A FAIR LOCAL RATES BASE

Victorians need a progressive local government rating system that equitably funds council services while fostering sustainable community and economic development.

Our existing rating system is far from ideal and fails to achieve these goals. Currently, owner-occupiers are penalised with regressive flat charges to the benefit of wealthier landholders and speculators who have a greater capacity to pay.

Prosper believes that rates should be levied on the value of land only (Site Value), and not on the property’s total value (Capital Improved Value). This would improve the fairness and progressivity of rates, reduce rates (and increase property values) for the majority of ratepayers, and unburden those who want to improve their properties from additional rates.

People who contribute to the community through renovations, investments in solar panels, and agricultural improvements are penalised as their Capital Valuation rises. Meanwhile, absentee landholders who let their properties fall into disrepair and underuse, or even leave land vacant, are subsidised. On top of all of this, significant concessions and exemptions are granted to asset-rich landholders. While no homeowner should fall into hardship due to their rates bill, exemptions and concessions shift the burden of rates to others. This forces the average ratepayer to pay even more.

We believe state governments should replace all concessions and exemptions. Instead, individual ratepayers should be able to defer their rates until a change of ownership (and to a limited extent farming businesses). Deferrals mean working age ratepayers are not supporting cash poor holders of million-dollar properties.

The review of Victoria’s council rating system was handed down at the end of 2020.

You can read Prosper’s submission to the review here, as well as an academic review of Victoria’s rates system changes throughout the 20th century.

In a clear win for our advocacy efforts, the government rejected the recommendation that site value rating be removed from the Local Government Act.

A further positive outcome of the review was investigation into a valuation averaging mechanism. Averaging the valuation of a property over several years could reduce the ‘bill shock’ that accompanies wild land price increases. A steadier valuation makes rates more certain and tolerable for ratepayers.

Site Value remains an option for local councils, but no council in Victoria currently makes use of it. We must convince ratepayers that site value is the fairest and most efficient base for their municipalities. Cash strapped councils in rural areas with the highest rating effort stand to benefit the most from a shift to Site Value rating.