Brighton’s flat rating system comes out on top


BRIGHTON can be proud that it is once again leading the way, this time in current and ongoing discussion about council rates.  Over the past few weeks, and at the instigation of northern media and councils in the region, the issue of a flat rating structure for all Tasmanian councils has been gaining momentum.   Brighton Council adopted the revolutionary flat rating system two years ago – the first council to adopt the more equitable system and abandoning the Assessed Annual Value System (AAV) of rating .

The result of the latest discussion is that the State Government is now reviewing the AAV system, which is being used by the majority of Tasmanian councils.

The fact that there is now such open discussion about the inequities of the AAV system demonstrates that our decision to move to a flat rate, despite criticism at the time by others, was the right one.

It is working well and our residents overwhelmingly support that decision.  Importantly, it is already having tangible benefits for everybody, residents and businesses alike. The latest report on local government finances from the Auditor General recognised Brighton Council as having the lowest general rate per capita in Tasmania yet also the highest operating margin (profit) in Tasmania. The latest ABS figures show Brighton’s 2.5% growth last year was the second fastest population growth in Tasmania and we are already seeing commercial results with our rating policy recognised as an Australian finalist in the Property Council awards and a major development, the Green Point Plaza complex, coming to fruition last financial year.

We have been moving towards a flatter rating structure for many years. Previously we had applied fixed charges for a number of services including water, sewerage and garbage. Each service is fully costed and then divided by the number of users to calculate a fixed fee. For example, a garbage service costs an average of $135 a year per service, so therefore each ratepayer should pay $135 for each wheelie bin they have.  Council does not believe wheelie bin collection should be based on how much a resident can rent their property for (AAV).  We took this concept a step further because we are a service provider (not unlike Telstra or Aurora) and believed that residents should not have to pay a greater general rate simply because their valuation says they may be able to rent their property for more.

We believe that the rating based on AAV is flawed as it represents the rental income on a property, or four per cent of its capital value, whichever is the greatest.  It has nothing to do with the cost of providing council services to that property.

The AAV system has significant anomalies. For example a pensioner living in the family home may find over time, that his or her home has significantly increased in value due to its location and attract higher rates simply because the pensioner could potentially rent the family home for more, even though his or her income has dropped.  Another family may improve their property by adding a garden or improvements to the property but would find themselves penalised by higher rates for their efforts. The AAV, in Brighton Council’s view, is not necessarily a reflection on a resident’s ability to pay, or the cost of the services, and therefore inequitable.

While the flat rate only applies to residents it is also our policy to only ever increase all rates by CPI. We believe that our business community needs certainty and surety, and stability for the future because under our model, the business sector is locked into a CPI increase on average for the next 10 years.

People know exactly where they stand in terms of rate increases in our municipality. This year Brighton Council was able to pass on the full savings in water and sewerage rates to the newly-formed Water and Sewerage Corporation ad our general rate increased by only $20 per resident, in line with the Consumer Price Index.

Through our rating system, we guarantee there will be no major fluctuations in rates in the future.  The system also ensures that businesses have the confidence to stay in Brighton or to be attracted to come to our region and invest.  It’s a win-win for all!

We now look forward to the State Government’s review of the AAV and the positive input that we, as a council, can provide that review.