By Paul Hemsley

An already combative relationship between Tasmanian councils and industry group Tasmanians for Reform has deteriorated further amid a fresh row over whether new increases in council rates are justified without moves to reduce the high number of local governments in the island state.

Business-led Tasmanians for Reform has attacked the move by Tasmanian councils to bolster their revenues as a “great rates rip-off” and says that the increases are “well in excess of the Consumer Price Index (CPI) for Greater Hobart, which is running at just one per cent.”

But the chief executive of the Local Government Association of Tasmania (LGAT), Allan Garcia, has vehemently rejected the criticism and accused the group of being “deliberately simplistic in their analysis of local government”.

Tasmanians for Reform chairman Mary Massina has been a vocal critic of both the way councils on the island operate and the relatively high number of 29 local governments servicing a population of just over half a million people.

“It is frustrating to see that while rates increases continue throughout municipal Tasmania, services on the other hand continue to fall,” Ms Massina said.

The latest council rates increases in the crosshair include Glenorchy (4 per cent), Brighton (2.5 per cent), Kingborough (3.85 per cent) and Hobart that is expected to go up by 3.5 per cent.

Ms Massina claims such increases are an example of a lack of accountability and questioned why rate rises of up to four times the CPI can be considered reasonable when state and federal government are required to “show considerable restraint?”

She has called on the state government to intervene on the issue of local government reform to “deliver better services, better infrastructure and cheaper rates to the community”.

“We have a state government that claims it is concerned about jobs and cost of living, yet when it comes to spiralling local government costs it is silent, despite it actually having the power to do something about it,” Ms Massina said.

However Tasmanian councils are fighting their corner. Barry Easther, president of the Local Government Association of Tasmania told Government News that Ms Massina doesn’t “understand how it works”.

Mr Easther said Hobart’s CPI had little relationship to the costs that other councils incurred. Tasmanian councils had been provided with a Local Government Index that councils can either use as guidance but are not bound to.

“The increasing regulatory requirements for local government business are the main driver of salary costs, and a significant factor in infrastructure costs is the depreciation standards imposed which are beyond that required of other levels of government,” Mr Easther said.

Mr Easther said councils are “very considered” when setting rates and must balance budget efficiencies with consideration of community priorities, as identified through strategic planning and long-term infrastructure requirements.

According to the LGAT’s Mr Garcia, the CPI is “not a good benchmark” on which to fix council rates because it bears no resemblance to council cost structures that were largely driven by infrastructure and salaries.

“Far from being massive and unnecessary, council rate increases represent the increasing demands on councils for new or enhanced services, well beyond those they are statutorily accountable for, as well as increasing infrastructure and regulatory costs,” Mr Garcia said.

He argued that the Council Cost Index for Tasmania reflects the true cost of doing business for councils, which has gone up to 3.05 per cent in 2013 and it indicates the average rate increase to maintain the present levels of service – “assuming other revenue sources, such as grants, also increase in line with costs”.

The latest war of words between Tasmanian councils and businesses follows a fierce dispute over the merits of reducing number of councils.

Although there are presently 29 Tasmanian councils, Tasmanians for Reform chair Mary Massina has persistently argued for a reduction of that number through amalgamations to boost accountability and productivity – a deeply unpopular idea among Tasmanian mayors, councillors and bureaucrats.

Tensions boiled over in September 2012 when LGAT president Barry Easther accused Ms Massina of having “finally lost the plot” and inventing a “conspiracy theory” about a state and local government partnership with the Tasmanian Chamber of Commerce and Industry (TCCI) to increase the number of councils in the state.