Rate Capping Bill Introduced Today

The Minister for Local Government, MP Natalie Hutchins, is thanking RVI and its networks of ratepayer-advocates for helping to collate grass-root feedback from ratepayers and residents, which provided valuable insights to help justify and developing the draft rate capping policy, which is now introduced into Parliament.

She wrote………….

“In the nearly twelve months since being elected, the Andrews Government has been getting on with delivering the things that matter to Victorians.

In the local government space that means giving ratepayers greater value, more of a say, and a better understanding of the work their councils are doing.

And with your help, that’s exactly what we’re doing.

Key to this has been our ‘Fair Go Rates’ system, which has now been introduced to the Parliament.

In Victoria, council rates have averaged close to six per cent rise every year for the past ten years.

As Ratepayers Victoria knows – it’s unsustainable, and it’s unfair.

That’s why we developed the Fair Go Rates system.

It’s not about stopping councils providing quality services and facilities.

And it’s not about cutting existing budgets.

It’s about giving ratepayers greater surety about what their rates bill will look like into the future. It’s about ensuring greater value for money.

And it’s about encouraging councils to listen and engage when it comes to the needs of their community.

While the Fair Go Rates system imposes a cap on rate rises, it doesn’t mean new projects can’t be funded.

In fact, it will encourage better-planned projects , with more consideration of what the community needs.

If a council has a project that requires it to go above the rate cap, it will have to demonstrate to the Essential Services Commission that an increase is warranted.

Councils will have to consult with the community and make a case for the increase before it’s approved.

I’d like to thank Ratepayers Victoria for their feedback as we developed a framework for the Fair Go Rates system. Hearing from residents and ratepayers on the ground has been invaluable.

Together we can ensure the community gets more of a say – and that councils are listening.”

Click here to read the final ESC report that was submitted to Parliament today. Read more of the introduced bills through this official media release.  Today’s Herald Sun also wrote about the introduced bills (see article dated 20 Oct 2015), reporting that:

“VICTORIAN councils will be forced to cap rate rises at the state’s key cost of living benchmark, under new laws that should save families hundreds of dollars.

And councils that “deliberately and repeatedly” defy the new limit will face the sack.

But the Herald Sun understands draft legislation, to be introduced to State Parliament on Wednesday, allows the local government minister to reduce or increase the cap in exceptional circumstances.

Councils also would be able to argue to the Essential Services Commission for exemptions if they could prove community support, and justify the need, for more spending.

The laws would see the Andrews Government fulfil a key election promise to cap rate rises at the Melbourne Consumer Price Index — despite ESC advice that it should be watered down.

The Melbourne CPI increased by just 1.1 per cent in the past year. Next year, when the new laws would apply, it has been forecast to increase by 2.75 per cent.

This is less than half the average rate rise over the past decade, and would mean the average rates increase next year would be $50 or less.

A final decision on the percentage cap will be made each December, when the State Government’s midyear economic update is released with inflation forecasts.

A spokeswoman for Local Government Minister Natalie Hutchins declined to comment because the Bill was not yet before Parliament.

But Ms Hutchins told the Sunday Herald Sun this week that “Victorians have had enough of never-ending rate increases”.

“Victorians expect greater value, more of a say, and a better understanding of the work their councils are doing — that’s exactly what our Fair Go Rates cap will do,” she said last week.

Opposition Local Government spokesman David Davis last night said Premier Daniel Andrews should have capped rates this year, and it was “imperative that he be forced to keep his promise from here on in because family budgets depend on it”.

Rates have risen an average of 6 per cent a year over the past decade.

The Municipal Association of Victoria released data on Tuesday showing state property taxes grew by 7.1 per cent in the past decade, after the Government released rates data.

Councillor Bill McArthur, MAV president, said “this year Victorian councils worked hard to keep average rate increases to a 10-year low of 3.8 per cent while still providing more than 100 vital community services and maintaining $73 billion of infrastructure” “

The comments of this article says alot about community sentiments for councils and their peak bodies. Lovely people.

 RVI also issued a press release today:


ESC rates capping solution is good news for ratepayers

Today’s press release from the Minister of Local Government is signaling the coming of many reform wins for ratepayers. This is the first in ratepayers’ advocacy history that a State Government has not only enabled but actually EMPOWERED the ratepayers community to play an important and effective role in contributing to developing the ESC’s rates capping solution. We highly commend Minister Hutchins for setting this first empowering precedent in ratepayers engagement.

RVI’s participation in Minister’s Fair Go Rates Reference Group has helped to ensure the draft ESC rates capping solution is ratepayers/community centric, through the governance principles underpinning it. We are also most pleased to see that the draft solution had  included our earlier submission’s proposal to include  setting transparent efficiency forecasts in the rates capping solution and when Councils varies from these efficiency measures, they will have to justify with sound business case evidence and get consensus support from their ratepayers.

RVI, working with other collaborating ratepayers groups, will continue to support and contribute value add to the development of reforms being planned by the Minister and LGV.

RVI will review the report in greater depth and share our findings online.

ESC Rates Capping Policy Review: RVI response & involvement

Local Government Victoria (LGV), representing the state department of municipal local government , is pursuing a rates capping policy. Minister Natalie Hutchins  heads up this state department, which operates through a decentralised structure of 79 councils. The objectives of this rates capping policy is to “contain council rates growth and develop greater transparency and accountability in rates setting” (ESC, 2015). The reasons for this policy ie because of long standing and current systematic inefficiency, transparency and accountability in councils’ rates setting practices.

The Essential Service Commission (ESC) has been instructed to conduct a consultative review and recommend a rates capping and variation framework for implementing this policy by the 31 Oct, 2015. Ratepayers were among the other stakeholders invited to provide inputs to ESC.

RVI and many other ratepayer groups’ representatives attended the first meeting with the ESC team on Tuesday the 12 May, 2015 in Level 37, 2 Lonsdale St. There was genuine consultation and the exchange of information was  valuable and heartfelt.

RVI, together with Monash and Knox ratepayer groups submitted a report responding to the ESC consultation paper.

RVI’s response can be found in the ESC site, which was submitted 18 May 2015 – http://www.esc.vic.gov.au/Local-government/Local-Government-Rates-Capping-Framework-Review/Consultation-Paper-Local-Government-rates-capping/Submissions.

The key highlights of this RVI’s response is that ratepayers support the rates capping policy 110% and will support LGV in making it work. We also highlight the power struggle between LGV and MAV, VGLA and councils in controlling the LG sector, reflected in the strong and coordinated resistance against and groupthink challenge to opposing rates capping.  We also met with LGV to express our strong support for the policy.

We will keep everyone posted on progress updates.

Rates setting without complying to ATO ruling

Taxation ruling ATO ID 2012/87 defines a general rate (as a tax) as “a compulsory extraction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered”. This distinction makes “rates as taxes” and “rates as fees for service”, mutually exclusive.  Thus, in setting rates, Municipal Councils must be cognisant of the nature of the economic goods that are to be supplied. A range of different rates, licence fees and charges are able to be levied, all with their individual requirements on those who should pay the fee for the delivered services. Public goods, which are paid for from the Consolidated Fund, need separate identification. Hence, taxes raised to support the payment for public goods, are identifiable by being raised in the same manner as the Fire Services Levy.

A good governance watch Bayside ratepayer found that this ATO did not apply in his Council’s financial management and rates setting. Read about the discovery in the two reports:

  2. The Comprehensive Income Statement.