THE RATE DEBATE

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Under Australia’s current three-tiered system of Government, for residential property owners there’s no avoiding council rates. Let’s face it, Local Council is a hard sell at best and friendless at worst, but they are still responsible for many vital services that we all benefit from  every day; rubbish collection, park maintenance, libraries and events. They also provide a range of important services that many of us aren’t aware of or will never need, like support for the elderly, disability access and inclusion programs, interpreters and youth initiatives.

Still, the time they tend to hit the spotlight isn’t when things are apparently ticking along smoothly, it’s when they hit a bump in the road, and that seems to be the current status of three inner-west councils: Maribyrnong, Hobson’s Bay and Brimbank. The main culprit? A perceived rise in rates, potentially caused by a number of factors – rising property prices, re-zoning, an openness to medium and larger development projects due to state government planning policy, and the high cost of service provision.

In the interest of fairness we asked our three councils to provide some positive context for this piece, and you, the residents to share your views and experiences. Are rates unreasonably high? Are they about right for the range of services that need to be provided to a diverse community? Or are they just a fact of life we should get used to?

Maribyrnong City Council:

Council did not respond to The Westsider’s questions and request for rates context before our monthly print deadline. An unprecedented 638 residents – more than 1.5% – lodged formal objections on their property valuations in the current rates year. Council recently held a community forum to explain rate calculation formulas and take resident questions.

Another is being held on December 12th.

More information can be found at: maribyrnong.vic.gov.au/Residents/Rates/How-your-rates-are-calculated.

 

Hobson’s Bay City Council:

We have worked hard to deliver a financially responsible and sustainable budget, shaped by a comprehensive process of community consultation and review. In 2018-19, we will increase rates by 2.25 per cent, in line with the State Government’s rate capping policy. The rate cap applies to the average rateable property, not individual rates notices – so some ratepayers will pay less than the 2.25 per cent cap and others will pay more, but overall, general rates won’t exceed the rate cap.

This year’s rates will also be based on new 2018 property valuations, meaning rate increases will vary considerably across the differential rating categories and individual properties. The revaluation process results in a redistribution of the rate burden across all rateable properties so there is no additional revenue for Council beyond our capped increase of 2.25 per cent. Residential property values, especially in Altona Meadows, Laverton and Seabrook, have increased significantly, therefore rates for many residential properties will increase. To get the budget to this point, we have conducted a community consultation process that reached across all our wards to cover as many of the needs of our community as possible while delivering value for money.

Co-Chair of the Planning Portfolio Advisory Committee and Deputy Mayor Councillor Tony Briffa: “Like other metropolitan areas in Melbourne, Hobsons Bay is under pressure to accommodate new medium and higher density development. While Council cannot prevent growth from occurring… the New Residential Zones provide more certainty to the community around what type of development they might see in their street and in their suburb, while also helping Council to plan for the changing needs of our community now and over the next 20 years.”

Brimbank City Council:

Every year, Council delivers services, facilities and projects to benefit people across Brimbank. The cost of these is shared by all ratepayers according to the value of their property. To calculate rates bills, before every financial year, Council consults with the community to help determine budget priorities for the coming year, then sets a total budget amount based on what Council plans to deliver. Individual shares of the rates bill depends on the value of the property compared to other properties in Brimbank. If a property value goes up by more than other properties – then the share of the rates bill may also increase.

Likewise, if a property value decreases, stays the same, or increases by less than other Brimbank properties, that rates bill may stay the same or decrease. When property values increase it does not mean Council collects more rates, it just changes the way rates are shared across the municipality.

To measure property values, currently all properties are revalued by the State Government Valuer General at the start of each calendar year. This is a requirement across all Councils. The State Government rate cap limits the total amount of revenue that Council can collect from rates. It does not limit individual property rates. In 2018/2019 total rates collected by Council increased by 2.25 per cent – in line with the State Government’s rates cap.

If individual rates increased by more than 2.25 per cent, it is because the property value has increased compared with other properties. (The rate cap does not apply to the Environmental Charge which covers waste and recycling services.)

Council acknowledges that from time to time people may experience financial difficulties. For this reason, Council provides various payment options to assist residents with their rate repayments, and encourages anyone who is struggling to pay their rates to contact their Council.

Residents and business owners

Jo Canny:

We’ve been rate payers for around 22 years. Our current rates are crippling us at over $7,300, we are bringing up 3 teenage children on 1.5 person working per week running a family! What I find interesting is will this change the ‘community’ of our area, and as they sell out due to high and increasing rates, are those moving in going
to be as community-focused if they are busy paying off a 1.5m mortgage? Will more people knock down and sub-divide to stay in the area? Could our homes become unsaleable if for the same budget i.e. $1.5 million, a person can buy in the City of Stonnington and pay 1/3 of the rates?”

