RURAL RATES: FIGHT FOR FAIR

Ratepayers across rural and regional Victoria are being forced to pay more in rates than ratepayers in metropolitan areas - yet they receive less in infrastructure and services. 

The rating system has failed Victorians, and is producing inequitable outcomes for all ratepayers whilst making many rural councils financially unsustainable. 

A 2010 analysis of Victoria’s local government showed 18 rural councils were the state’s least financially sustainable.

This evidence was backed by a 2018 Victorian Parliamentary Inquiry that found these councils required additional funding from outside the municipality to enable them to provide infrastructure and services that rural Victorian’s need and deserve. 

The VFF is not only concerned by this crisis, but also the inequity in the rates paid for similarly valued properties across all municipalities.

You know the system is broken when a $300,000 property in regional Victoria pays $2,400 in rates and a similarly valued property in Melbourne pays just $390. 

This inequity has a disproportionate effect on farming communities who pay over 70% of local government rates in some municipalities.   

What’s more, ratepayers in regional Victoria have lower incomes than those in metropolitan Melbourne and therefore pay a higher percentage of their income towards local government rates. 

OUR PLAN FOR FAIR RATES

In order to ease the rate burden placed on Victoria’s farming community, the VFF believes we must address the fundamental inequity that exists between all rural and metropolitan ratepayers. 

Our plan for fair rates will ensure equity for all Victorian ratepayers, delivering a fair go for farmers and rural and regional communities. 

Victoria should move to a local government funding model where the state sets a general rate for all property and redistribute funds collected from rates on the basis of equity and need.  

This Equalised Funding Model will provide a more sustainable funding base for all local government and will ensure all Victorians, no matter where they live, receive quality and reliable infrastructure and services. 
In addition to an Equalised Funding Model to produce equitable outcomes for all ratepayers, the VFF recommends the state government adopt the following policies to help farmers succeed in a competitive and unrestricted economic environment 
 
Minimum & Maximum Rates
The Local Government Act should be amended to allow councils to apply minimum and maximum rates (by property class). We suggest the Act define a maximum total amount that a council can raise from minimum rates at 50% of general rates. 

Differential Rates
The Act should be amended to require a council to use differential rates (including compulsory differential rates for farmland) to establish a fair and equitable distribution of the rate burden for each class of land and that the rate burden for each class be maintained for at least four years.

Differential rates should only be available to commercial farm businesses. 

Valuation Averaging
Valuation averaging should be introduced for all councils in Victoria. Under this system, all councils would strike rates based on a moving average valuation calculated for each property over the past 5 years.

The actual valuations returned each year by the Valuer-General would remain the same, but the valuation basis for the rate strike would be changed. 

Separate House & Curtilage
The house and curtilage of farms should be charged a municipal rate similar to that of all other homes in the local government area.

Farmland should be separated into a separate assessment with councils having the ability to rate land at the farm differential rate – or exempt the farm land from rates overall. 

 LOCAL GOVERNMENT RATING SYSTEM REVIEW 2020

As a result of VFF members' advocacy prior to the 2018 Victorian State Election, the Victorian Government committed to undertaking an independent review of Victoria's rating system. 

In June 2019 the members of the review panel were announced with public consultation taking place between July and October. The review panel held public forums across rural and regional Victoria which were well attended by VFF members. 

As part of the review, the VFF put forward a a 22 page submission which highlighted the inequity faced by all rural and regional ratepayers, and set out our plan for a fair rates system.

Click here to  download and read the VFF's submission. 

The review panel is expected to make recommendations to the government in March 2020. Further information about the review is available at www.engage.vic.gov.au/rating-review