Taxes, Rates, Musingplaces & Social Licenses

Recently the Tasmanian State Government and the University of Tasmania examined Tasmania’s cost of living pressures and specifically those arising from the following sectors and expenditure categories:

          • Electricity prices

          • Water and sewage charges

          • Local government rates

          • Transport costs

·         • Housing and rents

          • Food costs

Why might this matter to a musingplace looking to maintain its ‘social license’ Well in Launceston Local Government rates include a substantial levy for the recurrent cost of the musingplaces located there. This levy relies upon a social licence that the community entrusts to its Aldermen. However there is something of a paradigm shift in play as the cost of living grows and is increasingly being measured and assessed – this license is arguably under revision. For instance:

• Research  demonstrates the intensifying cost of living pressures confronting Tasmanian households; and
• It highlights the acute cost of living pressures facing low-income households; and
• The research demonstrates the complexity of both the cost of living problem and in achieving sustainable solutions; and
• It identifies short and long term strategies for addressing the cost of living problem.

 Interestingly, Tasmanian rates have increased by 7.8% on average since 2008 – 9.6% (2008) 10.0% (2009) 4.9% (2010) 8.0% (2011) 6.4% (2012) By comparison the national increase was 7.0% and the growth was somewhat more even in its trajectory – 7.8% (2008) 7.5% (2009) 6.5% (2010) 7.3% (2011) 6.1%(2012)

In Tasmania water and sewage prices have increased by over 65% since 2005. This has come about in the midst of a period of major and across-the-board reform that began with the Water and Sewerage Industry Act 2008.

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Against this kind of backgrounding the UTAS report to do with the Cost-of-living crisis in Tasmania and its intensification  the report’s recommendations for the local government sector included the:

• Broadening of the existing rate base through a more targeted concessions policy, given that a 30 percent rebate is available to all Pension Concession Card holders
• Use independently established capital land valuations as the basis for determining rates, as opposed to the volatile annual assessed valuation; and
• Subject all local governments to independent performance audits and benchmark levels of service provision and efficacy
• Impose a statewide cap on annual rate increases, which can be imposed by local government.

These recommendations are evidence based and together represent something of a paradigm shift. Mostly, what is in evidence here is the compelling evidence for the need for change and a total rethink in the way Councils structure their budgets plus set and police their benchmarks. 

Gone are the days – if these recommendations are taken seriously –  for bureaucratic empire building and soft management friendly (elastic!) benchmarking. Likewise, with greater capacity to report on performance digitally, musingplaces will come under increased and more incisive levels of scrutiny.

The cost of living issue is such that in 2009 Tasmanian Population Health Survey found more than one-quarter (28.4%) of Tasmanian adults claimed cost as the reason for not buying the quality or variety of preferred food. 42.5% of adults in the least affluent households cited being unable to buy the quality or variety of preferred food due to cost, compared to only 14.0% in the most affluent households. Compared to the state average of 5%, 10% of adults in the lowest income households reported they ran out of food in the last 12 months and could not afford a replacement.

Anglicare Tasmania recently asked low income Tasmanians about their expenditure on essential services and products, and the decision making that drives their budget. It found that the most significant budget strategy employed by households is to prioritise the payment of rent or mortgage costs, followed by electricity and telecommunications. This entails trade-offs that include food rationing, compromises on electricity consumption, withdrawal from social participation, and the use of credit to pay for essential purchases. Juggling bills and using the money made available through delaying payment of bills is also an important financial management strategy. Some research participants, for example, reported that they delayed bill payments to purchase food and a cycle of small loans from family members.

It has been reported some time ago that something around one in five of Launceston households find themselves living on, below or just above the 'poverty line'. All pay rates either directly or via rent and increasingly it can be expected that they will be pressurising their Aldermen to curtail rate increases. Indeed their representative organisation has been doing so for some time but by and large they have not been able to persuade their officers to deliver anything that represents significant cost savings. On the evidence it appears that there is considerable comfort with the status quo in-house at 'Town Hall' – and a lack of vision that might expedite a shift in civic imperatives.

While musingplaces can deliver considerable value to a community increasingly it will be doing so in competition with emerging technologies and other imperatives. Winning a social license for their existence will increasingly difficult.

Pierre Lassonde, President of Newmont Mining Corporation ... Click Here

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