Agenda of Finance and Governance Committee Meeting

Agenda (Open Portion)

Finance and Governance Committee Meeting

Page 5

27/4/2022

Finance and Governance Committee Meeting (Open Portion) held Wednesday, 27 April 2022 at 4.30 pm in the Council Chamber, Town Hall.

This meeting of the Finance and Governance Committee is held in accordance with a Notice issued by the Premier on 3 April 2020 under section 18 of the COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020.

The title Chief Executive Officer is a term of reference for the General Manager as appointed by Council pursuant s.61 of the Local Government Act 1993 (Tas).

COMMITTEE MEMBERS

Alderman M Zucco (Chairman)

Deputy Lord Mayor Councillor H Burnet

Alderman Dr P T Sexton

Alderman D C Thomas

Councillor W Coats

NON-MEMBERS

Lord Mayor Councillor A M Reynolds

Alderman J R Briscoe

Councillor W Harvey

Alderman S Behrakis

Councillor M Dutta

Councillor J Fox

Councillor Dr Z Sherlock

Apologies:

Leave of Absence:

Alderman D C Thomas.

1. Co-Option of a Committee Member in the event of a vacancy

2. Confirmation of Minutes

The minutes of the Open Portion of the Finance and Governance Committee meeting held on Tuesday, 22 March 2022, are submitted for confirming as an accurate record.

3. Consideration of Supplementary Items

Ref: Part 2, Regulation 8(6) of the Local Government (Meeting Procedures) Regulations 2015.

Recommendation

That the Committee resolve to deal with any supplementary items not appearing on the agenda, as reported by the Chief Executive Officer.

4. Indications of Pecuniary and Conflicts of Interest

Ref: Part 2, Regulation 8(7) of the Local Government (Meeting Procedures) Regulations 2015.

Members of the Committee are requested to indicate where they may have any pecuniary or conflict of interest in respect to any matter appearing on the agenda, or any supplementary item to the agenda, which the Committee has resolved to deal with.

5. Transfer of Agenda Items

Regulation 15 of the Local Government (Meeting Procedures) Regulations 2015.

A Committee may close a part of a meeting to the public where a matter to be discussed falls within 15(2) of the above regulations.

In the event that the Committee transfer an item to the closed portion, the reasons for doing so should be stated.

Are there any items which should be transferred from this agenda to the closed portion of the agenda, or from the closed to the open portion of the agenda?

Item No. 6.1

Agenda (Open Portion)

Finance and Governance Committee Meeting

Page 8

27/4/2022

REPORT TITLE: Rate Remissions - Pensioner Discounts

REPORT PROVIDED BY: Manager Rates, Procurement and Finance Operations

Director City Enablers

1. Report Purpose and Community Benefit

1.1. The purpose of this report is to provide information on the types of rates assistance offered to pensioners by other councils as requested by Council and present a proposal for a review of Council’s current pensioner rates discount as part of a broader review of the City’s rating and valuation strategy.

1.2. The community benefit is consistent with the City of Hobart Capital City Strategic Plan 2019-2029 strategy 8.5.8, being to ‘maintain a rating system that supports fairness, capacity to pay and effectiveness’.

2. Report Summary

2.1. There are approximately 3000 pensioners in the Hobart municipal area, approximately 12% of all ratepayers, receiving a pensioner rates discount. The State Government provides the pensioner discount scheme with maximum caps indexed annually and in addition Council provides a $10 discount off rates to eligible pensioners. In total, a pensioner who was an ‘average residential ratepayer’ receives approximately 15% off their annual rates bill.

2.2. In addition to the above, Council provides a range of other support measures for those ratepayers who have least capacity to pay rates, including rates rebates for eligible properties, remissions and financial hardship support, including payment arrangements, deferral of rates and remissions of late payment penalty and interest.

2.3. The majority of councils across Australia provide rates discounts to pensioners under a State Government scheme of some description. Fewer councils provide additional monetary discounts specifically for rates but have a range of other financial hardship support measures to assist those ratepayers who experience difficulties in meeting their rate payment obligations.

2.4. Of those councils who do provide additional support, the monetary value of that support forms part of the council budget.

2.5. It is proposed that the City considers the adequacy of rates support measures for pensioners in the Hobart municipal area as part of a broader review of its rating and valuation strategy to be undertaken in 2022-23 and include broad community and business consultation.

