Saturday, February 4, 2023

Gaol population used IPART rates calculation

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Rodney StevensClarence Valley Independent

Clarence Valley ratepayers will see the third-highest increase in their rates in NSW of 5.4 per cent for the 2023-24 financial year due to the new Clarence Correctional Centre’s population of 1100 being factored into calculations, the Australian Bureau of Statistics has verified.

At October’s Clarence Valley Council meeting during a Mayoral Minute by Ian Tiley, council papers stated Australian Bureau of Statistics population growth data, which is lagged by three years, was not an appropriate measure of population growth in the current year.

This ABS Estimated Resident Population ERP data is a significant factor in rate peg calculations.  

The rate peg set by the Independent Pricing and Regulatory Tribunal IPART for CVC for 2023-24 of 5.4 per cent was calculated using a change in population of 2.4 per cent, a supplementary valuations factor of 0.7 per cent, and a population factor of 1.7 per cent.

This was based on population change in the Clarence Valley that occurred in 2020/2021 during the Covid pandemic, up to three-years ago, despite the impact of increased population on councils being felt immediately, council papers stated.

The Clarence Correctional Centre CCC opened in July 2020 and by June 2021 it had a population of 1100, and the total Clarence Valley population increased by 1400, according to Australian Bureau of Statistics ABS ERP data.

Over the previous four financial years back to 2016, the Clarence Valley’s ABS ERP increased by an average of 300 people per year.

This was reflected in IPART’s CVC 2022-23 rate peg of 0.7 per cent, calculated using a 0.1 per cent change in population, a 0.8 per cent supplementary valuations percentage, and a population factor of 0.0 per cent.

Further evidence of the inclusion of the prison population in 2020-21 ABS ERP calculations is shown by the 79 per cent increase in the male population and 21 per cent increase in females, which reflects the CCC’s 81:19 male to female prisoner ratio.

Despite the CCC being privately run by Serco, Australia’s largest prison doesn’t pay CVC rates.

A Clarence Valley Independent reader asked the ABS this month if the CCC’s prisoners were included in the calculations of the ERP data?

“Yes, the prison population were included in the ABS ERP for the 2020/21 financial year,” the Australian Bureau of Statistics replied.

CVC General Manager Laura Black said IPART is required to set the maximum percentage amount by which councils can increase their general income each year.

“This ceiling is known as the rate peg,” she said. 

“Clarence Valley Council has not yet considered the inclusion of the rate peg in its 2023/24 Budget. 

“This will not occur until 2023, when the draft budget is prepared, exhibited and adopted.” 

Ms Black said IPART determines the rate peg using a four-step methodology, one of which is population:

  • Measuring the average annual change in costs faced by NSW councils using the Local Government Cost Index (LGCI);
  • Applying a council-specific population growth factor to account for the annual change in each council’s population;
  • Considering whether we need to apply a productivity factor to account for productivity improvements in the local government sector;
  • Considering whether we need to adjust the rate peg above or below the percentage produced by the LGCI, population growth factor and productivity factor, for any other external factors likely to impact on councils’ costs.

Ms Black said the change in population was 2.43%. 

“However, after considering the notional general income yield and supplementary valuations for 2019/2020, the population factor determined for Clarence Valley Council is 1.7%,” she said. 

“IPART has attributed the remaining 3.7% of the determined maximum increase to other factors in the rate peg methodology.”

Ms Black said Section 555 of the Local Government Act 1993 specifies what land is exempt from rates. 

“The Clarence Correctional Centre is exempt from payment of rates in accordance with the Government Gazette No 117 of June 2020,” she said.  

Ms Black said IPART is currently conducting a review of the local government rate peg methodology and is seeking feedback from all stakeholders, including councils and ratepayers. 

“As part of the review process, IPART has engaged ORIMA to survey residential ratepayers across NSW about key issues to inform the review of the methodology,” she said. 

“The survey will be conducted both online and by telephone to ensure that a representative sample is reached. 

“IPART anticipates that field work will take place over a two-week period starting on Wednesday 16 November.”

Clarence Valley Independent 16 November 2022

This article appeared in the Clarence Valley Independent, 16 November 2022.

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