Published Friday, 03 October, 2008 at 06:15 PM
Minister for Main Roads and Local Government
The Honourable Warren Pitt
Minister challenges claims about Townsville rate rise
Local Government Minister Warren Pitt has challenged claims that the amalgamation of Townsville and Thuringowa councils had forced higher rate rises than expected.
Mr Pitt said the new council, elected by ratepayers in March, had set rates at a level that it considered necessary to deliver on its priorities with regards to infrastructure and services.
He was responding to claims that a financial report prepared for the former Townsville City Council had forecast certain levels of rate increases for the next 10 years.
“I agree with the mayor's comments regarding the validity of the report's findings, given we're now in October 2008,” Mr Pitt said.
“Recycling old reports from organisations that no longer exist is like comparing apples with oranges.
“For example, the financial report apparently forecast CPI increases of 3.5 per cent – but we all know that this estimate is already out of date, with CPI now running about 5 per cent.
“Furthermore, a lot has changed in the economy during the past 12 months and many factors have impacted on council revenues.
“Most notably, there have been significant increases in fuel prices and construction costs, to name a couple. Councils and, ultimately, ratepayers have been affected by these rising costs.
“Also, the Local Government Reform Commission last year noted that the Townsville region would face significant growth challenges during the next 20 years, particularly in relation to infrastructure provision and the management of the infrastructure backlog.
“These are the types of issues that have affected council budgets this year – not amalgamation.”
Mr Pitt said any forecast of the current council’s financial performance over the next decade should also include the savings to be accrued as a result of amalgamation.
“Historically across hundreds of amalgamations in Australia, merger costs have been a one-off cost of about 1 per cent of a council’s revenue,” he said.
“History also tells us that councils will make savings through economies of scale and efficiencies of between 2 and 5 per cent per annum, year after year after year.
“I anticipate that councils such as Townsville should start to realise these savings within their first four-year term, so they will be quite substantial over a 10-year period.
“Here in Queensland, we have already seen evidence that the amalgamations have brought financial benefits, with the new Moreton Bay Regional Council identifying savings of millions of dollars in its first budget.
“I have no doubt that over a 10-year period, the amalgamated Townsville council will be in a much stronger position than its predecessor.”
Media contact: Minister Pitt’s Office 3227 8819
Mr Pitt said the new council, elected by ratepayers in March, had set rates at a level that it considered necessary to deliver on its priorities with regards to infrastructure and services.
He was responding to claims that a financial report prepared for the former Townsville City Council had forecast certain levels of rate increases for the next 10 years.
“I agree with the mayor's comments regarding the validity of the report's findings, given we're now in October 2008,” Mr Pitt said.
“Recycling old reports from organisations that no longer exist is like comparing apples with oranges.
“For example, the financial report apparently forecast CPI increases of 3.5 per cent – but we all know that this estimate is already out of date, with CPI now running about 5 per cent.
“Furthermore, a lot has changed in the economy during the past 12 months and many factors have impacted on council revenues.
“Most notably, there have been significant increases in fuel prices and construction costs, to name a couple. Councils and, ultimately, ratepayers have been affected by these rising costs.
“Also, the Local Government Reform Commission last year noted that the Townsville region would face significant growth challenges during the next 20 years, particularly in relation to infrastructure provision and the management of the infrastructure backlog.
“These are the types of issues that have affected council budgets this year – not amalgamation.”
Mr Pitt said any forecast of the current council’s financial performance over the next decade should also include the savings to be accrued as a result of amalgamation.
“Historically across hundreds of amalgamations in Australia, merger costs have been a one-off cost of about 1 per cent of a council’s revenue,” he said.
“History also tells us that councils will make savings through economies of scale and efficiencies of between 2 and 5 per cent per annum, year after year after year.
“I anticipate that councils such as Townsville should start to realise these savings within their first four-year term, so they will be quite substantial over a 10-year period.
“Here in Queensland, we have already seen evidence that the amalgamations have brought financial benefits, with the new Moreton Bay Regional Council identifying savings of millions of dollars in its first budget.
“I have no doubt that over a 10-year period, the amalgamated Townsville council will be in a much stronger position than its predecessor.”
Media contact: Minister Pitt’s Office 3227 8819