Differential Rates update – Landlords continue to pay

A couple of weeks ago in our article  “Differential Rates – Landlords may not have to pay” we advised that for some years a number of Councils throughout Queensland, including the Scenic Rim Regional Council, had applied an additional rates charge on Investment properties.  This practice had been challenged in the Supreme Court by a group of Mackay property investors and found to be an illegal practice (30th April 2014).  

Since then, as reported in The Courier Mail of 5 June 2014, the state government has rushed through laws allowing Queensland councils to charge investors more than owner-occupiers.  The legislation is retrospective.

Effectively, this means the state government with its retrospective intervention in the matter, has reversed the Supreme Courts ruling in favour of the Mackay property investment group. The new law has rendered the Mackay Council’s legal appeal redundant and allows Queensland Councils to rate rental properties higher than owner occupied properties. It remains to be seen whether or not the state governments reversal of a Supreme Courts ruling will be challenged! 

Astrid Kennedy

 

 

 

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Douglas Shire Council – Better than expected opening financial position

Douglas Shire Council has officially financially separated from Cairns Regional Council with a better than expected opening position.

Independent auditor Grant Thornton has signed off on the final financial statements prepared by the Financial Due Diligence Working Group. The final financial statements show a net cash balance of $19.371 million for Douglas Shire Council as at December 31, 2013. This figure includes de-amalgamation costs of $2.938 million.

The better than anticipated opening financial position means de-amalgamation costs have been absorbed without rate increases and the drawdown of a Queensland Treasury Corporation working capital facility has been avoided.

Douglas Shire Council Mayor Julia Leu said the strong opening financial position was a fantastic result, especially considering Queensland Treasury Corporation’s estimate of a closing cash balance as at June 30, 2012, of $9.085 million was exceeded for the same period by more than 60 per cent.

“We are in a strong financial position and our cash balance well exceeds our liabilities,” she said.

“This is a fantastic result for the people of Douglas and another endorsement of our resourceful and very capable Council.”

Mayor Leu said the strong opening financial position was supported by some outstanding achievements already recorded by Douglas Shire Council just four months into its existence.

“The task of creating a new Council was a challenging one considering the tight timeframes but I think the results in the first four months speak for themselves,” Mayor Leu said.

“In addition to dealing with a major cyclone event which caused an estimated $20 million in damage, Council has reached many milestones in a short period.

“Council is on track to develop our Corporate Plan which outlines our goals and actions for the next five years.

“We have developed and implemented a community engagement framework, a community grants and resources program and an events strategy.

“We are facilitating the introduction of technology that will increase efficiencies and deliver improved service delivery and management of road assets.

“Council has also begun a review of the existing planning scheme for the Douglas Shire and established a working group for our Landscape Management Plan.

“These are just a few examples of what Council has achieved in a very short timeframe while also managing the de-amalgamation process and a damaging cyclone and it should give confidence to our communities that their future is in very capable hands.”

First printed 30 April. Reproduced with permission.

Livingstone – Inaugural Budget Jan-Jun 2014

This inaugural budget that I put forward today will see Livingstone Shire Council soundly on the path to long-term financial sustainability.

It is a budget that is prudent given our circumstance, and importantly reflects responsible fiscal management while still delivering excellent outcomes across the board for our community. For this I must commend both our Transfer Manager and our senior management team for the work they have done in framing this our very first Livingstone Budget.

One of the key elements for ratepayers is the rate rise which, in contrast to the foreshadowed 16% projections suggested prior to the de-amalgamation vote, has come in at 5% across the board.

The budget has maintained a healthy capital works program for our growing Shire while also focusing on restoring the service levels that our ratepayers expect, and deserve. Maintenance in particular will be increased, particularly in our high profile spaces, CDB areas and parks.

This budget has also restored ‘common sense’ in areas like waste management with the reinstatement of free green waste disposal and dump vouchers for domestic general waste for both rural and urban ratepayers to help encourage and promote environmental best practice in our community.

Community groups will also benefit from proposed changes to our fees and charges structure that will abolish hire fees for community and not-for-profits groups using our Community Development Centre meeting rooms, and a 50% discount for those groups when they need to hire the Yeppoon Town Hall and Emu Park Cultural Hall.

