Art shelved but rates jump ‘OK’

NEWCASTLE City Council says it can shelve projects linked to the city’s recent 8.6per cent rates increase without breaching the local government act.

The $21million Newcastle Art Gallery redevelopment was placed in limbo on Tuesday night after councillors rescinded a previous decision to proceed with the expansion.

The art gallery was one of nine projects promised last year when the council applied to the Independent Pricing and Regulatory Tribunal to increase rates above the state cap.

Two other projects that were also supposed to be funded by additional rates income – the expansion of parking meters and the upgrade of council parking stations – have also been effectively scrapped.

The council’s city assets director, Steve Edmonds, said on Wednesday that the special rate variation would raise $55million over 10 years and that the nine promised projects would cost $178million to deliver.

The shortfall – which will notionally be covered by grants, asset sales and developer contributions – effectively gives the city leeway to direct the rates income only to priority projects.

‘‘Both the Division of Local Government and IPART have confirmed council will not breach the local government act [as a result of the gallery decision] as the proposed new capital expenditure remains well in excess of the proposed revenues to be obtained through the special rate variation,” Mr Edmonds said.

He said it was also important to note that the increased rates had been in effect for only one year.

Lord mayor Jeff McCloy said that the council needed to ‘‘clean the slate’’ on the bungled art gallery project.

Federal Newcastle MP Sharon Grierson and Regional Services Minister Catherine King released a joint statement yesterday that confirmed the government would withdraw a $7million funding commitment if the project did not proceed.

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