The council rating system is relied upon to raise enough revenue to provision appropriate goods and services to ratepayers. Less understood is the possibility of an efficiency dividend. The revenue system can minimise problems at the source, by encourage good behaviour. The rating system can assist in looking after our community. But yet it is poorly understood.
Local governments need a system that is simple to understand. Instead, perverse incentives abound, with those renovating a property penalised with higher rates whilst those leaving a home to waste receive a rating discount over time.
Ask yourself why ‘location, location, location ‘ is a crucial real estate strategy but virtually ignored in economics? Unfortunately, we are expected to believe it should be ignored in our rating systems as well.
We advocate that those who receive benefits from publicly funded activities should contribute according to the value these new services deliver to them. The value of these services is reflected in their land value. It is a system where the ‘beneficiary pays’ rather than ‘user pays’. Dr Ken Henry’s Australia’s Future Tax System Review advocated the need for such thinking (details below).
We provide these resources to assist with the ‘public interest’:
- Council Rates – Who pays more? The family home or land speculator?
- Waste Charges
- Local Government Rates primer – an introduction to the topic
Dr Gavin Putland – 3 short letters on rating:
- The Elected Representative’s Guide to Site Revenue for Public Finance (PDF 340KB) by Lev Lafayette – analysing the efficiency of Site Rating over CIV taxation.
- Aust Centre for Local Government Excellence – The Henry Review – Implications for Local Govt (PDF) p10 – 11.
- Victoria’s Municipal Rating System – AIUS Report (PDF 2.03M) – Phil Anderson’s landmark report for the Australian Institute of Urban Studies, delving into the heart of the controversial Council Rating issue. A must read.
- Fraser Coast Circumvents Site Value rating – Gavin Putland’s surgical analysis of across the board rating failures.
- Land Values Research Group historical reports – A wealth of data analysing equitable means for councils to raise revenue, with evidence going back to 1949.