Councillors as you know the process in framing the budget has not been without its challenges. De-amalgamation has brought with it the obligation for Livingstone to meet all the de-amalgamation costs of both Livingstone and the remaining RRC.

To their credit the majority of Livingstone voters accepted this onerous condition in exchange for the freedom to determine our own future as an independent Local Government area.

As anticipated the true de-amalgamation costs look set to come in well under the $10 million projected by the Queensland Treasury, and, with prudent management, the other good news is the Livingstone budget should be in a surplus position within 2 years.

In bringing down this positive and responsible budget for the community Council has also been forced to make some tough but necessary decisions in relation to staffing levels.

Under the terms of the de-amalgamation regulation Rockhampton Regional Council was permitted to allocate up to 60 more positions than Livingstone actually required to efficiently and effectively run Council’s operations.
eShire Council
As a result Council has been put in the invidious position of having to advise up to 38 staff, a number of whom had been long-serving Rockhampton City Council staff, that they will not be required for the effective and efficient operation of the new Livingstone Shire Council.

This was the joint recommendation from Transfer Manager Graeme Kanofski and the new Living¬stone senior management team. The decision has saddened both myself and fellow Councillors and was certainly not taken lightly.

It is disappointing RRC has taken advantage of the provisions of the de-amalgamation regulation to transfer the cost of addressing obvious long-standing staffing issues, however it is a situation Living¬stone must accept.

Despite this additional ‘one-off’ cost burden, Livingstone has been able to absorb the resultant re¬dundancy costs and still keep our rate rise down to 5%. This would not have been possible without making the tough decisions needed to get the new Council structure right from the outset.

Long-term Council’s financial bottom-line is now well on-track for sustainability as we move forward into what promises to be a bright and extremely positive future for the people of the new and most importantly independent Livingstone Shire.

Councillors I now formally move the combined budget recommendations and associated reports as presented and ask if the Deputy Mayor is prepared to second the motion.

Reproduced with permission.

Differential Rates – Landlords may not have to pay!

Three years ago Scenic Rim Council introduced a new income source by charging extra rates on investment properties. For example an investment property valued at $310,000 attracts an additional rate of $307 per year compared to an owner occupied property.

This revenue making venture has been used by numerous Councils Queensland wide, and was deemed by the LGAQ as legal under the Act.

The Supreme Court in Mackay has recently handed down a ruling that differential rates is invalid (30 April 2014) in a case fought against the Mackay Regional Council.

In the words of Judge Duncan McMeekin, “To justify the categorisation the Council impermissibly took into account characteristics personal to the owners of the land and failed to restrict itself to characteristics of the subject land itself. It is simply a misuse of language to claim that the owner’s decision to reside on land, or not, is in some way a characteristic of the land.”

The LGAQ and Mackay Council are appealing the Supreme Court ruling. Further, the LGAQ has appealed to the Minister for Local Government David Crisafulli to provide legislative change so the Councils can finalise their budgets for the next financial year with certainity

The legality of this method of collecting rates however could still be in question. Some argue that a rental property is a commercial or investment property whilst others argue that the characteristic of the land is that it is used for residential purposes. Most people see rates as a direct link to their use of Council’s services and in practice this is true, but in the law the link is less direct.

In the law it is not defined by how much service is provided to a particular property but a means allowed to councils to raise revenues and apply them as they wish.   However as this court decision reveals, it should be regardless of whether a residential property is owner-occupied or tenanted.

The problem becomes clearer when a commercial property is considered. For example would it be valid to impose a differential and higher rate on two identical commercial properties with the same use where one was owner occupied and the other tenanted?

If the decision stands, the Councils using this revenue source may be required to repay monies collected in this manner. Potentially the SRRC could have an estimated shortfall of $1m in the budget this financial year which they will have to find elsewhere.

Although this decision may cause financial distress for these Councils it is considered that Councils and the LGAQ have an obligation to collect revenues in a legally acceptable manner. Until it is resolved would it be prudent for the SRRC to put monies collected in this manner aside?

Astrid Kennedy

IT Officer

Letter to Chambers of Commerce

14 May 2014

The Secretary
Chamber of Commerce

Dear Sir/Madam,

We are writing to introduce the Queensland Local Government Reform Alliance (QLGRA) to you and the members of your Chamber of Commerce.

The QLGRA was established in July 2013 in response to the plight of shires that were forcibly amalgamated in 2008 by the previous Labor Party government and were then denied the opportunity to de-amalgamate contrary to the promise of the current LNP government.

