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Ratepayers to pay for changes to rating system?

Geoff Helisma |

In October 2016, Clarence Valley Council’s submission to the Independent Pricing and Regulatory Tribunal’s (IPART) draft report, Review of Local Government Rating System, advocated removing annual “rate pegging”.

The councillors’ unanimous decision, made at the first meeting of the current council, was “based … on the belief that a Council should be responsible for determining its own level of rate income in consultation with its community”.

However, while that idea was not considered by the IPART in its review, other moves are afoot that could cost ratepayers more – the introduction of capital improved value assessments to set ad valorem rates and a levy on ratepayers to pay for infrastructure.

At last week’s August 27 meeting, councillors unanimously supported CVC’s submission to the Office of Local Government (OLG), which is seeking feedback regarding 42 recommendations the IPART advocates in its report.

The council’s responses to the OLG were based on its 2016 submission to the IPART.

The IPART has recommended amending the Local Government Act “to mandate Capital Improved Value (CIV) as the basis for setting ad valorem rates in the metropolitan council areas”, however, in non-metropolitan areas it recommends allowing “non-metropolitan councils to choose between … Capital Improved Value and

[the current]

Unimproved Value (UV) methods”.

The council supports the latter, but states in its submission that “councils should have the opportunity to model the impact the CIV will have on their rating structures” before “mandating Council’s rating structures”.

If CIV valuations are implemented by the state government and CVC adopts that method, CVC states it agrees with the OLG that “the amount of rates that any ratepayer is liable to pay to the council should increase by no more than 10 percentage points above the rate peg (as adjusted for Special Variations) each year … councils could apply to IPART to exceed this 10% limit”.

While CVC supports “the growth in rates revenue outside the rate peg … using the formula based on changes in CIV, it has “concerns” about whether or not “substantial data [would be] available to properly determine CIV”.

The council advocates the NSW Government paying for the implementation of the changes associated with adopting CIV assessments, such as the NSW Valuer General establishing a new database.

On the Local Government Act being amended to “allow councils to levy a new type of special rate for new infrastructure [that is] jointly funded with other levels of government” CVC states it is “unsure”. “This special rate should be permitted for services or infrastructure that benefits the community,” the IPART recommendation states.

If the government implements this strategy, funds collected from ratepayers would be over and above a council’s general income, as permitted under the rate peg, and councils would not have to seek approval from the IPART.

The council states it “has concerns that the levying of a special rate for infrastructure, jointly funded with other levels of Government, will be used as an instrument to cost shift more infrastructure responsibilities to Local Government”.

The council disagrees with the recommendation to exclude land owned by private hospitals from paying rates.

“Land owned by private hospitals is used for commercial purposes and therefore should not be exempt from rates,” CVC’s submission states.

The council agrees with the IPART’s recommendation to reduce the “the period of time before a property can be sold to recover rates, from five years to three years”.

Citizens can make a submission via the OLG’s website up until Friday September 13, 2019.

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