“Undercooked books”: Is Kingborough rate rise too low?
As a Tasmanian council voted through a rate rise of 2.8 per cent every year for a decade, one councillor questioned whether it was high enough to serve the community. LATEST. >>
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Kingborough councillors voted in favour of a rate rise with most arguing ratepayers will still be paying less, but one councillor has questioned if the increase is too low.
Under the council’s new long term financial plan, rates will increase by 2.8 per cent every year for 10 years.
The increase will help the council achieve an underlying surplus to deliver on capital works projects.
At Monday’s council meeting, Kingborough general manager Gary Arnold said Kingborough’s rates would still be lower than other municipalities.
“Both Clarence and Hobart are 3 per cent or more in the foreseeable future,” Mr Arnold said.
“In Glenorchy the long term financial plan doesn’t actually give a figure … it appears they’ve got a flat rate of 2.5 per cent.”
Kingborough mayor Paula Wriedt said 70 per cent of the council’s revenue came from rates.
She said the council’s finances were impacted by Covid.
“As a council we have very limited income sources,” Ms Wriedt said.
“We do know we’re having some difficulties with some of the capital projects and the tenders that are coming in and that’s a flow on effect of general price rises in the building and construction industry.”
Cr Flora Fox was concerned about the council’s financial plan and that capital works projects were forcing the council to dip into next year’s budget.
“Have we undercooked the books basically?” Ms Fox said.
“If we can’t afford capital projects our rates will have to go up next year and the year after and yet we’re locking ourselves in to a pretty small increase if any over the next ten years.”
Ms Fox was concerned the increase was not enough.
“We may have the highest income per capita in Kingborough and I don’t understand why it’s so important we keep our rates low,” Ms Fox said.
“Is this really doing our community a service - especially when we’ve got massive growth and we’ve got people who really want to live here?”
Cr Christian Street said the increase was low but supported keeping them low.
“It’s important we keep our rates low because real people are required to pay the rates we set,” Mr Street said.
“It’s worth remembering people actually have to pay those rates, they’re young families, they’re single parents, they’re people who live alone, they’re pensioner.
“They’re not just the wealthy, they’re not just double income, no kids households, they’re real people who are really struggling with cost of living pressures.”
Mr Street said Kingborough was an efficient council and that Kingborough ratepayers enjoyed a higher level of service than Glenorchy.
The council also voted to increase fees and charges by 3 per cent.
Tassie council faces 28 per cent rates rise over 10 years
The Kingborough Council could increase its rates by 2.8 per cent every year for the next ten years as part of its long term financial plan.
The plan, which was released on the agenda for Monday’s general council meeting showed an assumed rate increase of 2.8 per cent over the life of the long term plan and the removal of the rate remission granted in 2020/21 to achieve an underlying surplus.
The report said achieving the surplus would put the council in a more favourable position to invest in infrastructure assets like the Kingston Park development.
The plan assumed the increase would be in place from the 2022/23 period.
An analysis of the council’s future rates showed if the rate increase was 2.3 per cent, 0.5 per cent less than the assumed rate increase, the council would generate $15.5m less over a ten year period.
“As rate revenue represents almost 70 per cent of total income, any deviation from the assumptions will have a significant impact on financial outcomes,” the report said.
The plan assumed fees and charges would also increase by 3 per cent per annum.
Projected revenue increases for rates and levies would increase from $34,009,000 to $51,047,000 over the ten year period.
The report showed for the 2020/21 period, Kingborough had the lowest rates compared to the seven largest councils in the state.
“It is important to balance rate revenue as a funding source with community sensitivity to rate increases, including rates affordability within the general community, the level of service required by the community and Council’s financial sustainability,” the plan said.
Meanwhile, the report also showed a significant income stream for the council was interrupted in 2021.
The council has an investment in TasWater, which could only pay a fiftty per cent dividend due to the need to freeze water rates in response to the pandemic.
It resulted in the loss of more than $600,000 for the year.
The report showed over the previous ten year period, the council had an “unsustainable” gap between its operating expenditure and revenue.
“The transfer of water and sewerage functions and activities to the newly formed southern water corporation (now TasWater) had a significant impact on council’s financial outlook,” the report said.
“Council was intending to close the gap between projected expenditures and projected income to deliver an underlying surplus in 2021.
“However the impacts of Covid, particularly the forecast loss of TasWater dividends has delayed the achievement of an underlying surplus until the year 2022/23.”
The report said allowing the deficit to continue would jeopardise funds for capital expenditure.
The council will discuss the plan on Monday.
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