Sem2 Display 750x350 v1a (1).png

Editorial Sept 6th 2019

Welcome to this week’s editorial, Over recent weeks there has been considerable conversation around proposed high rise developments in Batemans Bay, the impact of proposed seniors housing dominating the foreshore, the loss of views, the traffic, the hubbub, the effects on peace and quiet, the loss of the essence of what the South Coast is and what it might become.

Contrary to opinion our number one industry is not tourism. It is old people. We are a regional retirement mecca and the statistics support that recording 40.2% of us aged 60 years and over, compared with 27.2% respectively for Regional NSW. Of interest is that 67% of us own our own home.

So it seems fair and reasonable that those who do choose to live here expect that the region will remain just as it is, just so long as there are enough services provided to keep things ticking over, however, it requires money to keep things ticking over and Eurobodalla records more than 26% in low income households with many in the Shire on fixed incomes.

The Census says of our low income statistics that “if an area has a large number of retirees this will produce a higher proportion of households with low income but the retirees may have large capital wealth.”

Yes, 67% of ratepayers own their own house and pay their rates currently based on the Unimproved value of their land. Fortunately that doesn't change all that often and with a capped to CPI rate the annual General Rate doesn’t vary too much (unlike the annul spike in water, sewer and user fees that are not so constrained).

Where is all this going? Pleased you asked.

If you own a home now you are rated on the Unimproved Value of your land. An Average Block might be $190,000. Your rates include a General Rate and Environmental Levy made up of a base charge, which is the same for all ratepayers and a variable 'rate in the dollar' amount that is based on your land value, which has been calculated by the NSW Valuer General.

Rates make up 51% of Eurobodalla Shire Council's funds, and are used to pay for infrastructure and services for the community. The rest has to be funded by grants from the State and Federal Government.

Much to the annoyance of Councils they are unable to charge more than CPI. That is why they have to cry poor and claim they need a Special Rate Variation. The issue of the Mackay Park pool currently has them saying that if it costs more than $51m they will have to consider either cutting back the design, removing services, get a loan or seek a Special Rate Variation to cover the costs.

But with so many ratepayers over 60 on low or fixed incomes asking for more rates would be like getting blood out of a stone. And should the rates go up then those households would have to limit their spending elsewhere. They are already threadbare which is contributing to our regional recession after four quarters in a row.

Yes, there is a peak injection of State funds into the Shire presently but that will only bring a short term spurt to the local economy before we slide back into recession.

What Council needs is more money. Their rate base is deteriorating under the current constraints of rate-pegging and costs are rising. Their wages bill alone is $36m per year rising by 2.5% each year with CPI. Their overheads are steadily rising and their maintenance and replacement backlogs are steadily building. Meanwhile the State and Federal Governments are dealing with their own financial woes so the Grant Money Tree isn’t won’t continue to be what it used to be.

Fortunately for us we have a growth industry. Retirees. And mainly budget retirees looking for an affordable life. They don’t need work. They come with a nest egg that they are careful of and they are frugal.

At June 2018, the median house valuation in Eurobodalla Shire was $245,539 lower compared to New South Wales. That means that we are affordable and because of that we have enjoyed a spike in older arrivals.

Fortunately those who have arrived from metropolitan areas, having sold their homes for a sumly amount have been able to inject funds into improvements. It isn’t uncommon to see a local street that was once filled with fibro bungalows now being steadily replaced with more contemporary homes and the many holiday homes now replaced with smarter upgrades to attract Air BnB clientele.

While Council benefits from these upgrades via Development Application fees it just isn’t enough. They need more properties to bring in more rates. They need development, they need new subdivisions and in order to attract all this they need investors and buyers. But buyers are savvy. They look at the area, the sales trends and the rates.

Up until now our rates have been based on the calculated value of an empty Unimproved block of land.

But Council might consider changing that to be calculated on the value of the land and your house. The more you do to your house by way of renovation to improve its value the more you will pay in rates. They call it Capital Improved Value.

To calculate your rates, independent valuers work out the Capital Improved Value (CIV) of your property. When working out the value of your property, valuers will analyse property sales and rents and look at the type of property and its features. Information on properties is compiled through inspections, building and planning permits and other public sources.

In a submission to the General Purpose Standing Committee No. 6 – Inquiry into Local Government in New South Wales Eurobodalla Council wrote: - The rate pegging system in its current form impacts adversely on sound financial management particularly in regional areas with low rate bases. This system requires review. - There is a need for more equitable rate calculation methods with a shift from land value to capital improved value as the basis for rating.

Next Tuesday at Eurobodalla Council’s meeting Councillors will be asked to support the option of being able to choose between the Capital Improved Value and Unimproved Value (UV) methods as the basis for setting ad valorem rates at the rating category level. Will this burden the ratepayer further—we will just have to wait and see. No doubt they will choose the method that gains the most $$$$.

Until next, Lei

If only I hadn't renovated the beach house