Edselle McLeyland
Increasingly the Tasmanian State Government has been starving Local Councils of cash such that Councils are turning to the public to make-up the difference. Hence parking fees and fines have now moved from the realm of service provision to necessary revenue.
WALKING to work in June, the observant Hobartian may have noticed something unusual. It appeared that a plague of parking officers had descended on the City of Hobart. Lurking on every corner and zooming around on lovely new Vespas, the blue army was to be seen everywhere issuing their much despised manuscripts. It is a sure sign that the city budget is struggling and the edict has arrived from above to generate more cash before the books close on 30 June. But even now, in the new financial year, the zealousness of the blue army has persisted — what does this mean with regards to underlying city finances?
Before I continue, I need to point out that this article is not an attack on the hard working parking officers of Hobart — more-so it is a comment on the financial policies and politics which drive their behaviours. The community benefits from a dedicated parking patrol that offers a valuable service. However it is obvious that customer service has now been superseded by “direct revenue raising”.
Not very fine
In the financial year 2004-05, Hobart City Council raised $7.76 million in parking fines and user charges (including parking meter and station fees), of which fines alone constituted $2.36 million. This revenue amounts to 8.7% of total council revenues and is the third highest source of revenue behind “other service charges” and “residential rates”. In fact the contribution made by the State and Federal Governments (Government Grants) to the HCC coffers was 70% less than revenues generated by parking. It is clear that Council is becoming increasingly dependent on fines and fees to balance the books.
When size doesn’t matter (really)
In 2003-04 the average value of a parking infringement issued by Sydney councils was $95 each. In contrast Hobart council has a maximum fine of $35. This marked difference in value, plus the lower rate for parking meters in Hobart, has constituted the main thrust of the media spin on why Hobart parking is not a problem. However this argument becomes nonsense when the frequency of fining is dramatically increased. If we look at the break-down of parking revenues and expenses for Hobart we see that an amazing $3.005 million was spent on employee costs. With on-costs this means that Hobart City Council had the capacity to employ up to 60 people to patrol the streets on a full-time basis issuing tickets. This means that for every 800 of the 48,000 citizens of Hobart municipality, there may be at least one parking officer. Consequently it should be easier in Hobart to find a parking officer than either a pharmacist or public accountant.
In contrast the combined revenues from parking fines and user charges for Victorian councils in 2002-03 only constituted 2.3% of total revenues (about one third that of Hobart). In Australia’s most populous city (Sydney City Council) parking fines and user fees raised $14 million in 2002 and $27.8 million in 2003-04, about four times the amount raised by Hobart City Council. Sydney councils have a notorious reputation for zealous enforcement and pursuit of parking fines. Nationally all councils have become addicted to fine and fee generated revenue, but when one considers the disproportionate amount of income raised by Hobart City in comparison to both Victorian councils and Sydney Council (Australia’s most visited city), Hobart seems to be miles ahead in milking the public.
Sydney City Council (municipal boundaries) has a resident population of 156,000 people (more than 3 times that of Hobart City Council) but it is also the nations largest capital. Sydney City also attracts 400,000 day shoppers and 350,000 day workers along with 6,500 international visitors (daily). Consequently, when the higher fee value and population is taken into account, the probability of being fined in Hobart is still about 3.52 times that of Sydney! Hence the argument around the lower monetary value of Hobart fines pales into insignificance by virtue of frequency.
Hidden costs and profits
The common argument from all councils (nationally) for high parking fines and fees is that the money is needed to pay the wages of parking officers — a rather self-perpetuating and fulfilling prophecy! From a business perspective one does not employ a large manual workforce if there is not a significant profit to be made. If we look as the net profit made by Hobart City Council in 2004-05 from parking fees and fines we see that the reported amount is a meagre $1.55 million. However this amount includes the “paper” value of depreciation, hence the real cash return as profit was a nice $2.78 million — about the same amount of revenue that was gained from fines alone and half the amount of money that the state Government handed over for the pulp-mill “information” bus. It is therefore possible for the council to discard with fines in total and still break-even from off-street and on-street charges alone. However it’s all a vicious circle and at the end of the day council pockets a wad of cash that it is otherwise denied by the State Government.
Playing bluff
At the 30 June 2003, almost 50% of Victorian parking fines were listed by local councils as doubtful debts and almost 60% of these debts were never collected. In Victoria local councils must pay a fee to the state police to allow the tracing of car registration plates. As the initial issue of a parking infringement by a local council officer only records the registration number, the ownership of the vehicle remains unknown and payment of the fine is based on either “good faith” or bluff. Where councils have to pay a fee for tracking services there will come a point where the cost of pursuit of bad debts will outweigh the value of fine collection. In Sydney this is partly mitigated by the State Government automatically pocketing 50% of all council parking fines.
A fine-lead recovery
The use of local and state legislation to lock-up vast tracks of Hobart City roads within gazetted parking zones has produced an alarming planning side effect. As it becomes increasingly difficult (if not impossible) to find a street near the city precinct which provides free parking, the value of city land, with regards to potential parking station development, is increasing. As city commercial and residential investment returns typically fall beneath 10%, the demand for parking spaces makes it far more attractive for developers to churn-out ugly multi-story parking stations. Prime land in the city precinct will increasingly be viewed by developers as a license to print money via parking fees.
Whose hand is really in your pocket?
One cannot blame the loyal parking officer for this dilemma and to some degree it is difficult to blame local councils. Local Councils are empowered to raise revenue by the State through the Local Government Act 1993, as well as through a bevy of various State acts which contain clauses for local authorities such as the Traffic (Road Rules Regulations) 1999. In return the State Government can also use its authority to make Local Governments impose and collect taxes (eg. fire levy) on its behalf through the State and Local Government Financial Reform Act 2003. Stuck in-between this love-hate relationship between State and Local Government are ratepayers and road users who ultimately fork-out the cash. Increasingly the Tasmanian State Government has been starving Local Councils of cash such that Councils are turning to the public to make-up the difference. Hence parking fees and fines have now moved from the realm of service provision to necessary revenue.
So the next time you are parked at Salamanca and get back to your car to see the parking officer slapping on an infringement notice, don’t yell abuse at the poor sod — just cross the road to Parliament House and ask Paul to explain why.
