W ELCOME TO R ATEPAYERS V ICTORIA

What's New October 2008

Cutting your Monash Council Residential Rates

We need councillors who will cut rates and maintain services. And here’s how they can do it.

We need councillors who are committed to an effective pro resident differential rating system in Monash to cut the rate spiral for residents and make resident’s rates more affordable by lowering the proportion of Council’s spending paid for by local residents.

We need a differential rating system based on Capital Improved Value which reduces overall residential rates, which fairly spreads the burden and which reflects relative capacity to pay without the need to cut services.

And such a system can be implemented under existing law if councillors choose to adopt it. In fact, the system already successfully operates in other municipalities such as the City of Melbourne and the City of Greater Dandenong!

A differential rating system incorporates the fact that commercial and industrial ratepayers have a 100% tax write off for their council rates. Resident’s rates are not tax deductible.

How are Rates calculated?

Simply put, rates are calculated thus: Once a council determines the total amount to be raised from its rates that dollar figure is divided by the total value of rateable assessments – properties - (see below for the different types of property valuations which councils can use) to give the council rate in the dollar (usually expressed as cents in the dollar) to be charged on the assessed value of the property.

In calculating applicable rates, a council can choose to use a differential rating system under which it apportions the amount of council rates to be charged to different types of assessments (eg. residential, commercial, industrial or vacant land assessments) in a different ratio to their share of total assessment value.

For example, say residential assessments make up 80% of a municipality’s total value of assessments - in a non differential system these residential ratepayers would therefore be responsible for paying 80% of the rate income required by the council. In a differential system council might only allocate say 60% of the rate income required by the council to be paid by residential assessments even though they make up 80% of total assessment value. In this simple example the other 40% of rate income required by council would be charged to commercial and industrial properties (comprising 20% of the municipality’s total value of assessments). Thus the rate in the dollar of value charged to residential property owners is significantly reduced – they are paying a lesser proportion of council required total rate revenue.

But is differential rating fair to commercial and industrial ratepayers? Commercial and industrial ratepayers have 100% tax write off of their council rates – it’s a business cost. Residents do not have this advantage – they cannot claim their council rates on tax (unless they live and work on the same property and even then they can only claim council rates in proportion to the area of the property used for work – typically a home based business person would be hard pressed to actually claim more than 10-15% for business usage – a minor advantage and statistically insignificant for a pro differential rates policy).

Monash City Council is an example of a council that charges all ratepayers regardless of property type the same rate in the dollar and comparatively penalises residential ratepayers with higher rates than required.

Monash Council’s current Mayor & Councillors repeatedly tell ratepayers that their average rate bill of $954 is the lowest in Victoria … they even use our rate money to repeatedly advertise and publish this claim. BUT the average residential rate bill in the City of Greater Dandenong (which uses differential rating) is under $800 and they get the same or better services.

How are properties valued for Council Rates?

Property valuations are assessed every two years (the last as at 1 January 2008) and are set according to market values applying at the date of revaluation.

There are three types of valuation in Victoria from which councils can choose:

1. Site Value (SV) (that is, the undeveloped market assessment of the site – no capital additions/improvements).

2. Capital Improved Value (CIV) (that is, the total market value of the site with all capital improvements).

3. Net Annual Value (NAV) (really a subset of CIV – a notional or actual calculation of the annual lease value of the assessed property – notionally set at 5% of the CIV).

Monash City Council is one of the few councils in Victoria which use Site Value valuation. It means that rates are charged according to the assessed market value of the site regardless of buildings and other capital improvements to the land whether residential, commercial or industrial (ie. the market value of the land only).

This system is unfair. For example, two residential ratepayers, one with an older weatherboard or brick veneer home with land (site) now valued at $400,000 and house at $200,000 pays the same rates as a ratepayer with a modern $1,000,000 house on a $400,000 block of land.

The clear implication of the ratepayer with a $1,000,000 house having a greater financial capacity to pay rates than the ratepayer in the $200,000 house is ignored by the valuation system in the City of Monash. This raises real equity questions, particularly for pensioners and struggling families.

Differential Rating: A system we can use in Monash to cut residential rates and maintain services.

Melbourne City Council operates a differential rating system with business paying 17% higher rate in the dollar than residential ratepayers (4.58c residential & 5.38c business based on a Net Annual Value rating system) – but business has a full tax advantage.

