It’s Cairns Regional Council budget day for 2017/2018 with all the boring details at Special (budget) Meeting. I will just focus on this statement apparently drawn from the Mayor’s speech.
Cairns missed out on a revaluation this year so we will have to wait until next year for that fun. Although I’m curious as to the composition of that 0.4% presumably above the general rate increase?
Increases below CPI funding an equivalent level of council works and services over ten years could be something of a conflict. LGAQ have previously compiled a council cost index based on the relevant components of council costs but not sure if this is still available or behind a member login. The CPI is not really a relevant benchmark for council costs as we have found out at times in the past.
I think I would be prepared to take a bet against this but ten years is a long time to wait to collect and perhaps a closer look at the assumptions is warranted.
Mark, could the 0.4% relate to properties that have changed category during the year (e,g residential to commercial etc)?
Re the council cost index; comments in a report in Oct from QAO notes that “Eighteen councils use changes in the Brisbane Consumer Price Index to forecast growth in revenues, such as rateable properties and rate changes, rather than calculating an index that closely correlates to actual expected cost increases. Forty-seven councils index revenue growth using rates that aren’t referenced or explained to determine their appropriateness. Five councils use a council cost index — a specialised index developed for Queensland councils — which is a closer correlation to the cost of providing council services.”
This suggests that the LGAQ index you refer to does still exist…although I can find no public detail beyond 2012.
The (over) regulated NSW system is based around a Local Government Cost Index. The most recent years are below CPI. Care needs to be taken with any comparison with NSW given the different jurisdictions and expectations. Water and Sewerage particularly which is usually not a council responsibility in NSW. Already some flawed social media misinformation on rates comparisons for Cairns around this with the Cairns Post click bait trolling on FB.
Employee benefits is an item of interest in the Council ten year forecasts. Subdued wage growth has been a topic lately and is a key feed into council costs. If we assume employment at current levels the forecast would appear to imply wage growth “at or below” CPI for ten years?
Mark…having just looked at the Budget the 0.4% almost certainly relates to the “streamlining” of residential rating categories…
“For 2017/18 Council has streamlined the Residential rating categories under which rates are levied. These changes have reduced the number of Residential rating categories from 13 to 7 and provide a simpler and clearing rating system whilst not impacting the vast majority of ratepayers.”
Thanks Pete. The residential banding was only introduced about ten years ago after valuations skyrocketed in the boom for higher valued properties mostly around the city and beaches. It was a response to mitigate the subsequent massive rates increases on those properties. So yes will only be relevant to a small number of residential properties with high land valuations. May be something to watch next year though when new valuations come through after a gap year.