Carbon tax hits up council rates

By Paul Hemsley

Individual councils will be affected differently according to their own unique situations and rates may increase, according to the Australian Local Government Association (ALGA).

ALGA President Genia McCaffery said councils are faced with challenges in working out the full impacts of the carbon price on their operations.

“The introduction of the carbon price will affect each council differently depending on their individual circumstances,” Ms McCaffery said.

“For example, councils with large landfills – those with more than 25000 tonnes of carbon dioxide equivalent emissions – will have to pay the carbon price on each tonne of emissions.

“However, depending on their carbon reduction methods, which could include capturing and flaring methane gasses, these liabilities will vary," she said.

Costs may be passed on to ratepayers in some cases, according to Ms McCaffery.

“We can also expect that there will be general cost increases such as the rise in price of electricity and some of our contractors may increase their charges; these costs will also need to be passed on, probably through increases in rates,” she said.

She said the landfill sector is in a “somewhat unique position” as waste decomposes over 30 to 40 years.

She said most other industries can pass on the cost of emissions immediately, but waste is more complicated because it decomposes over 30 to 40 years, placing the landfill sector in a “somewhat unique position”.

According to the Municipal Association of Victoria (MAV), council rates will rise an average $75 or five per cent in the coming year to cover growth in community service demands, hikes in government levies and the impact of the carbon tax.

MAV President Bill McArthur said budgets also facing growing pressure on municipal waste management costs due to the start of the carbon price, stricter Environment Protection Authority standards for landfills, and rising State landfill levies.

“This year councils will redirect an average $20 from each household ($49 million) to pay the State’s landfill levy.

“If you’re in one of 25 metropolitan areas, an average $28 ($39 million) will also be paid from your rates towards the State’s fire services levy,” Mr McArthur said.

Mr McArthur said most of this year’s rate rise will be “eaten up” by external costs that councils can not control when a median increase of $22 is added, which will face rate payers due to a carbon price.

There will be a median rise in council costs of 0.8 per cent due to a carbon price, according to an MAV analysis.

If carbon price cost increases are collected through rates, it would equal a median rate rise of 1.5 per cent (around $22 per ratepayer), which excludes mitigation programs to reduce council emissions.

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