In the City of Greater Dandenong the (differential) commercial rate in the dollar is 63% higher than the (differential) residential rate in the dollar and the (differential) industrial rate in the dollar is 112% higher than the (differential) residential rate in the dollar. And this hasn’t damaged business in Greater Dandenong - Industry and commerce in the City of Greater Dandenong continues to grow unhindered by the rating system.

Without necessarily copying the City of Melbourne or City of Greater Dandenong differential levels there is great scope for incoming Monash City councillors to cut resident rates without cutting services through appropriate differential rating.

It’s time to elect councillors in Monash who will work for local residents and implement a fair differential rating system.

Garth Head

Member Monash Ratepayers’ Association &

Ratepayers Victoria

7^th October 2008

Letters to the editor

Statement of Purpose

To function as an educational body to disseminate information on issues and processes of local government
To work for equity for ratepayers and residents
To work for improved democratic process and participation in local government
To work for accountability and good governance in local government, all tiers of government, and other relevant bodies
To promote the return of local government to local control

Aim of Ratepayers Victoria, Inc.

To facilitate a membership network of ratepayer groups and individuals across Victoria for :

mutual support
sharing of information
lobbying strength
and input to development of policies and planning of local government

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Current Concerns

Secrecy in Council deliberations
“Community Consultation” that is often ignored
Increasing powers of Council CEOs
Cost shifting to local government
Lack of equity between rates and services provided in large rural shires
Rapidly increasing rate burden
Short term grants with long-term staffing and financing implications
Too many Council activities

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Current Involvement

Seeking a National Forum to begin reassessment of the roles, responsibilities and relationships between Local Government, State and Federal Government.
Encouraging formulation of ratepayers associations.
Submissions on relevant issues

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Representative membership from:

Ararat Rural City ~ Bass Coast Shire ~ Baw Baw ~ Ballarat City ~ Bendigo City ~ Buloke Shire ~ Cardinia Shire ~ Casey ~ Central Goldfields ~ Dalesford ~ East Gippsland ~ Gannawarra ~Emerald ~Hurstbridge<Yarrambat>Nagambie> Greater Shepparton ~ Hamilton (Grampians) ~ Hepburn shire ~ Horsham ~ Hume City ~ Knox ~ Lexton ~ Macedon Ranges ~ Manningham ~ Maroondah ~ Mildura ~ Monash ~ Moorabool ~ Mt. Alexander ~ Moira Shire ~ Mornington Peninsula ~ Nillumbik ~ Pakenham ~ Phillip Island ~ Queenscliffe Ratepayers of Werribee South ~ Rutherglen ~ South Gippsland ~ Southern Grampians ~ Upper Yarra ~ Wangaratta ~ Wellington Shire ~ Werribee ~ Whittlesea City ~ Wyndam City ~ Seymour ~ Swan Hill ~ Yarra Ranges ~ Narre Warren

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Ratepayers Victoria Executive Committee

President:
Jack Davis (Monash)
PO Box 1057
Huntingdale 3166
Phone: 03 9570 6227
e-mail: jack_d@iinet.net.au

Vice-president:
Vacant

Public Officer:
Marguerite Byrne

Secretary: Acting

Marguerite Byrne

Treasurer:
Carol Hunter (Maroondah)
e-mail:chunter@jeack.com.au

Ordinary Members:
Gloria O'Connor

Rosemary Davis

Peter Baird

Richard Thomas

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Membership Application

Ratepayers Victoria, Inc.
I_________________________________
Name (of organization if relevant)

Shire______________________________
Address___________________________
_________________________________
__________________________________
Phone________________Fax__________
E-Mail___________________________
In the event of my admission to membership, I agree to be bound by the rules of the Association for the time being in force, to pay annual membership dues as determined by the association, and to work cooperatively with the other members.
Signature ___________________________Date______________

Enclosed:
$20 Membership
Additional donation optional $_____________________

Mail To:
The secretary

PO BOX 1057

Huntingdale, Victoria 3166

E-mail: jack_d@iinet.net.au

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RATEPAYERS VICTORIA, Inc. A0040924M - PO BOX 1057 Huntingdale, Victoria 3166

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What's New October 2008

NEW PROPERTY TAX TO HIT Victoria - July 2005

Statement of Purpose

Aim of Ratepayers Victoria, Inc.

Current Concerns

Current Involvement

Representative membership from:

Ratepayers Victoria Executive Committee

Membership Application