Rating Strategy Review 2018

Independent consultants Mach2 have been engaged by Mildura Rural City Council (MRCC) to assist in the development of its new Rating Strategy for the next five years.

Objectives

The objectives are:

  • To review the MRCC Rating Strategy 2014-2019
  • To develop the new MRCC Rating Strategy 2019-2024 in the context of relevant legislation and guidelines, comparison with similar municipalities throughout Victoria and long term sustainability of MRCC
  • To make recommendations in relation to Council’s existing rating strategy to achieve a fair and equitable distribution of the rating burden across ratepayers.

Rating Principles

The Local Government Act 1989 (the Act) allows a council to raise rates to enable it to perform its functions but it must ensure there is an equitable imposition of rates and a reasonable degree of stability in the level of the rates burden.

When developing a Rating Strategy it is important to give consideration to several rating principles:

  • Wealth Tax: Rates are based on a property’s value and there is no correlation between the value of a property and the consumption of services
  • Equity: Horizontal equity – ratepayers in similar situations should pay similar amounts. Vertical equity – those who are better off should pay more than those worse off
  • Efficiency: The extent to which production and consumption decisions by people are affected by the level of rates
  • Simplicity: How easily a rates system can be understood by ratepayers and the practicality and ease of administration
  • Benefit: The extent to which there is a nexus between consumption/benefit and the rate burden
  • Capacity to pay: The capacity of ratepayers or groups of ratepayers to pay rates
  • Diversity: The capacity of classes of ratepayers to pay rates.

Types of Rates

Under the Act, a council is able to raise rates through a number of different rating mechanisms to achieve an equitable imposition of rates.

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Capital Improved Value (CIV)

MRCC uses the Capital Improved Value (CIV) system which means properties are valued on the basis of land and any improvements (i.e. structures and buildings).

Differential Rates

A council may raise any general rates by the application of a differential rate, provided the highest differential rate is no more than 4 times the lowest differential rate.

Ministerial Guidelines for Differential Rating were gazetted on 26 April 2013 to provide clarity, consistency and transparency, thereby reducing the complexity and inconsistent application of differential rates across local government in Victoria. The guidelines state that, when declaring general rates, a council must consider how the use of differential rating contributes to the equitable and efficient carrying out of its functions compared to the use of uniform rates. This determination and its rationale must be disclosed in the Council’s proposed budget and any revised budget or referenced in the council’s rating strategy.

In specifying the objective of each differential rate, a council should be able to provide evidence of having had regard to:

  • Good practice rating principles and their assessment against a particular differential rate objective and determination
  • Modelling or consideration of the impact of the rating decision on those rated differentially and the consequential impact upon the broader municipality
  • Rating strategies or related Council documents
  • The Victorian Government’s ‘Developing a Rating Strategy: A Guide for Councils;’ as amended from time to time.

Municipal Charge

A council may declare a municipal charge to cover some of its administrative costs but the total revenue raised from the charge must not exceed 20% of the total revenue raised from the combination of the municipal charge and general rates.

A municipal charge is a fixed charge on a property, regardless of its valuation. For this reason it reduces the financial burden on properties that typically have higher valuations (through a lower rate in the dollar), such as farming properties. Applying a municipal charge can be a way of ensuring that all properties make a standard contribution towards a council’s administration costs of delivering services to the community.

Farming properties may be eligible for an exemption in accordance with the Single Farm Enterprise provisions under S159 of the Act and upon successful application, would only be levied once, regardless of how many rateable farming properties they operate.

MRCC’s Current Rating Structure

General rates

Rating

Category

Rate

Differential

Total Assessments

Average

Rate

Residential

100%

23,095

$1,476.74

Farm land – Dryland

95%

1,830

$3,709.85

Farm land - Irrigated

95%

1,512

$2,183.77

Business

120%

2,434

$5,042.02

Cultural and Recreational

10%

84

$181.54

28,955

Municipal charge

$100 per property

 

Service charges

 

 

Municipal waste

$183 per property

 

Kerbside collection

$116 per property

 

Recycling

$58 per property

 

Special rates

 

 

Mildura City Heart

0.00251127 cents per $ CIV

 

 

Mildura City Heart Special Rate

The Mildura City Heart Special Rate is levied for the purpose of marketing and promotion of the City Heart area and is charged against all eligible properties contained with the defined Central Business District area. To raise the required funds, the rate is charged based on the value of each property.