Do Special Rates and Charges Schemes work?

This is a question I helped to answer for Banyule Council recently. The Council has been running special rates and charges schemes in its shopping and activity centres for more than 20 years. These are the schemes in which traders and/or property owners are charged a small annual fee which is then matched by Council, with the funds used to provide collective marketing, trader assistance and training activities. The schemes have been a way for street-based centres to improve their coordination to compete with the corporate malls. Typically, the schemes must be renewed every five years with majority support from traders and property owners required for their continuance. However, no assessment of the effectiveness of these schemes has been undertaken by Council. More surprisingly, there appear to be no significant studies from other jurisdictions around Australia that identify net benefits.

With my project partner, Geografia, I worked with Council officers and centre coordinators to identify net benefits. We undertook a series of interviews and a nine-month online survey of traders across four case-study centres, including one that had no special rate scheme in place. Using benefit cost analysis we determined that the schemes did, indeed, have a benefit, not only for the individual traders taking part in our survey but for the municipal community as a whole.

The results showed that, for the traders taking part in our survey, the benefits outweighed the costs by at least three to one. For the Banyule community as a whole, the benefits outweigh the costs by at least two to one. (“At least” because not all likely benefits were assigned a value in our assessment.)

The benefits flow initially to traders in the form of increased turnover, particularly for retail traders in the affected centres. However, the benefits flow through to the wider community in the form of increased employment, improvements in choice and local access to goods and services, and improvements in the vibrancy and fabric of Banyule’s activity centres as traders and property owners have a higher surplus to reinvest.

By demonstrating the net benefits of the schemes, these results should make it easier for Council to renew special rates and charges in the future.