2.6. It is noted that any increase in support measures for pensioners would require to be funded from rates, either requiring an increase in rates for all ratepayers or a reduction in another program or service that the City provides to all ratepayers.

3. Recommendations

That:

1. The City review the rates support provided to pensioners who own property in the municipal area in consultation with the community and business sectors as part of the review of the City’s rating and valuation strategy.

2. The Council Rates Remission Policy remains unchanged for the 2022-23 rating year, while the review of the City’s rating and valuation strategy is undertaken.

4. Background

4.1. At its meeting on 15 February 2022, Council considered the Council Policy Manual Review and resolved that the Council Rates Remission Policy (the Policy) – refer Attachment A, be deferred for further consultation. Council requested a report be prepared on the types of rates assistance offered to pensioners by other councils to provide Council with a scope of options they could potentially offer eligible pensioners in Hobart.

4.2. This report will outline what pensioners in the Hobart municipal area are currently entitled to, including additional support for those ratepayers experiencing financial hardship, what councils elsewhere in Tasmania provide and what councils interstate provide to support pensioners living in the local government area.

Pensioner Rates Discount Offered by the City of Hobart

4.3. Across Tasmania eligible pensioner concession card holders receive a discount off their rates for their principal place of residence under the State Government pensioner rates remission scheme (the Scheme). The Scheme is administered by the State Government who decide who is eligible for the discount and its value pursuant to the Local Government (Rates and Charges Remissions) Act 1991.

4.4. The State Government pensioner rates remission is available to pensioners who hold one of three types of cards issued by either Centrelink or the DVA:

4.4.1. Centrelink or Department of Veterans' Affairs Pensioner Concession Card.

4.4.2. Centrelink Health Care Card.

4.4.3. Department of Veterans' Affairs 'Gold Card' endorsed with Total or Permanent Injury (TPI) or War Widow/Widower DVA.

4.5. There is a limit of one remission per year per pensioner household. A pensioner who owns multiple properties is not entitled to receive more than one remission per year. Pensioners living in a prescribed institution e.g. nursing home, may be entitled to the pensioner rates discount.

4.6. The rates discount is:

4.6.1. 30% of rates and charges (excluding Fire Service Rate) capped at a maximum amount each year as annually advised by the State Government, plus

4.6.2. 20% of the Fire Service Rate, uncapped (so the higher the property value the higher the discount).

4.7. Under the Scheme, ratepayers apply to Council and Council provides the discount to eligible ratepayers and is reimbursed by the State Government. The value of the Scheme discount is indexed and increases each year. In 2021-22, the discount was capped at $326 for pensioners who are also customers of TasWater, and $479 for those who are not customers of TasWater. Because the 20% discount off the Fire Service Rate is uncapped, the more the State Government fire levy increases the higher the discount.

4.8. In addition to the State Government pensioner remission scheme, Council provides a $10 discount off rates to eligible pensioners in the Hobart municipal area, which includes certain independent retirees. The background to this decision is as follows:

4.8.1. In June 1994 the Association of Independent Retirees approached Council seeking equal treatment for independent retirees in the area of pensioner rates concessions.

4.8.2. Council subsequently resolved that on the basis the request was on behalf of all independent retirees that Council was unable to support a rates concession in the absence of State Government support.

4.8.3. In November 2014 Council considered a further report and resolved that pensioners with a Commonwealth seniors card or who are members of the Independent Retirees can apply for a Council pensioner discount, noting that its value would be $10.

4.9. The $10 Council discount has never been indexed, so it has remained at $10 since 1996.

Other Support Offered to Ratepayers with Least Capacity to Pay Rates

4.10. In addition to the pensioner rates discount, the City provides a number of other support measures for those in the community with least capacity to pay rates. These include the following:

4.10.1. Charitable and other rates exemptions - under section 87 of the Local Government Act 1993 (the Act), certain land is exempt from the General Rate (and Separate Rates and Averaged Area Rates) where they are held or owned for specific purposes outlined in the Act e.g.: charitable purposes, Aboriginal land, certain land owned by the Crown, council owned, etc.

4.10.2. General rate remissions - Pursuant to section 129 of the Act, a ratepayer may apply to the Council for remission of all or part of any rates paid or payable or any penalty imposed or interest charged under section 128 of the Act. The Act is silent as to the grounds for a remission and remissions are considered on a case by case basis by Council under its Rates and Charges Policy.

