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Rate capping fails to deliver on promises

1 August 2017

A new report from University of New England Professor Brian Dollery has confirmed that almost four decades of rate capping has failed NSW councils and their communities.

Professor Dollery’s study is a comparative analysis between NSW and South Australian councils looking at whether rate capping in NSW has produced measurable differences in equity, sustainability or efficiency relative to South Australia.

Mr Dollery said his research showed there’s no evidence in NSW of rate capping improving efficiency in local government.

“In fact, rate capping leads to a decline in the financial sustainability of councils, and particularly smaller councils,” Professor Dollery said.

“Councils with capped rates have higher levels of debt and larger infrastructure backlogs than those without rate-capping, and also have higher fees and charges that they pass on to their communities.”

“South Australian councils perform better than NSW against a number of criteria, including financial stability and efficiency.”

Professor Dollery will travel to South Australia this week to present the findings of his research in Port Pirie on Wednesday night, and in Adelaide the next day. His study is available to download here.

Professor Dollery’s research was funded by the LG Research & Development Scheme.

LGA President Lorraine Rosenberg said she questioned the value in bringing a system that has failed interstate to South Australia.

“There’s no rate capping success story in Australia. New South Wales is the only state that has a long term track record with rate capping, and Professor Dollery’s research confirms this policy has increased debt, infrastructure backlogs, and fees for service,” Mayor Rosenberg said.

“Victoria is only in its second year of rate capping, and councils are already being forced to consider reducing the services the services they provide.”

“Local government collects less than 4% of taxation nationally, and rate capping would squeeze council budgets to the point where all services that are not mandatory under legislation would be in danger of being cut or reduced.”

“Before making up their minds on this policy, we’re asking community members to imagine what their community would be like without their local library, recreation and sporting facilities, food inspections, hard waste collection, jetties, parks, events, street trees or public toilets.”

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