Amalgamation has had remarkably similar effects wherever it was implemented. Common experiences include but are not limited to:
• The loss of contact with a locally based Mayor and Councillors;
• The loss of council expenditure to the new central regional town. All types of businesses are affected – banks, post offices, newsagencies, florists, lawyers, schools, mechanical workshops etc;
• Reduction in economic development in the affected town;
• The potential sale of local council offices and other assets.

A functioning council office in a small town is a corner stone of democracy, development, community caring and disaster management. The aims of the QLGRA to remedy this are listed overleaf.

In this letter we ask your organisation to do two things:
Firstly to consider joining QLGRA as a full or associate member. A full member would view the aims of QLGRA (see over) as a primary purpose of their organisation. A full member has voting rights. Associate membership is open to organisations who agree with the aims of QLGRA but for whom this is not their primary purpose. We also have individual memberships for those interested.

Secondly, to please complete the attached survey. The information will assist QLGRA to further understand the issues caused by amalgamations. Answers will be kept confidential if requested. Please complete even if you do not intend to join.

Please do not hesitate to contact Vice President Colin Hewitt on 07 32837208 or Joanna Kesteven Secretary on 07 54635304 if you would like further information.

Yours Sincerely

RN Johnson,
Chairman,
Queensland Local Government Reform Alliance Inc.

GOALS OF THE QLD LOCAL GOVERNMENT REFORM ALLIANCE

I. To promote community acceptable natural Local Government boundaries that reflect locally held beliefs about community and identity, and provide local amenity and service;

II. Recognition in the State Constitution of Local Government as a legal entity with a clearly articulated role in governing, such that it can only be changed after a majority vote in a properly constituted referendum;

III. Retention and maintenance of reasonable levels of State and Federal Grants and Subsidies to support the necessary and important role of Local Government in providing and supporting rural and regional infrastructure serving not only local communities but also the state and the nation.

Strategic goals:
IV. To promote the benefits of effective, community based ‘local’ government throughout the general public and as an area of learning and study in tertiary institutions;

V. To share the commonality of our cause with all amalgamated shires and promote the sharing of strategy and resources to overcome barriers to de-amalgamation and boundary changes.

MISSION STATEMENT

“An alliance of Queensland organisations and individuals aimed at re-empowering communities.
Its main objectives are to lobby strongly for State Government (a) to recognise local authority based on community of interest that reflects commonly held beliefs about community and identity, local amenity and service, and (b) to also articulate constitutional recognition of Local government in the Queensland Constitution such that it can be changed only by a referendum.”

How To Join
Please see attached membership form. If you have any questions please do not hesitate to contact Joanna Kesteven (Secretary) on 07 54635304.

Letter to Chambers of Commerce – Survey

Chamber Of Commerce – Queensland Towns affected by amalgamation.

SURVEY

1. Could you please advise if your town was part of the amalgamation process of 2008 or the 1990’s? YES/NO
If so how did was the process implemented? Our Council of ________________________ was amalgamated with _________________________________ .

If you answered YES to the above question, please proceed.
2. In a few short sentences could you please describe the impact of the amalgamation on your town of __________________ on:

• Local Businesses
____________________________________________________________________
_____________________________________________________________________

• Community Groups
_____________________________________________________________________
_____________________________________________________________________

• Accessibility of elected representatives
_____________________________________________________________________
_____________________________________________________________________

• Rates and business costs
_____________________________________________________________________
_____________________________________________________________________

• Development applications
_____________________________________________________________________
_____________________________________________________________________

• Other impacts
_____________________________________________________________________
_____________________________________________________________________

3. Would you support the QLGRA request for a full review of council boundaries with a view to returning them to natural communities of interest? YES/NO
Comment: _____________________________________________________________________
_____________________________________________________________________

————————————————————————————————————————
We wish the contents of this survey to remain confidential YES/NO

Signed: _________________________ Date________________
Printed name: _________________________ Position: _______________________________
Contact Phone number: _______________________________
Please return the completed survey to Joanna Kesteven at 32 Panorama Drive Roadvale 4310 or scan to joeandjoanna@bigpond.com. Please feel free to photocopy this and pass to your members – individuals are welcome to participate.
Please return by June 30, 2014.