Council has credibility gap on IPART submission

Regular readers of this column will be aware that I often have a very different perspective on matters to do with Newcastle Council from the current General Manager, Ken Gouldthorp, whose stridently neo-liberal managerialist approach grates on my sense of what a community-oriented council should be.

It didn't surprise me, for example, when Mr Gouldthorp recently intervened (unsuccessfully, in this particular case) to advocate against the elected council adopting a Community Engagement Policy.

However, it seems that I'm on a "unity ticket" with Mr Gouldthorp on the issue of rate-capping and the need to increase council's rate income.

Mr Gouldthorp was recently quoted in the local media railing against the decision earlier this month by the NSW Independent Pricing and Regulatory Tribunal (IPART) to restrict NSW councils to a maximum 2.3% increase in their general rate income.

Saying that the rate-cap "beggared belief" he foreshadowed that the council would have to apply for a special rate variation to exceed the cap, and that this would probably need to be more than the 3.4% granted by IPART last year.

I've reflected before (most recently in my June column) on rate-capping as a "terrible policy", and "one of the main reasons why councils around NSW (including Newcastle City Council) are in such dire financial circumstances."

In that column, I also criticised the lack of any real commitment (by Newcastle Council or the state government) to conditions set by IPART on the special rate variation it granted to Newcastle Council last year, ostensibly for nine projects, many of which have been abandoned.

I don't resile from those criticisms - in fact, I think the council has created a rod for its own back in trying to win community support for the future special rate variations that Mr Gouldthorp has recently signalled as almost inevitable.

Applications to IPART for special rate variations have to identify the particular things that the council proposes to spend the money on, and IPART usually decides that any above-cap variation it grants has to be spent accordingly.

This is exactly what happened with Newcastle Council's successful application last year, but the nine projects it sought funding for disappeared as quickly as green bottles hanging on a wall.

As the council builds its case for a further special rate variation in the next financial year, that track record may well come back to haunt them.

That would be a pity, because I have no doubt that there's a genuine case to be made for the extra income.

Since its introduction in 1977, rate-capping has severely compromised the ability of NSW councils to deliver the services that local communities need.

No other sphere of government is subject to these kinds of restrictions, and the practice is limited to NSW, where council rate revenue lags well behind other states.

The cumulative and ongoing financial impact of rate-capping on Newcastle Council amounts to hundreds of millions of dollars of foregone revenue that might have been applied to our deteriorating infrastructure (roads, footpaths, public buildings, parks, etc) and disappearing council services.

I'm sure we'll hear a lot more about this, as the council gears up its pitch to the community - IPART also requires councils to actively engage with their community on any special rate application.

Mr Gouldthorp might need to reach for that Community Engagement Policy after all.