Mine refund shock
Tuesday, 20th November, 2012
By Erica Visser
City Council might have to hike rates to reimburse Perilya for millions of dollars after its land was dramatically overvalued unless the State Government intervenes.
The NSW Valuer-General in its 2007 determination set the land value of Perilya's North, South and Potosi mines at $20.9 million.
Perilya appealed the decision and the Land and Environment Court (LEC) last month found that the land was in fact worth just $4.9 million.
While the court's decision is likely to be appealed, Perilya has asked Council to recalculate its rates and reimburse it for the extra money paid from 2007 until 2010.
Managing Director and CEO of Perilya, Paul Arndt, said that the company paid more than $3 million a year in rates in that time.
Council, which has recently struggled with cash flow, has admitted it would be unable to pay back the money.
It now plans to seek "immediate resolution" by the State Government or else it could be forced to increase rates.
"Given the severity of this judgment, the impact on the Broken Hill Community and the ability of Council to repay the overpayment, it is recommended that a delegation be appointed to meet with the Premier and Treasurer, expressing the urgency of this matter and its impact on the city and seek immediate
resolution by the NSW State Government," according to a Council report.
State MP John Williams will meet with the Minister of Local Government Don Page and the Minister for Mining and Energy Chris Hartcher on Thursday to discuss the problem.
"This is a serious issue for Broken Hill and a serious issue for valuations that are done on behalf of the Valuer- General," Mr Williams said.
"This is showing a serious deficiency in how Local Government collected rates and dispersed them.
"We're talking about a serious amount of money."
Mr Williams said that another huge problem was the hole in Council's rates revenue from now on.
"This has got a significant impact for Council in how it regards revenue going forward," he said.
"If Council is going to maintain the same level of services it's always had its going to need to find that revenue from somewhere.
"This is a very, very unusual situation for rates to be challenged and for this sort of outcome to be found.
"Generally, most of the challenges come from residential small business...that's nothing like what we're seeing here."
Mr Williams said he did not know what the State Government could do to help Council but that he would highlight the severity of the situation.
"I'm certainly trying to achieve a positive outcome for council through this meeting," he said.
Mr Arndt said that Perilya was in discussions with Council.
"We've asked Council to calculate the difference...we are talking a substantial amount."
Comment was sought from City Council.