The R word

It seems, rates are destined to be with us always, and like another of life’s certainties, taxes, they always seem to be on the rise. 

Having said that I do appreciate that if some future commonwealth government in its infinite wisdom decided to hold a referendum on the desirability or necessity of paying any form of taxation every eligible voter in the country (plus Paul Hogan and all the other tax exiles) would resoundingly find in favour of complete abolition.

Of course that’s why you will never see that particular poll, but whether rates in their present form are the best or most appropriate method to fund local government administration is another question altogether  – particularly given the parlous financial condition of over half of all councils in NSW - and that was even before a number also lost out big time on their sub-prime related ‘investments’.

Historically the fundamental dilemma has always been: should landowners subsidise non-land owners for the provision of services everyone uses?  But given Australia’s current and on-going love affair with property ownership this concern would appear to me to be of little real consequence – most would rationalise it’s the small price we all have to pay for enjoying our own slice of heaven.

More recently the debate has centred on what exactly do the rates cover and (my own personal gripe) why do rate payers have to pay fees for just about every service one might reasonably have expected was already included in the rates?

Certainly we all utilise the so-called free rubbish collection and we don’t pay tolls on local streets (yet) but there are in fact very few council supplied items, which spring to mind, which do not have some type of fee or charge attached.

 When you think about it, it is probably property developers who use up more of council officers and town planner’s time than all the other ratepayers put together and perhaps this factor at least partially explains their surprising largesse. Of course, as ICAC revealed, they have not usually been directing the funds in the direction of the people actually providing the services viz: the local council, but to councillors and their affiliated political parties.

Whether the collection of taxes on a local basis is a particularly efficient form of taxation gathering when compared to say raising GST 1 percent is another matter and certainly the costs involved are never spelled out in the voluminous glossy reports our councils publish annually.

And the now suspect practice of ‘investing’ collected rates in sophisticated financial products spread around the globe also raises the issue of whether the average local body CFO (treasurer) actually has the necessary expertise to fully understand and manage the associated financial risks – recent history would suggest most don’t.

Let’s face it, some reliable and on-going form of taxation will always be necessary to make councils sustainable, but whether the current model is the best form to handle the unprecedented challenges of the 21st century is definitely questionable and it needs to be examined at both State and Federal levels without delay. 

Thinking positively, with all tiers of government in NSW being ALP controlled, it maybe a unique window is now available to tackle this perennial problem once and for all.