Rates, Rates, Rates

Please don’t mistake this short piece as any kind of excuse for the rates we are currently charged. I can barely keep my lunch down when I see the City of Greater Geraldton using our money to employ staff to put out press releases telling us how wonderful they are for giving some of our own money back to us in the form of services and street art we never asked for.

But before I digress into a libertarian rant, the point of sitting at the keyboard tonight was to discuss the issue that is currently being thrown about on Facebook regarding rates, and specifically as to whether the recent rate rises, which have been relatively low, are justified at all.

If you cast your mind back, the CGG CEO during the time of the 27% rate increase disaster was extremely clear about the rationale behind the hike. At the time, the City explicitly told everyone it was not their fault. Rents had increased dramatically due to the property boom, and you should direct your anger at the valuer general for telling the City we were all so rich now. The ‘rate in the dollar’ hadn’t increased, our property values had just gone up so much.

Ah, wonderful. We’re wealthier, so we pay a little more. Makes sense.

Not everyone bought it, but enough did that there weren’t French Yellow-Jacket style riots in the street. I mean hey, if our incomes go up, we pay more income tax. So it seems fair, right?


Except conveniently the narrative has now changed.

Rents and property values have PLUMMETED. You can pick up a house in virtually any suburb in Geraldton for less than 2005 prices. Not inflation adjusted less. Like ACTUALLY LESS DOLLARS. And the price falls haven’t abated. Even just last month prices kept falling by a lot in both Perth AND the regions.

So by all the logic the City used before, we should be seeing steep decreases in our rates, right?

Of course not. Because conveniently, as always, that was a different CEO and Mayor.

But here’s the catch. By the time boom-time hits again (as it eventually will but who knows when) we will likely have yet another CEO and Mayor. When property prices spike, can we expect the logic to once again reverse, and our new-found wealth being the source of large rate increases? Who will hold our current administration accountable for their rhetoric and the continued increases in the face of our present rapidly declining wealth?

No one.

So what is the current narrative regarding the continued increases in rates?

Well, it’s the fact that actual costs born by the City of Greater Geraldton are in no way connected to the potential rental income of Geraldton’s inhabitants. The costs largely hinge State Government expenses like electricity prices, labour costs, and the legislative requirements as to what services a local government is required to provide.

That is to say, the State Government tells the local governments what they have to do, and what they have to pay, and then leaves them to be the bad guys collecting your rates, so you don’t realise that it’s Mark McGowan who is in charge of what your local government is allowed and not allowed to do, and what they can and cannot do to raise revenue, and how much they actually need to raise.

It gets even worse when you zoom right out. Because it’s Melissa Price and co in Canberra who have the bulk of the nation’s purse strings via income and business tax, and who get to decide where that precious GST revenue gets sent. And while they can freely cut or increase services they run as revenue waxes and wains, they in turn put demands on the States through all sorts of mechanisms to get them to keep certain standards or pass certain laws, as no Premier wants to be the guy who can’t fund the new “whatever project” because he burnt Canberra. The federal government also hands out grants like Santa Claus to local governments, boasting about providing funding to some project for this or that, as if they personally earned all that money and weren’t merely giving us back our own funds.

Before I wrap up, I don’t place the full blame at the feet of the state and federal governments. Surely the local government here, like most bureaucracies, is bloated in some areas. For example, regular businesses can’t compete with them in terms of what they pay staff. The irony that they take rates off us in order to out-compete us for the limited talent pool of staff is not lost on me.

But in this author’s opinion, the crux of the problem is not local. It’s in Perth and Canberra.

One of these two things need to happen to see any long term change:

  1. Local governments need to stop existing altogether and just be rebranded what they really are, which is administrative departments of the state government, with the State responsible for setting and collecting land rates, and dealing with the political fallout from all that follows; or

  2. Local governments need to be legitimate independent bodies with actual power to make decisions over their regions, raise revenue as they choose, and to live without fear that any decision they make can be quickly overridden by a tribunal in Perth completely disconnected from the goings on in the region.

As they currently exist, local governments are the perfect scape-goat and revenue raiser for Mark McGowan and Co. State Labor suffer none of the flak for our rates constantly increasing while our home values plummet, but get to dictate all the services that shall be provided AND they get to sell overpriced electricity etc to those local governments in order to extract more revenue from us. And whenever a local government does something the State Govt disapproves of, they can simply override the decision or make a quick legislative amendment and viola, the democratically elected local government’s decision is null and void. All the while, whenever someone complains that our rates keep going up, Labor politicians point to our Mayor here in Geraldton and his National Party affiliations and tell us all that that is where we should direct the voice of our dissatisfaction. Of course, I’m not saying these issues started with the Labor party. This problem of misaligned incentives wasn’t birthed with the latest incarnation of State Labor. It’s been this way for a long time.

I take my hat off to ANYONE who chooses to serve us in the the capacity of local government, state government, or federal government. Politics aside, Labor, Liberal, whatever, I have a lot of respect for all of them. It’s easy to sit in the peanut gallery and opine as to how much of a better job I could do if I wasn’t so busy watching The Politician on Netflix (great show btw).

My argument is simply that sometimes blame over particular issues we are facing may not lie at the feet of a particular individual, but more so with the way a system has been designed, and the incentives it begets.