❓ In relation to the Minister's decision to ensure that those who default on local government rates and services pay only minimal interest penalties, I ask: (a) on what economic basis did
AnsweredQoN 7904Legislative Assembly
QuestionView source ↗
In relation to the Minister's decision to ensure that those who default on local government rates and services pay only minimal interest penalties, I ask:
(a) on what economic basis did the Minister and the Department determine that 7% is an appropriate penalty interest level for overdue rates;
(b) in making this decision, did the Minister consult with any other department or agency regarding penalty rates in those departments; and
(c) did the Minister state on 6PR radio that 7% is a more realistic figure because people in Western Australia are doing it tough and that he did not want local governments to be making money from people's hardships?
(a) on what economic basis did the Minister and the Department determine that 7% is an appropriate penalty interest level for overdue rates;
(b) in making this decision, did the Minister consult with any other department or agency regarding penalty rates in those departments; and
(c) did the Minister state on 6PR radio that 7% is a more realistic figure because people in Western Australia are doing it tough and that he did not want local governments to be making money from people's hardships?
AnswerView source ↗
Answered
12 June 2012
Responded by
Minister for Local Government
Response time
40 days
(a) The prescribed interest rates payable by ratepayers on overdue rates and service charges had remained unchanged since 1999 when the Reserve Bank of Australia (RBA) cash rate was five per cent. The RBA cash rate in May 2012 was 3.75 per cent and is expected to fall to three per cent by December 2012.
During policy development, it was determined that the Western Australian Treasury Corporation (WATC) lending rate for local government short term borrowing appeared a more appropriate indicator to use than the RBA rate, as the WATC rate reflects the actual cost to local government of the deferred rates revenue. Further, it was advised during drafting that a flexible rate could not be prescribed; the fixed rate of seven per cent imposed is reflective of the average WATC lending rate for local government short term borrowings (eg five per cent), plus an additional two per cent to allow for the administration costs incurred in recovering overdue and unpaid amounts.
On this basis, I moved to reduce the limits from 11 per cent to seven per cent.
(b) The Legislative Reform Working Group, which was made up of representatives from my Department of Local Government, the Western Australian Local Government Association and Local Government Managers Australia (WA Division), recommended, in 2012, a change to the interest rates based on the average variable overdraft interest rate for small business, as published by the RBA.
(c) Yes.
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During policy development, it was determined that the Western Australian Treasury Corporation (WATC) lending rate for local government short term borrowing appeared a more appropriate indicator to use than the RBA rate, as the WATC rate reflects the actual cost to local government of the deferred rates revenue. Further, it was advised during drafting that a flexible rate could not be prescribed; the fixed rate of seven per cent imposed is reflective of the average WATC lending rate for local government short term borrowings (eg five per cent), plus an additional two per cent to allow for the administration costs incurred in recovering overdue and unpaid amounts.
On this basis, I moved to reduce the limits from 11 per cent to seven per cent.
(b) The Legislative Reform Working Group, which was made up of representatives from my Department of Local Government, the Western Australian Local Government Association and Local Government Managers Australia (WA Division), recommended, in 2012, a change to the interest rates based on the average variable overdraft interest rate for small business, as published by the RBA.
(c) Yes.
Notice: This document is created or edited using unregistered or evaluation copy of rtLib valid for testing or development purposes only. To use it for productive or any other purposes please register it. You may purchase the license on
http://www.rtlib.com
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