Rate notices in Monash have recently been sent out. Monash will collect 2.5% more in rates in 2016/17 compared to the previous year 2015/16.
However, unfortunately this does not mean a uniform increase of 2.5% every property.
The amount of rates paid by each property is determined by the biannual valuation of all properties. The most recent revaluation was completed on 1 January 2016. It is the most recent valuation of all properties in the municipality which determines the amount of rates paid by each property.
If a property has increased in value by significantly more than the average increase in the municipality, the rates paid by that ratepayer will increase by more than the 2.5% overall increase.
Conversely, properties which have increased in value by less than the average increase will have a corresponding rate increase of less than 2.5% (or even a rate decrease).
It is important to note that councils receive no extra money overall as a result of changes to revaluations – this merely impacts how much different properties contribute relative to each other.
Unfortunately, there is no flexibility or mechanism available to councils to soften this impact of increases from year to year. In the previous Council term, Monash Council made representations to the state government that it should introduce flexibility into the rating framework (which it mandates for councils) to allow councils to prevent substantial fluctuations in individual rate notices from year to year. However, this has not been actioned.
At the 30 August 2016 Council meeting, I proposed to Council that we advocate to the State Government to provide an alternative to the current situation where ratepayers are subjected to fluctuations to their rate bill from year to year causing distress to those who are most vulnerable, living off very low fixed incomes with little prospect of increasing their income in real terms in the future. I am pleased most councilors supported this decision and the overwhelming response since from our community to support Council’s advocacy on this issue has been very pleasing as well.
In 2016, a number of ratepayers in Monash – particularly in Glen Waverley, Mt Waverley and Wheelers Hill – have experienced rate increases of more than 40-50%. This is unfair and the system should be reformed to ensure that such wild fluctuations from year to year do not occur.
Council has managed very carefully the finances of the City of Monash over the course of this Council term to achieve the following:
- The lowest average rates in Victoria;
- An increase overall in rates of only 2.5% in 2016/17 – the lowest rate increase in Monash in almost 20 years
- The recent addition of a supplementary Council rebate for pensioners of $50 to provide extra assistance to ratepayers with paying their Council rates;
- The elimination of all Council debt;
- Efficiency and productivity savings which reduce the Monash Council budget footprint; and
- A reduction in Council’s workforce size.
These are all measures which are within the control of a financially prudent council. Unfortunately one thing which a council cannot control are fluctuations brought to individual rate bills as a result of changes in property valuations. Changing property valuations can result in one property having a huge rate increase from one year to another. Council receives no windfall or benefit from this outcome. The amount above the general rate increase (in this year’s case, 2.5%) which a property increases by is effectively reduced from the rates paid by other ratepayers in the municipality. This produces a constantly fluctuating situation where rates are going up and down across the municipality every two years like a yo-yo. Following each two year revaluation cycle, winners and losers are created across each Council area.
Some 34% (25,000) Monash ratepayers have experienced a rate increase of more than 6% over their previous rate notice. Dreadfully, 36 have had an increase above 100%. The revaluation has also resulted in 48% of ratepayers receiving a rate decrease, and indeed a majority of ratepayers (55%) have received either a rate increase of less than the 2.5% rate cap or a decrease.
The revaluation causes some ratepayers to be slugged hundreds of dollars more to subsidise rate cuts to some 48% of ratepayers.
Clearly, it is totally unreasonable to expect that a pensioner could understand a system that imposes such an increase, let alone manage that impost on their finances – particularly while surviving off a modest fixed income which increases from year to year based on inflation. The impost on non-pensioner ratepayers is no less significant or unfair.
The value of residential properties in Monash increased by an average 39% between 2014 and 2016. This was the highest increase in values of any council area in Victoria. If a residential property increased in value above the average 39% increase, the corresponding rates to be paid by that ratepayer have increased by more than 2.5%.
A rate increase much above the general increase of 2.5% is very unfair. In some instances, the increase has been more than 50% or $1,000 from the previous rates notice received by a ratepayer. This is unbelievably unfair.
However, regrettably there is absolutely nothing a council can do to address this fundamental unfairness by softening the extent of such increases.
But it doesn’t have to be this way.
There are amendments which the state government could make to the rating framework to allow councils to stagger rate increases due to valuation impacts over several years to soften and smooth the change. It is unfair for anyone to receive a bill from any government or utility provider which has increased by more than 50% and where the service level has remain unchanged. The fact that this is due to no other reason than a change in an arbitrary assessment of a property’s ‘book’ value is no excuse.
If car registration bills doubled from one year to another, there would be riots on the street. Rate bills are significantly higher than car registration fees yet working Victorians and pensioners are meant to just sit back and cop it when their rates increase by more than $1,000 because of the archaic and lazy rating framework which is maintained in Victoria.
It is well past time for Victoria’s rating framework to be dragged into the 21st century and made fairer. I am pleased that Council has supported my recommendation that we reiterate our representations from 2008 and 2009 to urge the state government to act forthrightly to fix these problems.
Council has agreed with my recommendations that we urge the government to legislate to introduce flexibility into the state rating framework to allow councils to:
- limit the increase in any individual residential ratepayer’s rates from one year to the next based on property valuation changes so that individual rate bills cannot increase by more than double the overall percentage increase in rates for that year (i.e. for this year, 5%); and
- cap the rate increase possible for any resident over 60 who has lived at their property for more than 10 years so they will never receive an increase above the overall percentage increase in rates (i.e. for this year, 2.5%).
Council must stand with our ratepayers – particularly those living off pensions or other fixed incomes – to say that such onerous increases from year to year should not have to be tolerated by anyone. It is time that the state government fix this mess.
It has been pleasing that more than 700 Monash ratepayers have supported Council’s campaign for reform. You can join the push too by signing the petition here.
This is the letter I wrote to the Minister for Local Government at the start of the campaign and the additional submission I sent into to the state government’s Local Government Act review. And here is a link to an editorial about our campaign in The Herald Sun.
Recent Comments