Capping rate rises to inflation was a key 2012 election commitment from Mayor Karen Williams.
This promise is likely to be front of mind as she prepares her next Redland City Council budget, for delivery on 25 June. But how easy is it to cap rates to inflation?
2014/15 rates increase is greater than inflation
In its 2014/15 budget the Council claimed that:
- Average rate notice increase is 3.95% (including utilities and separate charges)
- Average residential general rate increase is 3.50%
Although not widely promoted by Council, commercial properties were hit particularly hard, with average increases of 15%.
The generally accepted measure of inflation is the Consumer Price Index (CPI) published each quarter by the Australian Bureau of Statistics (ABS). For the December 2014 quarter, annual inflation in Brisbane was 2.0%. So Council rates in 2014/15 have increased significantly above the annual inflation rate as at the year’s midpoint.
Will the Mayor be able to do a better job with the 2015/16 budget, and limit increases to Council’s rates and charges so that they do not exceed the forecast CPI inflation rate?
This could require a cost squeeze which would have implications for the delivery of services and projects throughout the City. Sometimes spending cuts have immediate and obvious impacts. Other “savings” can take many years to cause pain (like reducing maintenance spend).
Checking the budget assumptions
Most business people know that any budget or forecast is only as good as its assumptions. So can we find out more about the detailed assumptions that Council uses when it makes up a budget? Well only what they choose to tell us about.
The Right to Information Act exempts the Council from having to divulge “Information brought into existence in the course of a local government’s budgetary processes” for 10 years after the date it was brought into existence”.
Of course Mayor Williams, who promised increased transparency when campaigning for office, could choose to publish her detailed budget assumptions when she delivers her 2015/16 budget.
Winners and losers from land revaluation
Changes in land valuation could cause significant variation in rates for 2015/16, depending on your suburb or island. Land valuations in Redland City were revised recently by the State Government. Average valuations increased by 2.2% but there were some significant variations, including Cleveland where values went up by 14%.
In December 2012 the Council decided that Southern Moreton Bay island (SMBI) property owners would pay an $88 Translink levy, even though a majority of properties are vacant land and their owners do not regularly use ferry services.
Mayor Williams justified her approach by saying in July 2013 that:
In fact, the latest government valuations show that land values on the southern Bay islands have decreased by 13 – 15% since 2013.
SMBI property owners, already unhappy with lack of basic infrastructure like sealed roads and sewage treatment, will be very interested to find out how this fall in land values is reflected in their rates for 2015/16.
Further details about the recent land valuations are available in this Redland City Bulletin report.
For many years Redland City has added an environment charge to rates bills. This was originally intended to cover the cost of buying and owning land for environmental and conservation purposes. In 2012/13 the charge was reduced from $99.80 to $65.00 ” with a corresponding reduction to the environmental program”.
Last year the environment charge was increased by $20.00 to $85.00 “to fund the majority of operational environmental works previously funded from general revenue and retained earnings”. No reason was given for this change which had the effect of allowing the Council to keep general rates lower than they would have been if these works had to be funded normally.
In recent months the community has expressed much angst about threats to koalas and their habitat in the Redlands. Will the Council respond to these concerns in 2015/16 by reverting to proper use of the environment charge to fund increases to the City’s conservation areas?
The rates concession for pensioners is a fixed amount of $330.00. This amount has not been adjusted in line with inflation in any of the last three three budgets delivered by Mayor Williams.
Will the 2015/16 budget be better for the City’s pensioners? The rates concession will have to increase by about $30.00 (9.0%) to compensate for inflation since the amount was last adjusted in the 2011/12 budget.
Canal property owners have already expressed frustration over their extremely high rates and levies as reported in Redland ratepayers fed up with Council charges. They will be watching the next budget very closely to see if their concerns get addressed.
Are Redlands rates the highest?
As well as focusing on the size of a rates increase, the Council needs to keep the City’s rates and charges competitive with those elsewhere in the region. A comparison last year by the Sunday Mail found that “Redland City residents are slugged with the highest average rates in southeast Queensland”.
What do you expect from the 2015/16 Redland City Council budget?
Now is the time to have your say, while the budget is still being prepared.
Here are Redland City Council contact details.
Redlands2030 – 17 April 2015
Update 23 April 2015 – Latest CPI data
CPI data for the March quarter 2015 shows that Brisbane’s annual inflation is now down to 1.4% . The quarterly increase for Brisbane was 0.0%.
Australia’s annual inflation rate fell to 1.3% following a 0.2% increase for the quarter.
Annual inflation for the past four years is shown on the chart below.