Name and suburb withheld:

We recently moved within the city and council valued our new house at 10% more than what we just paid for it. Surely their valuation mechanisms are connected to actual sales? That’s the market value right there – the market has spoken!”

Leahanne Schneider:

“I am a single 57 year old woman with a big mortgage. My council raised my rates by over 25% the last two years. I cannot afford to live in my own home because of this greedy incompetent council. There are no plans to allow people to afford their rates. I am the working poor, struggling and they take no responsibility for the destruction of the community. They want more revenue and high rises for their own existence. Amalgamate them! Please help!”

Sue Cramm:

“My rates went up 30% on the latest notice. I am outraged and have submitted an objection. Their valuation was $105,000 above a valuation undertaken by the bank only 6 months earlier. The bank’s appointed valuer did an internal and external examination/measurement of the property, which hasn’t been altered, extended or renovated since purchase in 2017, as it was brand new. The council’s valuation was $140,000 above the purchase price only 12 months earlier. Auction clearance rates are now down to about 40% on Sydney and Melbourne and all property analysts have specified a decrease in house values of approx 4% in the last 12 months. Outrageous!”

Small business owner (name withheld):

We have operated a small business for over twenty years, right on the border of the lovely Village. In this time we haven’t altered or renovated our building other than putting solar panels on our roof. Our business is privileged to be able to operate out of a house (hence zoned residential), but council has charged us commercial rates. This year our rates have essentially increased by 40% compared to last year. We are now having to pay an absurd (and l consider unjustifiable) $5275. In 2010 it was $2150, in 2013 $3200. What l am amazed with is the house next door that is identical, built by same builder, on the same sized land but is a rented residence, is rated around $3200 per year! Next door passed in at auction for $1.5 million yet council has valued our house at $2.1 million!”

Robert Wiatrowski:

The key body that can invoke any real changes against the unfair rates charges Maribyrnong Council forces on its residents is the State government’s Local Government Minister Marlene Kairouz. Seeing as Labor has been voted in for another term with the usual support from the western voters, Minister Kairouz has the power to add more councils, decrease the number of councils or intervene if they do not follow proper governance and due diligence guidelines. To put this in context, Brisbane only has one super metro council overseeing the running of all of Brisbane. Our unfair rates charges are simply a product of an unviable council that cannot survive without extra ordinary rates charges over all other mainstream councils and has turned this matter into one of the biggest issues in Australia’s local government arena.”

Arthur Bregiannis:

There are a number of ratepayers that feel the rates have been too high for too long. There have been suggestions that a ratepayer should have their property revalued to see if they can get a lower rate, however a valuation leading to an adjustment is not the concern. (I have enquired once, there was no change) Whatever the valuation comes in at, the calculation of the rates seems to be high regardless, due to the way it is calculated. The method used by MCC, the Net Annual Value (NAV) method, is specifically designed to get more money for the council and secure their future viability at unfair cost to the ratepayer. Maribyrnong is currently the 2nd most expensive of all municipalities in Victoria. A single income home owner of a 3 bedroom house has to pay approximately $3000pa. That is at least 3 weeks wages after tax. I simply cannot keep up with the instalments. Councils should be amalgamated to spread the cost of providing community services to their constituents (see Brisbane). I find that this has gone on for too long and needs to end.”

Several Community Rates Forums have been held, largely to explain the relationships between rates and council budgets and how rates are calculated, but also to give residents an opportunity to express their individual concerns and ask questions such as:

  • If councils can only increase the total “pot” they collect from rates by 2.25%, why have so many residents experienced rate increases of 10-40% in the past year?
  • With thousands of medium and high density residences being added via council approved developments, when will the benefit of the spread of the rate burden trickle down to established residents and will it see a reduction in rates?
  • Is the Valuer General’s valuation mechanism connected to the data from a properties actual sale, or only based on estimated values, influenced by the sale of similar properties?
  • The Valuation of Land Act was established in 1960 in simpler times to deal with Victoria’s approximately 1 million residences spread across a population of 2.8 million. There are now over 3 million residences in Victoria and a population of 6.25 million. Is it time for a new act that takes into account modern property factors – diversity, development, urban planning, expansion, boom – and their effect on a range of property types?
  • Do council budget forecasts work on a model that anticipates an increase in property values each year, and if yes, what is the plan if property values continue their recent decline?

Watch this space.

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