Ashburton Shire to lose $5m after Chevron rates decision
The Shire of Ashburton expects to lose about 10 per cent of its operating budget in the wake of a tribunal finding that Chevron was overcharged rates for its Wheatstone LNG Project several years ago.
In a decision handed down in the State Administrative Tribunal last month, Judge Tim Sharp ruled partly in favour of Chevron in its objection to the WA Valuer-General’s 2016-17 unimproved valuation assessment for the $34 billion plant near Onslow.
Last year the Shire, which collected rates based on that valuation, labelled the case a “potentially extreme” financial risk and stated it could result in the loss of up to $8.5 million in rates revenue.
Shire of Ashburton president Kerry White said while “thankfully” the extreme risk scenario had not been realised, the decision would have an impact on Shire operations.
“This ruling will impact rates revenue and require council to reallocate and source other funds for community projects,” she said.
“The financial implications for the Shire are yet to be fully determined. However, it is estimated at least $5 million may need to be refunded. The refund amount represents around 10 per cent of the Shire’s operational budget.”
She said the Shire was reviewing its next steps.
The Valuer-General valued Wheatstone at $16,460,000 using an income capitalisation method in 2016-17, but Chevron disagreed with the method and claimed the land’s correct value was no more than $11,550,000.
Judge Sharp upheld the rating method and market rental figure used by the Valuer-General but ruled in favour of Chevron on the capitalisation rate employed.
He found the correct value should be $13,844,910.
The Shire will have to refund $500,000 as a direct result of the case.
However, the local government believes the decision will also mean a revaluation of 2016-17, 2017-18 and 2018-19 rates bills for Wheatstone and Chevron’s Gorgon LNG Project on Barrow Island — for which Chevron has also lodged an objection — at a total cost of $5.2 million.
A Landgate spokeswoman said the Valuer-General was reviewing the tribunal’s decision and considering whether to appeal.
A Chevron spokeswoman said the company welcomed the case outcome.
“We hope this determination provides certainty for rating stability moving forward,” she said.
Chevron provides about 40 per cent of rates revenue to the Shire and objected to Wheatstone’s valuation in line with the process available to all ratepayers.
The Shire was knocked back in an application to be heard as part of the case in June 2018.
Ms White said the Shire was glad to have some certainty for developing future rating strategies.
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