The Municipal Association of Victoria (MAV) has called new ministerial guidelines to restrict local government’s use of differential rates a direct assault on the autonomy of councils to make decisions about equitable rates for their communities.
Victorian councils will now be required to apply a more consistent rates system following the release of new guidelines on the use of differential rates by Minister for Local Government Jeanette Powell.
Ms Powell said the State Government had delivered on its promise ‘to restore simplicity, consistency and transparency to local government rates’.
“Councils are now required to follow a more rigorous method of applying differential rates that will assist in delivering greater equity in the imposition of rates and charges by Victoria’s 79 councils.”
The guidelines are intended to prevent councils from extending their taxation powers and using differential rates to pursue social policy agendas.
“We are drawing a line in the sand about what is and is not appropriate so we do not see differential rates radically extended to include fast food premises, tattoo parlours and bingo halls or whatever the next soft target business might be,” Ms Powell said.
MAV President Councillor Bill McArthur said the reforms were more autocratic non-discretionary rules than guidelines, and raised more questions than they answered.
“Our legal advice suggests the proposed guidelines may be inoperable, as they appear to have overstepped the powers conferred on the Minister through legislation.
“Aside from the questionable validity of the guidelines, we are concerned that they will undermine the primary principle of equity in favour of appeasing certain vocal interest groups.
The Ministerial Guidelines for Differential Rating establishes three categories of differential rates — those that are appropriate, those that are inappropriate and those that must be carefully considered before being applied.
Classes of land categories considered appropriate for differential rates include: residential land; commercial land; industrial land; and cultural and recreational land.
It would not be appropriate to declare a differential rate defined narrowly and applied specifically to classes of land such as: electronic gaming machine venues; liquor licensed venues; fast food franchises; or land within the Urban Growth Zone without an approved Precinct Structure Plan in place.
The guidelines require councils to give consideration to applying a differential rate to extractive industries, automobile manufacture land or petroleum production land.
Ms Powell said councils across Victoria would benefit from the guidelines, which will help them set rates based on a property’s classification rather than the specific type of business conducted on the land.
The Minister can prohibit differential rates that are inconsistent with the guidelines.
Councillor McArthur said the reforms appeared politically motivated, rather than good policy.
“There are a range of inconsistencies and consequences of the guidelines, as highlighted in our submission to the Minister, which deserve serious attention and resolution.”
Property rates are the primary source of revenue for local government, accounting for 3.5 cents of every tax dollar raised nationally.
Cr McArthur said the Minister’s suggestion that some property types should receive discounted rates for the reason that they ‘receive a lower rate of services from councils’ was a disturbing proposition.
“It is incorrect and irresponsible to suggest that there is a direct relationship between the level of council services received by a ratepayer and the amount a property should pay in rates.
“Council rates are collected to fund local community services and infrastructure for public—not private—benefit.
“This sort of untenable reasoning leads us down a dangerous path of suggesting to all property owners that council rates are now a beneficiary pays system.”
Cr McArthur said decisions about fairness of rates should be made by democratically elected councils, taking into account local circumstances and community input.
As part of the consultation process the Ministerial Committee held 10 public hearings across Victoria and received 140 written submissions.
Sixty–three Victorian councils participated directly in the consultation process, as well as the sector’s peak bodies.
The Minister has also committed to working with the Municipal Association of Victoria to develop a ‘Best Practice Rating Strategy’ to assist councils in improving their use of all rates.
