ANOTHER WHACK AT WALGA

Readers may have seen in a recent issue of the West Australian an article by WALGA president Lynne Craigie headed ‘Rusted-on bias in unjust criticism of Council rates rises’.

The article appeared as an advertisement on 12 June.

Ms Craigie has served as WALGA’s president since 2015.  She is also president of the Shire of East Pilbara, having held that office for 10 years.

Her article is a spirited defence of local government annual rate increases, which she says compare favourably with increases in government charges.

‘Inappropriate yardsticks’ 

Ms Craigie is scornful of those benighted critics who ‘ignorantly’ judge the propriety of rate increases on the basis of what she calls ‘inappropriate yardsticks’ like the Consumer Price Index (CPI).

She points out that while the WA government has walloped households with whopping increases in various charges—averaging 7% for electricity, 5.5% for water, 5.8% for vehicle registration, and 3.7% for motor licences—by contrast, municipal rates this year have averaged a mere 2.5% across the board.

She also mentions the 10% increase in the Emergency Services Levy, every cent of which, though it is collected with council rates, vanishes into the coffers of State Treasury.

And she reminds us that increases in some state government charges, like that for electricity, have a similar impact on local governments as they have on households.

All those facts are true, but the argument they are mustered to support is at best seriously flawed, and at worst disingenuous.  I wouldn’t want to be rude to Ms Craigie, so I’ll stick with seriously flawed, while offering a pre-emptive apology if I have misrepresented her argument in any way.

False comparisons

A relatively trivial objection is that even if the state government is ripping off the public as Ms Craigie seems to suggest, that’s no excuse for local government to go down the same fiscal path. 

More to the point, she is, so to speak, comparing apples with mangos. 

The fiscal circumstances determining state government decisions are rather different, in substance and scale, from those that local governments have to face.

For example, there is the question of government debt.  In 2008, when the Barnett government took office, the state’s debt amounted to around $5 billion, or about 19% of revenue.   It has risen steadily over the past 10 years, and is now pushing $60 billion, or more than 80% of revenue.

As state treasurer Ben Wyatt said last year, the reality of such massive debt will haunt WA taxpayers for years to come, which leads me to wonder if the McGowan government’s declared intention to return the budget to surplus by 2021/22 has the slightest hope of success—spiralling utility charges notwithstanding.

A large proportion of that debt—over 60%—comprises what the pundits call non-financial public sector debt, or NFPS.  This relates to essential services like hospitals, the police, child protection and education.   Skimping on those has serious consequences for a government’s chance of re-election.

I’m no apologist for the present state government, but in fairness I have to say that it can’t be blamed for the state’s mountain of debt and is making a genuine attempt to reduce it—and risking its popularity, i.e. electoral chances, in the process.

Who is to blame?  Your answer to that question will probably depend on your political orientation. 

Supporters of the current government point the finger at what they regard as the profligacy and fiscal incompetence of the Barnett government, particularly in its second term. 

Opposition supporters would dispute that assessment, citing instead the collapse of the mining boom and the unfairness of GST distribution.   As usual, there is truth on both sides.

Getting away with extravagance

Local governments are no less likely, but have less reason, than state governments to bail themselves out of debt by thrusting greedy hands ever more deeply into the pockets and purses of the folk they exist to serve. 

What’s more, they usually get away with it, because paradoxically their communities, while theoretically closer to their elected representatives, on the whole appear to display scant interest in what those representatives are doing—or not doing, as the case may be.

Much of local government borrowing relates to the extravagant provision of services that are far from essential and bear little or no relation to the more modest purposes that local government was originally designed to accomplish.  

Some notable examples of such extravagance are York’s so-called recreation and convention centre, with its subsidised bar and restaurant, and more generally madcap schemes for ‘community development’ which tend to sap initiative and enterprise in the community at large. 

If governments do things for you, there’s not much incentive to do them for yourself.

Differences

Politically, local governments differ from the state government in numerous ways.  To begin with, everybody qualified to vote is required by law to turn up to vote in state government elections, but not in council elections.  

To some degree, this might be seen to undermine the legitimacy of local governments as expressions of the popular will.  According to the WA Electoral Commission, the average voter participation rate in the 2017 council elections was 33% in the metropolitan area and 39.6% in country shires.  

(York scored a dismal turnout rate of 26.85%.)

Some people argue that low voter turnout is an indication of public apathy, others that it signifies general satisfaction with what councils do, and still others that it is symptomatic of quiet desperation bordering on despair.  On balance, I’m inclined to favour the last of those explanations.