4.10.3. Financial hardship assistance - The City has a Financial Hardship Assistance Policy to provide support meeting rate payment obligations for those ratepayers experiencing financial hardship. The Policy provides a range of support measures including the deferral of rates, payment arrangements and penalty and interest remissions.

Pensioner Rates Discount Offered by other Tasmanian Councils

4.11. No other council in Tasmania provides anything other than the State Government pensioner discount to pensioners.

Pensioner Rates Discount Offered by Interstate Councils

4.12. In NSW, pensioners receive the following rates discounts, the cost of which is shared between the State Government (55%) and local councils (45%):

4.12.1. $250 off ordinary council rates and charges for domestic waste management services;

4.12.2. $87.50 on annual water rates and charges (where the service is provided by council); and

4.12.3. $87.50 on annual sewerage rates and charges (where the services is provided by council).

4.13. These discounts are applicable to eligible pensioners but may be granted to ratepayers suffering financial hardship in certain circumstances.

4.14. The City of Sydney provides a 100% rebate of rates and annual charges for eligible pensioners within its local government area. This scheme provides an additional rebate on top of the mandatory rebate above for eligible pensioners and in total, the scheme costs the City of Sydney approximately $4.2M per year.

4.15. In Victoria the state government scheme provides 50% off the current years rates up to a maximum of $247 per year per eligible property. The State Revenue Office grants a $50 rebate off the Fire Service Levy.

4.16. The City of Melbourne in addition to the above, grants an additional 25% off rates up to a maximum of $123.50 per year. In most instances, the combination of the State Government scheme and the City’s discount, means that pensioners receive an annual discount off rates of $420.50.

4.17. In South Australia, up until 30 June 2015 the state government funded councils to provide a rebate on council rates to eligible concession card holders.

4.18. As of 1 July 2015 the state government replaced the concession on council rates with the ‘Cost of Living Concession’ (CLC) provided directly to those entitled, for 2021-22 amount was $217.20. Self-funded retirees receive $108.60 and tenants receive $108.60. In addition the State Government provides a $46 per year discount off the Emergency Services Levy.

4.19. This means that concession cardholders no longer receive a rebate on council rates in South Australia. However, the state government encourages recipients to use the CLC payment to assist in the payment of council rates.

4.20. The City of Adelaide doesn’t offer any pensioner rates discounts in addition to the State Government CLC outlined above.

4.21. In the ACT, eligible pensioners receive a 50% discount off their rates per year, capped at $750 and a $98 discount off the Fire and Emergency Services Levy.

4.22. In the NT, eligible pensioner receive a 62.5% discount off their annual rates up to a maximum of $200 per household per year. Also, a discount for the waste management service, which varies according to where you live but ranges between $25 and $150 per year. As an example, for ratepayers in Alice Springs, the discount is $52, for ratepayers in Darwin the discount is $46.25.

4.23. In QLD, under the State Government scheme, eligible pensioners receive a 20% discount up to a maximum of $200 per year of gross rates and charges levied by a local council. Also, 20% off the emergency management levy with no cap.

4.24. In addition to the State Government scheme above, Brisbane City Council provides a rebate of up to 40% off the rates bill up to a maximum of $276.50 per quarter or $1,106 per year to people who receive a full pension. For people who are on an allowance/benefit or part pension Brisbane City Council provides a 20% rebate up to $129.25 per quarter or $517 per year. Where a pensioner holds a current Centrelink pensioner concession card but does not receive a pension, the PPC cardholder receives the State Government subsidy only.

4.25. In WA, under the State Government scheme, eligible pensioners are entitled to a 50% discount off rates capped at $750 per year. For those with a WA Seniors Card (self-funded retirees) pensioners are entitled to receive a discount of 25% off rates capped at $100 per year.

4.26. The City of Perth doesn’t offer any pensioner rates discounts in addition to the State Government scheme above.

4.27. As outlined above, in all States and Territories pensioners receive some support meeting rate payment obligations through a State Government scheme. Some councils provide additional support to pensioners, which is funded by the council as part of their budget.

5. Proposal and Implementation

5.1. This report has considered what support the City of Hobart, other Tasmanian councils and councils interstate provide to pensioners to support them to pay rates on the home they own.

