A wide-ranging and complex review of Victoria's shire rates system has been released by the state government just days before Christmas,with Local Government Minister Shaun Leane simultaneously capping council rate increases for 2021-2022 at just 1.5 per cent, the lowest percentage increase since the implementation of the system in 2016.
Forty-eight shires made submissions to the Local Government Rating System Review, as well as the Municipal Association of Victoria (MAV), and Rural Councils Victoria (RCV), representing 38 country councils in the state. There were multiple organisational and individual submissions provided, including many from golf courses and clubs across the state, ratepayers' associations, VECCI, the VFF, municipal valuers and others.
The City of Ballarat did not make a submission.
The Local Government Rating System Review was conducted by a panel of three appointees: Dr Kathy Alexander, former CEO of City of Melbourne; Mr John Tanner AM, a former administrator for Brimbank City Council and commissioner of the inquiry into Ararat City Council; and Dr Ron Ben-David, former chair of the Victorian Essential Services Commission and deputy secretary of the Victorian Department of Premier and Cabinet.
The panel made 56 recommendations, 36 of which the state government supported in full, in-principle or in part. Twenty recommendations were rejected by the government, largely on the grounds that "significant change would increase uncertainty and risk for (insert issue) during the coronavirus pandemic and post-pandemic recovery."
During the time of the review's considerations, the state government also passed the Local Government Act 2020, which overrode some recommendations, and placed any consideration of the Valuation of Lands Act 1960 outside of the scope of the review, meaning that the system of Current Improved Value and Net Annual Value will continue to be used in property valuations for the foreseeable future.
Among the reviews accepted were that:
- the Local Government Act 1989 should describe rates as a tax for local government purposes;
- the Valuer-General should review and improve the accessibility of dispute process for those who have a grievance;
- it should retain the current rate exemptions for Crown or council land that is unoccupied or used for public or municipal purposes;
- it should require that all Victorian ratepayers have access to consistent billing, debt recovery and payment difficulty assistance and that the use of council's coercive powers (e.g. legal action and debt collection) are only ever measures of last resort;
- that "the provision of a water supply" be removed from the provisions for a service rate (or charge);
- that a sector-wide culture development program be established to assist councils to develop the governance, leadership, skills and knowledge required to engage communities in a manner consistent with the policies and practices set out by the Local Government Bill.
Those rejected included:
- the appointment of a suitably qualified and experienced authority to monitor and report publicly to the Minister on the compliance of councils' rating strategies with the regulations;
- repealing the exemption for land used exclusively for charitable purposes.
The 1.5 per cent rate cap, which matches the forecast Consumer Price Index (CPI) for the period, was not part of the review and the capping system will be reconsidered at the end of 2021.
"Our response prioritises reforms that support ratepayers in financial hardship, enhance transparency and consistent decision-making and lay the foundations for greater equity and fairness in the rating system," Minister Leane said.
The City of Ballarat issued a release saying "Council will consider the impact of the State Government's Fair Go Rates Cap for 2021-22 of 1.5 per cent as part of its budget process in the new year."
The Municipal Association of Victoria says the state government's Local Government Rating System Review goes only some way to providing much-needed taxation reform.
Welcoming the overhaul, interim MAV president Cr Josh Gilligan said councils must be able to raise sufficient taxes to enable them to meet community and business needs and deliver services and infrastructure.
The detailed MAV submission to the review noted, among other widening gaps, state property taxes in Victoria increased by 114 per cent between 2010/11 and 2017/18, whereas local government taxes on property increased by 52 per cent.
It argued "the following exempt commercial activities, fees for service providers, private sector competing activities, or legally nuanced categories of exemption should be revoked and made rateable:
- solar/wind farms and electricity generators;
- universities and private schools;
- religious property holdings used for commercial purposes or not held and occupied by the legal entity providing the religious instruction/faith-based services;
- RSL gaming and gaming venues on Crown land;
- Crown land used for commercial purposes.
"The government needs to reassure local governments and their ratepayers the income of councils will not be further eroded via other policy and regulatory changes," Cr Gilligan said.
Responding to the rate cap, Cr Gilligan told The Courier that councils cannot afford to run out of money at a time when they are delivering support and services in the wake of the COVID pandemic and last summer's bushfires.
"Councils have continuously shown their commitment to helping communities stay connected and supported, recognising the likely economic impacts of the pandemic on businesses and households," he said.
"During the COVID crisis, they led the way in offering fee waivers, refunds and reductions, relaxing enforcement of infringements, reducing or waiving rent for council facility tenants, and promoting financial hardship policies.
"Like many businesses and organisations, Victorian councils have suffered sizeable loss of revenue through the mandated closure of facilities. The sector is now anticipating sustained financial challenges ahead as their residents and businesses seek to recover from the pandemic."
" Councils need to be able to raise sufficient taxes to enable them to meet the needs of community and businesses through the delivery of services and infrastructure that they want and need. It also needs to be remembered that councils raise approximately 3.5 cents in every dollar of taxation in Australia."
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