Rate Harmonisation Project

Advantageous outcome expected

CT Management Group is assisting with rate harmonisation for amalgamated councils. Understanding rates is fundamental to local government, yet the frameworks differ significantly from state to state.

Compared to the complexity in establishing fees and charges – for example charges for water, sewer and waste (relevant to some states) – the general rate is effectively a broad tax applied to a valuation. So why then is it that states differ so significantly on what is best practice and how they regulate local governments?

Differential rating provisions increase the capacity of councils to raise revenue while allowing each local government to structure differentiated general rate based on capacity to pay and benefits received (equity principle). However, NSW prescribes four categories (residential, farmland, mining and business) with restricted ability to create subcategories, while other states such as Queensland and Victoria allow local governments to create unlimited categories.

In our experience, limited ability to differentiate the general rate results in less than ideal scenarios – especially without the ability to limit (cap) the resulting increase in rates for some.

States differ on the prescribed use of a base amount (fixed charge) and/or a minimum amount.

Then there is the different valuation methodologies. Queensland and New South Wales use unimproved values (UV). Whereas other councils such as those in Victoria and South Australia provide a choice between the UV, capital improved value (CIV) or Annual Rental Value (ARV).

Councils in states where the rate is pegged are quickly realising that maximising revenue sources based on user pays principle (eg water, sewer, waste) is essential for long term sustainability. The general rate should not be used to fund services that can charged on a user-based principle. That is one way at least that councils can simplify the general rate.

Our rate harmonisation project can help your council build a rating framework that better reflects the diversity of the local economy, is sensitive to the differing capacities to pay and is sustainable for the long term. We are experienced in modelling rates, developing user charges (eg water, sewer and waste) and revising your fees and charges schedule.

For more information or to discuss how CT Management Group can support your council, please contact Merv Hair on 1300 500 932 alternatively complete the form below.

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