5.2. The majority of councils across Australia provide rates discounts to pensioners under a State Government scheme of some description. Fewer councils provide additional monetary discounts specifically for rates but have a range of other financial hardship support measures to assist those ratepayers who experience difficulties in meeting their rate payment obligations.

5.3. Of those councils who do provide additional support, the monetary value of that support forms part of the council budget and factored into their long-term financial plan.

5.4. As outlined in section 7 below, the average residential ratepayer eligible for the pensioner discount received $402.28 off their annual rates bill of $2,609.35 (which includes the State Government fire levy) for 2021-22. This represented a 15.4% discount.

5.5. Council has previously resolved to write to the State Government about the adequacy of the State Government pensioner scheme. At the time the State Government responded that it had no plans to increase the amount of the pensioner discount noting that the amount is indexed each year and the State Government does provide pensioners with a range of other cost of living support, of which the rates discount in one. More information on support for pensioners is available from the State Government website at: https://www.concessions.tas.gov.au/ and include concessions for housing, electricity, transport, education, health, licences, vehicles, parks & heritage, water, land tax and other.

5.6. It is clear that the $10 discount Council provides in addition to the State Government pensioner remission scheme is inadequate as a support measure and needs to be reviewed. The discount has remained at $10 since at least 1996, has lost its value, has not kept pace with cost of living pressures, is rarely applied for and is costly to administer.

5.7. The question arises as to whether Council should provide additional support to ratepayers in addition to the State Government pensioner discount scheme.

5.8. Cost of living pressures arising from the conflict in Europe and COVID‑19 are putting additional pressure on ratepayers to be able to meet their rates payment obligations to Council.

5.9. However, should Council consider increasing the Council $10 rates discount, the quandary is how that should be funded. Should it be funded from an increase in rates that all ratepayers pay or should it come at the expense of a reduction in services to the community.

5.10. Any increase in support measures for pensioners would require to be funded from rates, either requiring an increase in rates for all ratepayers or a reduction in another program or service that the City provides to all ratepayers.

5.11. Given this and in order to fully consider the scope of options that could potentially be offered to eligible pensioners in Hobart, it is proposed that the City considers the adequacy of rates support measures for pensioners in the Hobart municipal area as part of a broader review of its rating and valuation strategy to be undertaken in 2022-23 and include broad community and business consultation.

5.12. It is also proposed that for 2022-23 the Council Policy – Rate Remissions remains unchanged while the broader review of the City’s rating strategy is undertaken.

6. Strategic Planning and Policy Considerations

6.1. This report is consistent with the City of Hobart Rates and Charges Policy and Council Policy – Rates Remissions.

6.2. This report is consistent with the City of Hobart Capital City Strategic Plan 2019-2029, strategy 8.5.8:

6.2.1. Maintain a rating system that supports fairness, capacity to pay and effectiveness.

7. Financial Implications

7.1. Funding Source and Impact on Current Year Operating Result

7.1.1. There is no impact on the current year operating result arising from this report.

7.2. Impact on Future Years’ Financial Result

7.2.1. The cost of the Council $10 rates discount is currently $30,000.

7.2.2. If the discount is increased, every $1 increase would result in $3000 impact on the City’s budget.

7.3. Asset Related Implications

7.3.1. Not applicable.

7.4. The average residential ratepayer eligible for a pensioner discount for 2021-22 received a $402.28 discount off their rates, comprising the following:

7.4.1. $326.00 off rates excluding fire service rate; plus

7.4.2. $66.28 off fire service rate; plus

7.4.3. $10.00 from Council.

8. Legal, Risk and Legislative Considerations

8.1. These are considered elsewhere.

9. Community and Stakeholder Engagement

9.1. Broad community and stakeholder engagement is proposed for the City’s review of its rating and valuation strategy, which is proposed to include a review of the adequacy of rates support measures for pensioners in the Hobart municipal area.

10. Delegation

10.1. This matter is delegated to Council for consideration.

As signatory to this report, I certify that, pursuant to Section 55(1) of the Local Government Act 1993, I hold no interest, as referred to in Section 49 of the Local Government Act 1993, in matters contained in this report.

Lara MacDonell

Manager Rates, Procurement and Finance Operations

Tim Short Feb 2021

Tim Short

Director City Enablers

Date: 8 April 2022

File Reference: F22/31090

Attachment a: Council Policy - Rate Remissions ⇩

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