Budget reply (Appropriation Grievances)

02-Jul-2015 Mr VAN HOLST PELLEKAAN ( Stuart ) ( 16:55 :40 ): I would like to use the short amount of time available to me in this grieve to touch on the aspect of the budget relating to charging royalties to local government to access quarry rubble. There are quite a few more technical terms and there are a range of different materials, but for the sake of this contribution let us just consider it as rubble which is almost always used for road base. That is going to be a very serious impost on local government councils.

The government has allocated a $1 million income to itself from this new move and I believe that is a pretty serious underestimate of the amount of money the government will get. It will not be the sort of income that is going to fix the budget or fix the state's economy, but by being an underestimate of the income to the state the key issue is, I think, that it is an underestimate of the cost to local governments.

When we have approximately 67 councils, I think it is, in South Australia, plus the Outback Communities Authority, which does everything it can to fulfil a similar role in the out-of-council boundaries and parts of the outback of South Australia—I think we have 19 councils in metropolitan areas—that means that the overwhelming number of local government councils across our state would be affected by this decision.

There are a wide range of examples, but let me just start with the smallest council in the state, the District Council of Orroroo Carrieton, which is in my electorate. When I say smallest I mean by ratepayer base. They have just under 1,000 head of population and they have a bit over, or I think approaching 1,500 actual ratepayers, considering the fact that some people own more than one property, etc. Their ratepayer income is currently sitting at $780,000 per year. For the state government that is not a big amount of money, but $780,000 is the entire rate income for the Orroroo Carrieton council. They do everything they possibly can to serve their ratepayers and the people who travel through that beautiful part of the world with that ratepayer base and whatever else they can get through grant and other income opportunities.

The District Council of Orroroo Carrieton estimates that in 2015-16 they will have to pay $44,000 because of this new royalty. Again, that is probably not the sort of money that scares the state government or really worries them at all in any way, but $44,000 to the District Council of Orroroo Carrieton, based on their $780,000 rate income in total, is a 5.6 per cent cost to them. So, they have a few choices, a few very difficult choices. Do they just cancel the road work that they were going to do? Do they just not pay the $44,000 to the state government by not doing the road work that they were going to do? Clearly, that is not an option for them.

Do they just add 5.6 per cent onto all of their rate notices on top of the regular annual rate increases that they would be working with anyway? Probably not. That is a very difficult situation too. That would probably double the rate increase that was coming anyway. The reason I use this example is so that the government really does understand the serious impact of this decision upon the people and the councils that it affects.

One thing I say in this place very regularly is that relativity is critically important: $44,000 to the state government budget would not be a significant hit, but $44,000 to the Orroroo Carrieton council is incredibly important. I normally use that example with regard to household budgets and household incomes or small businesses or large businesses. It is the relativity that is actually really important when you are trying to ascertain the benefit or the cost or the penalty of certain decisions.

That is only one of the councils in the electorate of Stuart; there are seven of them, and of course there are nearly 60 across the entire state that will be hit in this way. One of the great frustrations is that there is no time for councils to react. They have already done their budgets. They have done their budgets for the 2015-16 year. They are committed to do the work, they have promised their ratepayers they will do it and they are locked into achieving their budget the very best they can.

The state government is imposing this extra royalty payment immediately, with effect straightaway. What is worse is that they just did not consult. They did not talk to the affected councils and they did not talk to the LGA. They did not consider or they certainly did not undertake any discussion—if they did consider it and decided not to, that is even worse—discussion with councils with regard to what the impact might be so that, for example, they could understand that the royalty they wanted Orroroo Carrieton council to pay was equivalent to 5.6 per cent of their total rate income. That is the sort of information the state government needed to understand.

They probably just looked at it and thought, 'Gee, I don't know. We estimate this might make us about $1 million.' I have no idea, by the way, how the government would have come to that estimate because I am sure they did not do any detailed calculations. They just would not have the knowledge of how many tonnes of rubble each council is taking for this purpose throughout South Australia. They just did not consider that sort of thing at all, so councils all over the state are faced with not doing the work or trying to find the money to pay the bill. Really, the only way to do that, unless by chance they happen to be a particularly wealthy council, and I do not know many of them in regional South Australia, is to charge their ratepayers significantly more.

My purpose here is to implore the state government to support these councils that need the support. I implore the state government to try to understand the impact of this decision. Yes, it is one of the smaller components of their budget, but it will have a very large and detrimental impact upon the councils and the ratepayers that it affects.

This is a year after the state government, without any notice whatsoever, increased the royalties, from 35¢ a tonne to 55¢ a tonne, to those organisations already paying the royalties last year. This is clearly an area where the government thinks it can just scrape up a little bit of money without hurting people, but that is not the case. While it might seem small to the state government, this is a decision that definitely will hurt people.

While I am on my feet on this topic, I would like to highlight the fact that there are occasionally areas of awkwardness, let us say, for earthworks contractors who can get caught up between extracting rubble from quarries where the royalty has previously been paid versus areas where the royalty was previously not paid. That is a different topic for a different day. I recognise that that is an issue, but just to blanket charge all the councils without any consultation, without any notice, is certainly not the way to address that part of the puzzle. I very earnestly ask the government, and the Treasurer and the Minister for Local Government in particular, to find a solution to help those councils which cannot absorb the cost the state government is putting upon them.


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