Liberals proposed a controversial plan for rates capping to the last State Election.

The $65 million annual saving would include:

REDUCING the number of mayors and councillors ($5.5 million)

CUTTING executive-level bureaucrats ($50.67 million)

OPPORTUNITIES such as bulk-buying materials. ($8.74 million)

Based on an estimated 750,000 SA households and businesses, if the full $65 million saving was passed on, The Advertiser understands each would save more than $80 a year on their rates bill.

The report also found South Australians pay the highest rates per person in the country at $774 in 2013-14, almost $150 more than the Australian average.

The SA Local Government Association is opposed to forced amalgamations.

Property Council executive director Daniel Gannon, who represents 300 ratepaying businesses in SA, said the time had come to “examine” the role of local government to make sure it was as “efficient as possible”.

“There will be fewer mayors, fewer councillors and fewer local government executives,” Mr Gannon said.

He emphasised that there would be “no net reduction in non-executive staff as councils move to increase services across the board”.

Rates for homeowners and businesses could be cut without reducing services if SA councils were merged, a report says.

“What is now clear is that the benefits of recasting council boundaries substantially outweigh the costs. Any effort to implement local government reform will not be easy, but that doesn’t mean we should ignore it.

“Recasting council boundaries needs to be considered to ensure every dollar of ratepayer money is wisely spent at a time when our state’s economy is struggling.”

Local Government Minister Geoff Brock said changing council boundaries should be driven by the needs and interests of our communities.

“That’s why the government is preparing legislation to put in place a better process for considering proposals for council boundary changes,’’ he said.

LGA chief executive Matt Pinnegar said the organisation was opposed to forced mergers.

He said the LGA was already working on a range of reforms to drive efficiencies, including improved shared services arrangements between councils, and the implementation of benchmarking across the sector, and these measures were all in the public realm.

SA councils serve local populations that range from 900 to 165,000.

The Property Council report shows voluntary amalgamations would involve merging small metropolitan councils into populations of around 100,000 to 150,000.

Over 20 years, the report shows these reforms would create a benefit of about $505 million to the economy. Actual savings each year were likely to reduce over time.

The last major amalgamation of councils in the mid-1990s slashed the number from 118 to 68 but there have been none since.

Those mergers saved ratepayers $19.4 million every year (in 1998 dollars) and a once-off saving of $3.9 million. At the time, $22 million yearly savings were estimated from further mergers with less than 80,000 people in urban areas.

NSW is in the midst of reducing 152 councils to 112, at an estimated saving of about $100 million a year.

In the mid-1990s the Kennett Government restructured councils in Victoria, reducing the number from 210 to 78.

In 2008, the number of councils in Queensland was reduced from 157 to 73 but four years later four councils were approved for de-amalgamation.

The report, Local Government Reform in SA, also found:

ANY council amalgamation process would incur significant upfront costs.

COUNCILS in SA are much smaller than interstate, averaging 24,790 people compared to 55,100 in Queensland, NSW and Victoria.

BRISBANE City Council is of similar size and population to the Adelaide metropolitan area, has 26 wards and 27 councillors, but Adelaide has 220 councillors.

SA councils are heavily reliant on rates to fund activities, with 63 per cent of revenue coming from rates compared to only 38 per cent for Australia as a whole.

SERVICES provided by councils to ratepayers were also far worse, spending only 6.6 per cent of total expenditure on general public services compared with the national average of 18.7 per cent.

The report concludes: “While this report provides an estimate of the potential financial benefits of council mergers, the real benefits should be in terms of improved services and lower rates which could be passed onto the community and improved capacity and capability of councils to provide essential infrastructure’’.

“For many of the relatively small councils in South Australia, this improved capability is likely to be considerable.”

Saving you cash

A reduction in councils in South Australia by around 50 per cent would deliver savings to councils and the community of around $65 million per annum, a total of $505 million.

The model is based on a cut in councils from 68 to 32; 19 to nine in Adelaide and 49 to 23 in country SA.

Savings would include:

$5.5 MILLION a year from a reduction in the number of mayors and councillors. Councillor numbers would be reduced by 318, from 647 to 329.

$50.67 MILLION of savings after year 3 from a more streamlined executive, with cuts from 576 to 330 positions.

$8.74 MILLION a year from economies of scale benefits in the procurement of materials, contracts and other expenditure.

Amalgamations in the mid-1990s resulted in the number of councils being reduced from 118 to 68.

South Australian councils are on average significantly smaller than those interstate, averaging 24,790 people. This compares with an average of 55,100 for councils in Queensland, NSW and Victoria.

Brisbane City Council has 26 wards and 27 councillors whereas Adelaide has 220 councillors across the Adelaide metropolitan area.

In SA, 63 per cent of council revenue comes from rates, compared to only 38 per cent for Australia as a whole.

Adelaide metropolitan councils are even more reliant on rate revenue than the state as a whole, with rates accounting for 76 per cent of their total revenue base.

South Australia had the highest rates per capita in the country at $774 in 2013-14, almost $150 more than the Australian average.

Rates in SA are also increasing at a faster rate than the rest of Australia.

Onkaparinga’s vote to downsize

A QUARTER of councillors at Onkaparinga Council might be axed under plans to downsize the state’s largest local elected body before the next ballot.

In a tight finish, councillors last week voted to consider reducing the number of elected member positions from 20 to 15 and keep the five wards.

Almost 60 per cent of 197 residents who responded to a survey about the council’s structure wanted 12 or fewer councillors. About 30 of the state’s 68 councils are reviewing their structure, as required under local government laws at least every eight years.

Nine of the 17 councillors at last Tuesday’s meeting agreed to a “compromise” of a 15 member elected body.

The proposal will go back to ratepayers for another round of public consultation, open until mid-November, via the council’s website.

The council can then hold a second round of consultation based on results, with a decision likely by mid-2017.

— Kurtis Eichler