Rate hike after parking slump Author: CLAY LUCAS, CITY REPORTER Date: 07/05/2006 Publication: The Sunday Age
MELBOURNE businesses and residents face a rate hike almost triple the rate of inflation, as a result of a $6 million plunge in parking revenue and Melbourne Council's controversial $43 million commitment to the new convention centre.
"We are looking at cutting services or increasing rates - and we would be very reluctant to cut services," said Brian Shanahan, finance chairman at Melbourne Council. A rates rise between 6 and 8 per cent was being considered, he said.
In recent years, the council has kept rate rises at or below the inflation rate, now at 3 per cent.
Cr Shanahan said fewer people were driving into the city, which had cut expected revenue from parking machines from $38 million to $32.1 million.
But former lord mayor and finance chairman Kevin Chamberlin said a rates rise was "just the tip of the iceberg" for inner Melbourne.
The drop in parking revenue - which Mr Chamberlin said was due to an increase in parking fees up to $3.50 an hour, not petrol prices as the council said - combined with the council's $43 million commitment to the State Government's convention centre showed the council was in trouble.
A council insider said that up to a quarter of the council's $120 million cash reserves could be spent in this budget - potentially dipping into the reserves for the first time since lord mayor Ivan Deveson in 1999.
The council has also agreed to cut its city works budget by at least 50 per cent over the next five years.
Mr Chamberlin claimed the cut to the capital works budget over the next five years would be up to 75 per cent. "In order to pay for the convention centre they will take out 75 per cent of capital works - roads, new drainage systems, footpaths, libraries, child care and marketing" Mr Chamberlin said.
The council is also said to be facing an increase of $3 million to its annual staff bill, placing further stress on the city budget.
Local resident groups have been angered by the prospect of the rate rise. "I'm furious. Thousands of families are on waiting lists for child care and all this money is going to the convention centre," said Bill Cook, of the North and West Melbourne Association. "John So goes out of his way to keep the State Government happy, and that is going to have a direct impact here."
City retailers warned that the expected rate rise could force them to dismiss staff. The Melbourne Business Council, which represents 350 city retailers, said there already had been a drop of 4 to 5 per cent of foot traffic through the city since January as a result of the increased parking rates. A rates increase would hurt them further.
"It's bloody frightening. (Inflation) is only nudging 3 per cent, so what is going on?" council secretary Don Parsons said. "They're even talking about cutting money that's been allocated towards marketing of the city, which is really disturbing."
Councillors admitted there were some financial shocks ahead. "We need to consider a rate rise and using council's investment portfolio to build long-term capital infrastructure," Greens councillor Fraser Brindley said.
He attacked the $43 million being spent on the convention centre, which he said would do nothing for the city.
At least one councillor said he would oppose a major rate hike. "I certainly won't be supporting anything like an 8 per cent rate rise," said Cr Peter Clarke. "I'd prefer to see it below 3.8 per cent, which is what it has been."