In local as distinct from state governments, party politics allegedly play no part, although many state politicians cut their teeth as members of local councils.  The absence of avowed political affiliations at local government level arguably leaves greater scope for nepotism, patronage and other forms of corruption. 

The most effective way to keep the bastards honest is to have another bunch of bastards of a different political stripe watching like hawks for evidence of municipal malfeasance and when they find it, falling over themselves to call it out.

That, broadly speaking, is how democratic governance takes place at the commonwealth and state levels.  It’s not perfect, but it works reasonably well.  When we drag ourselves to the polling stations, we have a reasonably clear idea of what the rival parties are offering and of the values on which their policies depend.

At local elections, we tend to cast our votes for individuals rather than policies and values and simply hope for the best.

I doubt that any reform of local government in WA, however comprehensive and well intentioned, will do much good if it doesn’t make voting at local elections compulsory and foster the introduction of overt party politics into the local government arena. 

The CPI

Now for that ‘inappropriate yardstick’, the CPI.

As every householder knows, the CPI measures the movement over time of retail prices.  It plays an important part in the formation of government economic policy, for example in the determination of Centrelink benefits and the financial conditions attaching to government contracts. 

It is often used, in conjunction with another indicator based on Gross Domestic Product (GDP), as a measure of inflation.

The Australian Bureau of Statistics is responsible for calculating the CPI. It does that  by comparing the cost of a broad range, or ‘basket’, of goods and services that households consume within a defined period—quarterly and yearly—with the cost of the same basket over previous such periods.  The result is expressed as a percentage.

In Australia, separate calculations are made for capital cities in addition to an overall rate for the country as a whole.

For example, at the end of the March quarter 2018, compared with the March quarter 2017, the CPI had increased by 1.9% for Australia as a whole.  The corresponding figure for Perth was 0.9%.  The June figures will become available sometime this month.

You can find out more about the CPI on the ABS and State Treasury websites.

The CPI as a guide for setting rates

Should the CPI have a role in the setting of council rates?

Ms Craigie doesn’t seem to think so, and haughtily dismisses as ignorant those of us who take a contrary view.

In my opinion, what is good enough for commonwealth and state governments, with their far more extensive range of responsibilities, should be good enough for local governments too.

I’m not saying that the CPI should be the sole determinant of rate increases, but it has a part to play, along with other factors, as a guide.

And I’m glad to say that the Shire of York agrees with me.

On page 3 of its draft annual budget for 2018/19, the Shire notes that the cost of providing services has increased by 1.5%.  It continues:

This is reflected by the underlying assumptions used to formulate the budget, such as the CPI, wage increases and utility increases.

Those considerations have resulted in a modest rate increase of 2% for 2018/19, better than what Ms Craigie tells us is the state average.  This compares very favourably with the Shire’s rate increases for 2014 (10.8%) and 2015/16 (9.6%).   It is a tiny bit less than its increase for 2016/17 (2.1%) and a fraction more than for 2017/18 (billed at 1.4%).

In practical terms, this means a current increase in residential rates of less than one cent in the GRV dollar ($0.118490 to $0.120862, i.e. $0.002372). 

I haven’t finished analysing  the budget—I’m waiting for the final version as adopted at yesterday’s Special Council Meeting—so I’ve no idea by what miraculous means the Shire achieved this very reasonable result.  Anyway, well done the Shire of York, and all the other councils that have shown similar restraint.

Which brings me back to Ms Craigie’s article.  She is right to commend councils statewide for keeping this year’s rate increases low.

But there’s a sense in which she (and they) are missing the mark.

In straitened times, sensible householders have to reduce expenditure on inessential goods and services.  They have to dispense with such luxuries as late model cars and overseas holidays and in other aspects of life are forced to apply the time-honoured principle of ‘make do and mend’.

I see no reason why at such times local governments—and governments generally—shouldn’t follow the same principle by exercising restraint and commonsense in spending their money—which is actually our money, not theirs.

Shock horror, Councils might even search for ways to reduce rates rather than increase them further with every passing year.

One thing they might do to save money is collectively give WALGA conferences a miss until they amount to something more beneficial to ratepayers than a gabfest, a bunfight and a comedy show.

Ah well, dream on…

THOUGHTS FOR THE DAY

The object of government in peace and in war is not the glory of rulers or of races, but the happiness of the common man.

  

W H Beveridge, Social Insurance and Allied Services, 1942

Democracy substitutes election by the incompetent many for appointment by the corrupt few.

G B Shaw, Man and Superman, 1903