Hobart Rates: Mediocre Product, Luxury Price

The Hobart City Council recently patted itself on the back for passing a 3.5 per cent increase to its rates. I’m the first to admit that the hike could have been far worse and that the percentage increase is at the lower end of what’s been seen around the State this year, but important context is needed.

For starters, it’s essential to look at the base figure that the 3.5 per cent is being applied to and what our community is getting for their money. Hobart rates are known for being high, and they are. I don’t believe our community is getting the value they deserve for their top-dollar payments.

My determination to ensure that rate payers are getting excellent value took me on a tour. First stop was Launceston.

Locally, Launceston is the most comparable to Hobart for obvious reasons, but there are differences. Launceston City Council covers an area of over 1,400 square kilometres, compared to Hobart’s tiny 78 square kilometres. They also have 16,000 more people to serve and their road network is twice the size of Hobart’s.

Despite these considerable differences, Launceston spends $58 million on labour each year, while Hobart’s people budget it 37 per cent higher, coming in at $80 million.  And Launceston has no debt, compared to Hobart’s $32.5 million.

The unjustifiable difference is most stark when you consider that rates per capita in Launceston is $1,200 while Hobart is over 70 per cent more, coming in at a whopping $2,100. Sadly, even with these head-shaking disparities, my attempt to scale Hobart’s hike back to two per cent didn’t gain majority support.

A good comparator to show economies of scale in action comes from the City of Geelong which is 15 times larger and has five times as many people as Hobart. Even though it has far more on its plate, Geelong’s workforce is only three times the size of Hobart’s, and employee costs as a percentage of total revenue is nearly half Hobart’s. The average rates per rateable property is also half of Hobart’s.

Putting Hobart and the City of Albury side-by-side also delivers a reality check. Albury has the same population as Hobart but is nearly four times bigger. Albury also directly provides its community with water and wastewater services. Remember when our rates bills were meant to drop when Taswater was created? No surprise that didn’t happen. The drop was quickly absorbed by bureaucracy and green-washing.    

Albury delivers everything a Hobartian would expect, plus a heap more. On top of all the usual Council business, the City of Albury owns and operates an airport, has an entertainment centre and museum, provides library and childcare services, and serves its community to the very end with a cemetery and cremation service, all for about the same as what Hobartians are paying now.

It’s obvious that Hobart can and must lift its game. We are not unique or special when it comes to rates and services. If anything, we are an outlier in all the wrong ways. Hobart offers a mediocre product with a luxury price tag.

And don’t fall for the line that Hobart’s higher property values as the explainer for our high rates. Councils are a unique beast in that they decide how much money they want to extract from their forced customers and then spread that heavy burden across those rateable properties. Council’s forced customers cannot go elsewhere and shop around. The amount of revenue the Council wants to raise comes first and that’s completely within the Council’s control.

The opportunities that come from pooling resources are obvious. It is insane for each Tasmanian council – all 29 of them – to have their own planning, infrastructure, waste management, finance, human resources, information technology and all the other teams. We must maximise economies of scale if there is any hope of being efficient, achieving decent buying power, and being able to deliver high quality services and substantial projects for our communities.

On a positive note, Hobart’s financial ship just missed the iceberg and is now heading down the right path, but there is a long way to go. Since I’ve been elected the Council has halved its debt and the Council is getting full and frank advice about our finances and future. That said, there’s always pressure from elected representatives to spend our miniscule surpluses and demands for the latest shiny object which are motivated by media releases, photos and votes.

My focus won’t change. I’ll keep pushing hard to ensure that the Council is fixated on delivering first class core services in the most efficient way possible. A comprehensive and pragmatic review of the services the Council provides and the many pies the Council gets its fingers into is an urgently needed first step. And relentless scrutiny of every dollar spent is essential.

There is no scope for fluffy nice-to-haves when we have deteriorating assets that must be maintained, and people handing over thousands of dollars in rates every year even though they have no decent footpath and their roads are crumbling.

I know what must be done and I believe Hobart deserves the best.

https://www.futurelocal.tas.gov.au/council-data/