Intent of Proposed Regulations under Section 96 of the Natural Resources Management Act 2004
Council Recovery of Fair NRM Levy Collection Costs
Discretion in seeking reimbursement of costs
While councils are currently eligible for the reimbursement of costs associated with the collection of catchment water management board levies very few councils elect to do so. Councils have indicated that a primary reason for this is the perceived complexity associated with the process. Although costs claimed under the Water Resources Act 1997 require the approval of the Minister, approval has always been given for a high proportion of the costs being sought.
The significant role of Local Government in natural resources management (NRM) includes being a planning authority (land use policy and development assessment), a manager of public land and a program partner. Councils contribute significant financial and in-kind resources to NRM and actively support local on the ground initiatives including those of volunteer groups.
The new NRM arrangements represent opportunities for Local Government to work in partnership with NRM boards and regional communities to address NRM issues that are important to their constituents and range from protecting local watercourses, to soil conservation and pest species control. Councils will have the opportunity to suggest inclusion of local projects in regional NRM plans. For this reason the capacity to recover NRM levy collection costs is discretionary. A key principle of public accountability is transparency and it is important that councils and NRM Boards do formally record and recognise the actual levy collection cost, even if a council chooses not to seek reimbursement.
Councils will be able to seek from NRM boards fair costs for raising a regional NRM land-based levy, as a separate rate, in order to reimburse the contributions required to be made to a regional NRM board under section 92 of the Natural Resources Management Act 2004.
It is proposed that fair costs be those additional costs that a council incurs specifically because it collects an NRM levy, ie fair costs would not include costs, or proportions of the costs, that a council incurs for general rates collection.
It is proposed that all amounts prescribed in this cost recovery regulation be adjusted annually by being indexed to the Consumer Price Index - all groups index for Adelaide (CPI). This will ensure that the amounts are regularly updated and maintained in real terms.
It is intended that councils be required to notify regional NRM boards of the estimated NRM levy collection costs that the council will claim in the following financial year during consultation between the council and the regional NRM board on the NRM plan1.
This condition is proposed so that regional NRM boards will be able to consider the estimated collection costs associated with different types of land-based levy proposals in the process of developing their levy proposals. Prescribing this condition will also mean that regional NRM boards will be able to factor estimated levy collection costs into their annual budgets. Preliminary NRM board consultation with constituent councils during the plan preparation stage, ie prior to finalising NRM levy proposals, will provide constituent councils with early opportunities to explain their capacity to implement different types of land-based levy options and the likely associated costs.
These consultation processes provide the opportunity for councils’ estimated levy collection costs to be identified and considered
If the basis for collecting a levy is changed during the plan adoption process by the Minister or as a result of referral to the Natural Resources Committee of Parliament, it is proposed that a council would be entitled to change its advice regarding estimated collection costs to that regional NRM board.
Types of costs
It is intended that the regulation provide for councils to recover two types of NRM levy collections costs; establishment costs and ongoing costs, depending on the circumstances.
Where a new levy is being raised a council would be entitled to recover both establishment and ongoing costs as establishment costs are limited to those costs that are associated with setting up the raising of a separate rate to collect the land-based NRM levy.
Establishment costs are to be those costs associated with a council putting in place matters (rates systems, rates assessment data & customer service) required to raise new land-based NRM levies - ie where a land-based levy is being raised for the first time or where the basis of the levy changes. This assumes that community education is the primary responsibility of the regional NRM board not councils.
The regulation is not intended to provide for councils to recover establishment costs where a council has previously raised a land-based catchment levy and the land-based NRM levy is to be raised on the same basis, or on a basis that does not require significant changes to existing council costs such as assessment data or rating processes. If this is not the case, a council will be able to seek reimbursement of establishment costs notwithstanding that it previously raised a land-based catchment levy.
For initial implementation of NRM levies, it is intended that NRM boards be required to consult constituent councils during the initial NRM planning process to ensure that councils provide input regarding the proposed basis (ie capital value, fixed charge etc of NRM levies – see section 95(3)) – and likely costs.
Fair NRM levy establishment costs – 2 methods
1. Prescribed amount
The prescribed amount that a council would be entitled to claim for establishing a levy, either where a levy has not been imposed by a council previously or where the basis of a levy has been changed, is $7,918 + 52 cents per rateable assessment. These amounts are to be subject to annual CPI adjustment.
Alternatively a council may claim fair levy collection costs based on the prescribed list of fair establishment costs - see below.
2. Default option for establishment costs - Prescribed fair establishment costs
Establishment Costs – Table from LGA report
Establishing ability of rates system to include NRM levy
Setting up new codes, and coding properties in rates system
Confirming eligibility of assessments
Councils will be required to document the details of the claim for fair costs under this option.
Under the default option, there is a risk that a regional NRM board and a council may be unable to reach agreement about fair collection costs through the consultation process that applies to the regional NRM plan and levy. Therefore a simple dispute resolution mechanism is to be provided in the regulation to avoid the financial and human resource costs (for councils, boards and state government) of complicated dispute resolution processes and procedures.
The regulation is to provide that where a council and a regional NRM board are unable to reach agreement about the amount of levy collection costs a council is entitled to be reimbursed:
a regional NRM board includes the amount that it considers reasonable in its regional NRM plan budget
on receiving an invoice for collection costs from a council, a board is to reimburse the amount included as a reasonable estimate of collection costs for that council in its regional NRM plan
a council or board is entitled to appeal to the Chief Officer under the NRM Act the amount of levy collection cost, within twenty-eight days of being notified by the regional NRM board that it does not agree with the amount sought by a council. The Chief Officer’s decision is to be made within sixty days.
Note: There is potential for dispute both when the estimate of collection costs is notified by a council to an NRM board for inclusion in a plan and, also, when a council invoices an NRM board seeking to recover fair costs.
Establishment costs - councils in more than one NRM board region
The additional complexity involved where a council is required to contribute to more than one regional NRM board and, hence, to raise separate land-based NRM levies in those parts of the council area corresponding to different board areas is recognised. It is proposed that a council be reimbursed sixty percent of the fixed establishment amount from each of the regional NRM boards that it makes contributions to - when an NRM levy is first raised. The default option of detailing prescribed establishment costs would be available for use where a council considers that higher levels of fair establishment costs will be incurred and should be reimbursed.
Fair annual costs for collection of an ongoing NRM levy
It is intended that a council be able to seek from NRM boards fair annual costs for collecting the land-based NRM levy. Fair annual costs are those costs that a council incurs directly as a result of collecting an NRM levy on an ongoing basis and do not include costs that a council incurs for collecting general rates.
The prescribed amount that a council is to be entitled to recover for collecting a levy for which the basis remains the same as that adopted in the previous financial year is $1,848 per council plus 18 cents per rateable assessment. These amounts are to also be indexed to the Consumer Price Index – all groups index for Adelaide.
Payment of collection costs to councils by regional NRM boards
It is intended that a council would be required to invoice a regional NRM board for those levy collection costs included in a regional NRM plan prior to 31 of March in the financial year in which an NRM levy is raised by a council. The invoice would be payable within 30 days.
Review of cost recovery regulation
It is proposed that this regulation be jointly reviewed by the Minister responsible for the NRM Act and the LGA President after the second year of operation of the regulation and that that review be concluded prior to the end of the third year.