LOCAL GOVERNMENT (RATING) BILL 1554 COUNCIL Thursday. 21 November 1991 I was trying to establish the true intent of local At the end of the day, apart from that complication, government. I wrote some months ago, and some of the fact remains that when a farmer comes to pay his those responses are still coming in, but I got a wide rate bill the size of the cheque required will depend range of responses. Two fundamental conclusions ultimately on the rate in the dollar struck by the can be drawn from the survey I undertook. The first council. Under the differential provisiOns of the farm of those is very clear: the vast majority of councils - rate that is, as I said, already available to councils, an I emphasise not a11- favoured the availability of opportunity exists for that rate burden to be eased. It differentials, or at least having an option to is clear that many councils are not using that introduce differentials. Very few municipalities opportunity or, as I said also, are applying it in a indicated they expected to implement them in the token fashion. short term. In a technical sense at least municipalities already One of the features that I detected from the survey have available to them the solution of differential was a degree of nervousness about the introduction rating. The fact that those differentials are not used of differential rating. I am not surprised about that extensively across local government - that is, to the nervousness because one of the anomalies in the extent that that would appear to be arguably support for open-ended differentials is that very few justifiable - provides some insight into the extent to municipalities across the State of Victoria use the which I expect open-ended differentials will be form of differentials already available. Under the applied if and when they become available. I want to existing law, councils can choose to impose a farm make it clear I have not delivered a criticism of local rate, an urban farm rate or a rate for residential use. government because my view is that the decision In relative terms very few municipalities take that taken around the council table is by definition the opportunity, and of those that do some employ right decision. That is the best forum in which to those standard differentials in almost a token way. make such a decision, and I am an avid supporter of local government because of that belief. The classic example is one very close to my heart and relates to farm rating, which is a hot potato in its The fact that differentials for farm rates have not own right, particularly since the decline in been widely applied demonstrates the conservatism conditions applying to agriculture generally, but that exists across the industry. Because of that, I do more specifically to wheat and wool production. not believe there will be a dramatic shift in the rate Municipal rates represent a standing charge against burden as a result of the general introduction of each enterprise in that industry. They are based on differentials. In fact I suspect that one of the real the notional value of each property. That causes attractions of differentials is that they allow councils hackles to rise everywhere, firstly, because the to simply soften the impact resulting from any shift values of land are dropping in general terms and the in the valuation base employed, and I am intrigued values ascribed to properties under the rating by that. system may not truly reflect their market values. Just as importantly, the hackles rise because the rating The first conclusion I draw from the survey is that bill takes no account of the farmer's ability to pay, many councils have argued that there should be an and, worse still, takes no account of the productive option in the form of differential rating as distinct capacity of the land, let alone the question of profit. from being prepared today to confirm that the As a consequence this is a most sensitive issue. differentials would be applied. Secondly, the capital improved valuation is not the outcome sought by Enormous pressure has been applied from many the majority of councils. It is the access to directions by people who seek to have the anomaly differentials that is attractive as an option. addressed. It has come from the Victorian Farmers Federation and the Municipal Association of It brings me to the conclusion that there are two Victoria. This year the two organisations jointly options that could be considered in this context. The funded a study into the farm rating. Among other first is the removal of the poll, which is the solution things the study advocated the reduction of implied proposed by the Bill. In my view the second is just as NAV, which is currently built into the Local valid: the simple application of differentials to any Government Act at the rate of 5 per cent, back to 3.5 basis of valuation of land. per cent. A debate could be conducted on how the reduction from 5 per cent back to 3.5 per cent was Hon. K. I. M. Wright - That seems to be the justified because I think the starting point was 1.5 answer! percent. LOCAL GOVERNMENT (RATING) BILL Thursday, 21 November 1991 COUNCIL 1555 Hon. R. M. HALLAM - The question at least is The MAV argues that public notice and the right for raised, Mr Wright. It seems to me that there is more any person to make a submission to a council under than one practical alternative. I do not believe the the Act provides sufficient safeguards. The letter solution proposed by the Bill is a stand-alone issue. further states: On the question of differentials and the removal of ... the MAV regards the capacity to use differential the poll, the view of the industry is very clear and rating as pivotal to a viable local government system. precise: it wants the poll to be removed. Obviously not all councils will exercise the choice available to them in the Local Government Act 1989, I have received a letter of 25 October 1991 from the but those that do will ultimately have no choice, given Municipal Association of Victoria (MA V), which is that polls traditionally retain the status quo and, in this very clear in that sense. It refers to the Provincial case, will be based on a demonstrated lack of Cities, Towns and Boroughs Association of Victoria understanding about the valuation and rating system. and states: That is clear. I acknowledge the stance taken by the The current rating options are inflexible and the MA V and acknowledge'that in this case we have the association believes that CIV, with the associated ability advantage of a single and representative pOSition to strike differential rates, is likely to look attractive to from the industry. I suggest that is a step in the right councils. direction. Despite that, the coalition has resolved to oppose the abolition of the right to demand a poll Councils have advanced the availability of and I will list the grounds on which that decision differentials in the same breath as the likelihood of a has been taken. shift to capital improved valuation. It continues: Firstly, we are not persuaded by the claim that the In addition to flexibility, CIV will allow councils to deletion of the poll is somehow a challenge to the eliminate injustices resulting from the traditional democratic right of councils. Although that claim options and will provide a natural growth in the rating has been made we are not persuaded by the base of municipalities. argument. One can hardly say we are turning our backs on democracy when the proponents suggest I am not sure whether the second part of that they are running a campaign to retain the poll for statement is supportable, but nonetheless the precisely the same reason. They say they are running position of the association is very clear. The letter the campaign to retain the poll to protect the further states: democratic right of electors. So we are apparently weighing up the democratic rights of the councils as The association is firmly of the opinion that councils opposed to those of the electors. desiring to make a change to CIV will be confronted with the same negatives that are associated with a It seems to me one could toss a coin on the issue. If referendum and considers that this association should we are talking about democratic rights, what could show its support for the thrust as contained in the local be more democratic than to have a poll of voters? It government Bill proposed for this session of Parliament. would be difficult to sustain an argument that a poll of voters should be denied on the grounds of The association's view is very clear. The letter democratic rights. continues: I have some sympathy for councils that say they This view was reinforced by a resolution proposed by have been elected to take the tough decisions - that the City of Stawell at the recent annual session of the it is not only their right but also their responsibility association ... to take those decisions and they should be allowed to do so without the trammels of at least the threat of The MAV believes that local government's capacity to a poll. However, I do not understand how councils use the new rating provisions should not be inhibited can run the democratic rights argument to support by token attempts at ascertaining community views in the deletion of the poll.