RELATED: Have your say on council charges
WELLINGTON Shire Council will continue using its current method for setting rates for properties, if it adopts its draft rating strategy.
The draft 2015-18 rating strategy highlights options for council to set rates and charges in order to raise revenue.
A rating strategy enables council to consider how the rate burden can be most equitably distributed across the shire.
The rating system determines how council will raise the money from properties within the shire. It does not influence the total amount of money to be raised, but the share of revenue to be contributed by each property.
The amount of rates collected by a council depends on decisions over as to the quantity and quality of services it will provide and how much of the cost is to be recovered from other revenue sources such as government grants, fees, charges and fines, and the sale of assets.
The amount collected in rates represents the difference between total expenses required by council to fund program activities, maintain assets and to service and redeem debt, and the total revenue from all other sources.
To rate properties, there are three methods available to councils:
Site value: value of the land plus any improvement which permanently affect the amenity of use of the land, such as drainage, but excluding the value of buildings and other improvements.
Capital improved value (CIV): the land and other improvements, including the house, other buildings and landscaping. Essentially the market value of a property.
Net annual value (NAV): value of land’s rental potential, less the landlord’s outgoing such as insurance, land tax and maintenance costs. For residential and farm properties, this rate must be set at five per cent of the capital improved value.
Wellington Shire Council uses the CIV system, which gives it flexibility to levy differential rates.
Council believes the CIV better reflects capacity to pay than the alternatives. It is the most widely used method by local government in Victoria.
In the rating strategy, it is recommended council retains the CIV method.
Advantages of CIV are it includes all improvements and more closely reflects a “capacity to pay”, more equitable than site value or NAV, and with the two-year frequency of valuations, market values are more predictable and less likely to result in objections.
A disadvantage is that rates are based on the total property which may not reflect the income level of the property owner, particularly pensioners and low income earners.
It has also been recommended the differential rate for farms larger than two hectares be retained.
A lower rate has applied for farms as farmers generally require more land to run efficiently, resulting in disproportionately high rates in relation to income generated.
Council mentioned in the strategy that any increase in total valuation across the shire is generally offset by a reduction to the rate in the dollar used to calculate the rate for each property.
Wellington: median valued residential property $192,000; rates on median property $1213
Bass Coast: $356, 394; $1435
Baw Baw: $324,088; $1757
East Gippsland: $251,000; $1451
Latrobe: $200,000; $1356
South Gippsland: $262,000; $1499
Ballarat: $267,000; $1361
Benalla: $198,000; $1476
Corangamite (Camperdown, Port Campbell): $199,000; $1128
Glenelg (Portland): $183,000; $1129
Greater Bendigo: $296,000; $1359
Casey (Berwick, Cranbourne): $350,000; $1469
Melbourne (CBD): $435,000; $880
Whitehorse (Nunawading, Box Hill): $640,000; $1282
Wyndham (Werribee): $387,000; $1556
Information from Municipal Association of Victoria 2014-15 Victorian Local Government Rates Survey.