The Newcastle
Art Gallery redevelopment was one of nine projects for which Newcastle Council
was granted a Special Rate increase last year by the NSW Independent Pricing
and Regulatory Tribunal (IPART).
While
much recent discussion about funding for the project has centred around the federal
government's $7million commitment and the lack of matching state funding, the
council's apparent willingness to ditch the project raises questions about both
the integrity of their Special Rate bid, and about the general accountability
of councils for complying with IPART conditions.
Ordinarily,
councils in NSW are allowed to raise their total rate income only by the amount
set by IPART.
This
practice (called "rate capping" or "rate pegging") is one
of the main reasons why councils around NSW (including Newcastle City Council)
are in such dire financial circumstances. It's terrible public policy (NSW is
the only state that has it), and it should be abolished - but that's a
discussion for another day.
Last
year, Newcastle Council asked IPART to be allowed to raise an estimated extra
$45.6million between 2012 and 2020/21 to help fund nine significant civic
projects that were specified in Appendix A of their application.
IPART approved
the council's request on the condition that "The council uses the
additional income from the special variation for the purpose of providing
funding towards the 9 Civic Projects outlined in the council’s application, and
listed in Appendix A."
Note:
"the 9 Civic Projects outlined in the council's application".
Very precise. Not "at least 8 (or 7, or 6) out of the 9 Civic
Projects"; and not "most of the 9 Civic Projects".
In fact,
even before its controversial decision to place the Art Gallery redevelopment
on indefinite hold, the council had quietly dropped two other Appendix A
projects: the expansion of parking metres around the CBD, and repairs to
council car parks prior to selling them.
The Art
Gallery decision reduced the Appendix A list from 9 to 6.
Questioned
by local media representatives about what action they might take to ensure the
council's compliance with IPART's conditions for the Special Rate, the NSW
Division of Local Government responded that they understood that the
development of the regional art gallery had been "deferred not axed".
The
Division also stated that:
"As the Council will continue to direct all
the income from the special rate variation to the projects identified in the
civic project program, albeit over a longer period of time, the Division does
not consider that the proposal breaches the conditions of approval."
The
Division's language drops the specific reference in the IPART decision to
"the 9 Civic Projects", strongly implying that it's okay by them if
it's a bit short of nine - though it doesn't say how many short would be okay.
At the
moment, it seems that two out of three is fair enough.
It's
hardly an approach that will send a message to councils that they should take
IPART conditions seriously, or that will assure Newcastle ratepayers that the
money will be spent on what the council promised.
And it
will send a shudder down the back of advocates for the other projects
associated with the Special Rate, who saw the IPART condition as some kind of
security for these projects.
P.S. Newcastle
council also recently voted (7 Liberal/McCloy Independents v 6 Labor and
Greens) against even hearing a proposal for a briefing from independent experts
(including Tony Richards, who has featured in some of these columns) on the potential
dangers of ammonium nitrate stockpiles in the Newcastle area.
