Rates and comparisons
As Council prepares its 2013/14 budget, Corporate Services Director, Danny Luna addresses some misconceptions about how rates are calculated and the drawbacks of trying to compare rate levels between metropolitan and rural councils.
In a letter to the editor in the Sentinel Times (26 March), Tim Edwards writes that rates in Bass Coast are higher in than those in metropolitan Councils. This is based on the assertion that rates in the dollar in Bass Coast are higher than in metropolitan councils. He uses rates in the dollar in the City of Greater Dandenong to support his argument. These conclusions fall down on a number of fronts.
First, it does not make sense to compare a rural council of 900 square kilometres and a population of 30,000 with an established inner metropolitan council of 114 square kilometres and a population of 117,000.
Second, the relatively low rate (the General Rate) in the dollar he quotes for the City of Greater Dandenong is very highly subsidised by the commercial and industrial rates in the dollar which are 75 per cent and 150 per cent higher respectively than the General Rate. In fact, commercial and industrial properties combined in the City of Greater Dandenong generate approximately $42 million in rates or 51 per cent of all rate revenue. Compare that with Bass Coast, where commercial and industrial properties combined generate approximately $2 million in rate revenue or 6 per cent of all rate revenue. If this cross subsidisation did not exist, then the rate in the dollar for a residential property in the City of Greater Dandenong would be similar to the one in Bass Coast.
Third, as outlined in the letter I sent to the Sentinel Times last month, when comparing rates between councils, one should compare an average residential property in one council with an average residential property in another, and not one that is valued at more than the average. This is not arguing that rates in Bass Coast are lower than all metropolitan councils. This point seems to have been completely missed in Mr Edwards’ letter.
In any case, if one is to compare rates between councils, it probably makes more sense to compare rates in Bass Coast to rates in similar rural councils. After all, rural councils have a completely different profile to metropolitan councils. We do provide this kind of comparison data as part of the budget information on our website.
Corporate Services Director
Bass Coast Shire Council