On the Capping of Council Rates, Amalgamations and the Needed Diversification of Revenue Sources

The recent Liberal Party announcement on capping rate rises for Councils is worthy of consideration. The biggest problem with the announcement was the failure to liaise with the Local Government Association of SA or any Council on the detail of the policy.

Cost of living pressures are enormous and rates are one hole in the household purse. I don’t see why Councils can’t or shouldn’t more effectively and collaboratively work towards this end with the State Government.

Are big or small councils more expensive? On the surface the answer seems big is better but consider this, the ratio of council staff to residents in SA is 1 : 157 compared to the national average of 1 : 116. SA, with a multitude of councils performs the function of local government with less staff than other states with their fewer and larger councils.

Statistics

Indeed when you look at the average size of the Councils in each state, Victoria, which has the largest average sized Council does not look at all favorable by comparison to South Australia when you compare staff to resident ratios. If you divide the states into two categories, states with larger Councils (NSW, Vic, Qld) and states with smaller Councils (SA, WA, Tas, NT) the smaller category clearly has a more efficient staff to resident ratio.

# of Councils and average size

But SA Councils are the highest taxing in the nation!

The Local Government Association of SA must look at diversifying SA Councils’ sources of revenue.

As Mayor I’ve been arguing at Unley Council that we need to diversify our revenue base. This is a call that must be unified across SA Councils. SA Councils must find ways other than taxation (rates) to generate income. SA Councils’ rely more heavily on taxation (rates) than any other states’ Councils with 57% of SA’s Councils’ revenues coming from taxation and when the national average of Councils revenue coming from taxation is 39.44%, that is not a pretty figure.

Sources of Revenue

I don’t have the solution as yet but I’ll be seeking to find out what the LGA of SA has done to analyse how other Councils across the nation are generating income through sources other than taxation and what further work could be done to help SA Councils diversify their sources of revenue.

Do SA Councils need to become involved in the sale of essential services such as water or electricity. Do we need to be involved in transport? What is done in NSW which enables their Councils to generate 32% of their revenue from “Sales of Goods and Services”?

The next crucial step in Local Government in South Australia is finding a diversification in revenue and this is best demonstrated by looking at Local Government revenue source by jurisdiction, $ per capita:

Revenue per capita

South Australia’s rates are the highest in the nation. SA Council taxation sits at $668.89 which is just shy of $100 more than the national average. Perhaps this is a function of necessity considering that the SA Councils receive the equal lowest amount in grants and subsidies of any state. However, we mustn’t rely on handouts as the silver bullet towards our path to a sustainable future. SA Councils have the lowest $ per capita revenue sourced from “Sales of goods and services”, “Interest” and second lowest “Other”.

I can’t help but wonder if these other sources of revenue are the reason why Councils in other states employ more people. Until we do the work we will never know. SA Councils must be prepared to take some risks, be open to new ideas and change the way we operate. The recent “Council’s of the Future Paper” is a good start. We need to go further.

So whilst SA Councils perform the function of Local Government using the fewest staff to resident ratio, our reliance on Taxation (Rates) must stop immediately. We are at the edge. If we remain stuck to rates as our main source of revenue, the calls for amalgamation (though wrong, are based on our service delivery standards) will grow louder. We must diversify our sources of revenue, ease the tax burden in order to rightly claim the mantel as the State with the best system of local government.



Categories: Lachlan Clyne - Personal Life, Mayor Clyne's Opinion

3 replies

  1. Spot on with this write-up, I really think this amazing site
    needs a lot more attention. I’ll probably be returning
    to see more, thanks for the info!

Trackbacks

  1. Should the State Government Reinstate Rate Concessions for Pensioners or Not? | Lachlan Clyne, Unley Mayor

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: