Council rates need reform to deliver fairness & equity


The Municipal Association of Victoria’s (MAV) submission to the Victorian Government rates review has called for system reforms to improve fairness and equity for all ratepayers.

Currently, many outdated rates exemptions are provided under State legislation for commercial activities, fee-for-service providers and private sector activities. Many of these exemptions are received by organisations who no longer just serve the local community, and cannot be justified as fair and equitable.

Community members are unfairly cross-subsidising those who don’t pay rates, including organisations that compete in and supply to statewide, national and international markets.

Additional reforms have also been proposed to improve community understanding and fairness of rates, including simplified rates notices, minimum and maximum rates, rating of residential village homes and a tourism levy option in declared tourist destination municipalities.

The MAV and councils also seek urgent Victorian Government action to assist small rural and regional shires facing a mismatch between their financial capacity and their asset and service responsibilities.

Smaller councils collect less rate revenue and are more reliant on government grants.

The Commonwealth Government collects 80 per cent of total taxes while local government collects 3.6 per cent of all taxes nationally. Despite this disparity, councils manage one third of the nation’s total infrastructure (valued at $445 billion) including three quarters of the total road network across Australia.

Cr Coral Ross, MAV President said the current rates system is not fair or equitable for all ratepayers.

“No systm of taxation is perfect, but a review of local government rates is long overdue given that property rating began in Victoria in the mid-19th Century.

“State laws currently provide rates exemptions to electricity generators, solar and wind farms, universities and private schools, mining land, Crown land used for commercial purposes, RSL and gaming venues on Crown land, and religious property holdings used for commercial purposes.

“Mum and dad home owners and small businesses are paying their council rates. Exempt private and commercial activities should also be paying a fair and equitable share of rates.

“Smaller rural and regional shires don’t have the population base to raise enough revenue to provide the essential services and infrastructure required by their local communities. For these councils, equity cannot be achieved through the rating system.

“We call on the State to urgently establish a small councils funding program or review road and bridge responsibilities split between councils and VicRoads.

“Our submission also proposes allowing rural councils to set minimum and maximum rates in consultation with their communities to improve fairness for farmers who rely on their land holdings to earn an income.

“The State’s rates review provides an important opportunity to correct the imbalances within the current system to ensure all property owners contribute their fair share towards council rates. We look forward to working with the Victorian Government to deliver a more equitable property rates model,” she said. 

View the MAV submission: www.mav.asn.au/news-resources/publications/submissions