Sue Heins: Mayor of Northern Beaches in NSW talks the consequences of a rates cap

An Australian Mayor is warning of the unforeseen consequences of a rates cap. 

Minister of Local Government Simon Watts says he will advance rate cap policy discussions before the end of the year.

Sue Heins, mayor of the Northern Beaches Council in New South Wales, told a Local Government New Zealand conference it leads to councils making impossible choices.

She told Heather du Plessis-Allan it leads to things like delayed infrastructure repairs and sports grounds with outdated facilities. 

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Episode Transcript

Speaker 1 (00:00):
Now will a cap on rates solve our financial problems?
A New South Wales mayor whose city implemented them told
a Local Government New Zealand conference today that we should
be very careful what we wish for. Sue Heines is
the mayor of Northern Beaches in Sydney and Australia High suit. Hello,
what's your experience of a rate cap?

Speaker 2 (00:17):
My experience of a rate cap. I've been in local
government now for about twelve years and I've been through
too well. Every year there's a rate cap in New
South Wales. So we have a rate capping system where
an independent body decides what percentage our rates should go

(00:38):
up to cope with all the renewal and repairs of infrastructure.
And quite often that number or that percentage number that's
chosen is nowhere near the reality of how much it
actually costs to repair things. So over the last ten years,
many councils in New South Wales are slowly being strangled

(00:59):
to death with their lack of funding coming in for
the enormous costs of looking after a local council.

Speaker 1 (01:07):
So is it not even enough what you guys are
bringing in? Is it not even enough to cover just
basic maintenance and repairs. I would say that's probably close
to the truth. For us, we have at least two
major weather incidents every year that need repairs. We have
a lot of flooding on in our area from Manly

(01:30):
to Palm Beach in Sydney, a lot of coastal erosion
and at least and we can have bushfires as well.
So we have at least two major weather events where
there is damage to infrastructure, whether it's roads, bridges, that
kind of thing, and it will mean that we have
to apply to the government for some disaster fund recovery.

(01:53):
Quite often, even if we're successful, we don't get as
the amount back of what it cost us to repair it,
and quite often we don't get paid it until about
four to six years after the event actually happens. So
you end up being a little bit of a credit
card where you're handing out the money and hoping money
comes in to fill that credit card payment. Does it

(02:14):
not have the effect like having a limited pot of
money which you're constrained by Does that not have the
effect of forcing you to cut your cloth? So if
somebody comes up with the idea of having a really
nice light installation down the road, No, you can't afford it.
Like anything that as a luxury just gets cut.

Speaker 2 (02:33):
It does make you think very carefully about what the
bang is for your buck that you're going to get
because you want to make sure that everything goes further
and makes a difference. However, it does mean that like
you're also looking at where the biggest cost savings can be.
So it might be things like certain type of led lighting,

(02:55):
which we did and that saves us about one and
a half million dollars a year. But you're also you're
also getting a bit strangled by the fact that you're
being really deliberate now about what you can and can't afford.
So the nice to have which make your community a
special place to be does start getting a bit strangled.

(03:17):
And we do love We know that for people's own
social and mental well being, creative, being immersed in the arts,
having things like libraries are really important. And these are
things that we don't really want to pull back on
because we know that those things are important for social cohesion.

Speaker 1 (03:37):
Okay, so it seems like we are sitting at opposite
ends of a spectrum here. You guys are incredibly constrained
with what you are able to spend. Our councils in
New Zealand, on the other hand, are profligate, right, They
just spend like it's unbelievable the crap that they spend
money on. So maybe your examples not not where we
want to be, but where we are is also not
where we want to be. So what's the solution in

(03:58):
the middle?

Speaker 2 (04:00):
I think, And I could hear from the leaders that
I was listening to this morning, they're obviously trying to
find a model that works. And I would say, don't
look at New South Wales because I can tell you,
like I said, we're being strangled to death here with
the tap being tightened and tightened and tightened on us.

(04:23):
But the reality of it is, I think there really
has to be a very open and strong discussion about
what is it that the community actually want, because it's
very easy to turn this into a political argument where
it'll be very easy for one side to go we
don't want to rate rise because we care about our community,

(04:44):
and of course everyone goes yay, that's how I feel too.
But the reality of it is you need to have
funding in there. Most people don't understand how complicated a
council is you need to have funding up your sleeve
for things like unexpected weather events, the assets, the bridges,
everything else that needs to be maintained to just keep

(05:05):
it at a satisfactory level. Doesn't even have to be
at a great level, but you need to have it
at a satisfactory level that people kind of can use
things that council provides safely.

Speaker 1 (05:16):
Yeah, fairpoints. So thank you very much for the time.
Appreciate it. Sue Heine's mayor of Northern Beaches in Sydney.

Speaker 2 (05:21):
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