State water and NSW Forests would have to pay rates on areas such as Blowering Dam and local state forests if recommendations released last week by the Independent Pricing and Regulatory Tribunal are taken on by the state government.
Crucially, it will not automatically mean any additional revenue for the Snowy Valleys Council.
IPART last week released three reports – one which reviews the local government rating system and two which relate to reporting and compliance functions. The reports have been gathering dust for up to five years, amid political sensitivities over rates, levies and other local government costs.
Local government has welcomed the State Government’s agreement to consult with the sector on key recommendations from the three key reports.
The question about whether the likes of forestry, national parks and the state water corporation should pay rates has been raised by councils for decades.
State government entities currently don’t pay rates to councils.
IPART has recommended that rate exemptions should be based on the use of the land, rather than who owns it.
“Land used for commercial or residential purposes should not be exempt, regardless of who owns it,” the IPART report states. “This would help to ensure that land used mainly to deliver private benefits pays its fair share of rates.”
Some exemptions should remain, IPART recommends, including land used by a religious body, land vested in the NSW Aboriginal Land Council, and land owned by a hospital.
There’s no proposal to make national parks rateable.
IPART does recommend removing exemptions on water corporations (State Water) and commercial logging operations in state forests.
The former state forests was corporatised several years ago, and its logging is classified as a commercial activity. State water is also a corporate body, and water sales from Blowering to irrigators would also likely fall into the commercial classification outlined by IPART.
Critically, IPART also recommends that a council’s total income shouldn’t automatically increase as a result of any rating changes.
Under that scenario, existing ratepayers could pay less.
But it could leave a council such as Snowy Valleys left with responsibility for maintaining a vast network of public roads within forestries – and currently maintained by Forests NSW – without the means to pay for it.
To cater for that scenario, IPART recommends a one-off streamlined process to allow councils to increase rating income through a special variation should, during the year any changes to rating exemptions are made.
While the former Tumut Shire Council had for decades lobbied to make forests and state water land rateable, Snowy Valleys mayor James Hayes said “you have to be careful what you ask for”.
Cr Hayes said the council would consider the recommendations and looked forward to consultation with the state government on any changes.
“It wouldn’t make any sense to have new rateable areas, adding extra responsibilities for the council, if it didn’t result in extra revenue for the council,” Mr Hayes said.
“It needs very careful consideration by the state government. It’s something that we’ll have to weigh up as a council.”
Local Government NSW (LGNSW) President Linda Scott said it was a relief that the Government had finally released the reports and agreed to further discussions with the sector on how all levels of Government can best meet growing community needs.
“It’s gratifying that IPART confirms what we’ve been saying for a long, long time: if we’re going to meet the needs of our growing communities, there needs to be more flexibility for councils and less cost shifting from the State Government,” Ms Scott said.
“We are also strongly supportive of IPART’s finding that the State Government should work as a partner with our sector in considering the impact and cost of their regulatory requirements, and should remove restrictions on fees for statutory approvals and inspections to allow for the recovery of efficient costs.
The local government body was disappointed that the rating exemptions wouldn’t include profit making bodies such as private hospitals.
One of the issues due for consultation was the flexibility for individual councils to choose whether to calculate rates on Capital Improved Value – essentially the market value of a property – or Unimproved Value (land only).
“A modern, fair ratings system needs a new flexible approach, and that’s what we’ll be working with the NSW Government to achieve,” she said.
Clr Scott said the IPART report on reporting and compliance burdens had the potential to fundamentally reform the relationship between the State and Local tiers of Government in NSW.
“IPART acknowledges direct cost- shifting onto councils by the State Government, as well as the imposition of large and unnecessary administrative burdens,” she said.
“At the time of the report, IPART found councils had around 120 regulatory functions, involving 300 separate roles, that are set down in 67 State Acts administered by 31 State Government agencies.
“LGNSW will continue to seek the Government’s commitment to address systemic issues such as cost shifting, which acts as such a significant barrier to the financial sustainability of local government.”
Clr Scott paid tribute to Greens MLC David Shoebridge, who bought the issue of delayed reports to a head by foreshadowing moves to call for the Rating Review to be brought before the Upper House.
“Now we need to have a mature and realistic conversation about which of these recommendations deliver the best outcome for our rapidly growing communities and should be progressed,” she said.
“I look forward to working closely with the Minister and across political lines with other committed MPs to progress these issues.”