Council seeks better rates balance for businesses

Published on 29 April 2021

Councillors are seeking to strike a fairer balance regarding rates distribution amongst the city's businesses after placing the draft 2021-22 budget on public display for 28 days.

In late 2019 valuations were undertaken by the Valuer General which saw land value rise by around 54 per cent on average in the city's industrial area, whilst the value of other business land across the city decreased by 18% on average.

This resulted in an average rates increase of 56% for landholders in the industrial area, and a 12% discount on land rates for other businesses (excluding mining).

Mayor Darriea Turley AM said Council was targeting a rates model to better balance the cost between all parties in the coming financial year.

"Everyone knew that industrial business rates had a huge rise because of the valuations, but it probably wasn't as well known that rates for all other businesses actually went down," said Mayor Turley.

"The model we adopted simply returns commercial rates to the level they were prior to receiving the 12% rates discount due to the valuations.

"Under this model the businesses are no worse off than they were in 2019-20, but it allows us to reduce the rates burden on the industrial area by 15%

"Unfortunately there's never a solution that will please everyone when it comes to rates, and we understand this model isn't perfect, but we feel it's the best short term solution to try and spread the rates burden across the business sector."

Mayor Turley said Council had also investigated shifting some of the business rates onto the residential or mining sectors, but neither option was suitable.

"The mines are already rated above their land value, and 16% of residents currently cannot afford to pay their rates," said Mayor Turley.

"Attempting to add extra burden to either sector could lead to legal challenges or further hardship amongst residents, and we weren't comfortable with either of those outcomes."

"Ideally we'll see some legislative changes in the near future that will give us more options when apportioning rates."

In 2020 IPART undertook a review of the Local Government Rating System, and it is hoped that the Local Government Amendment (Rates) Bill 2021 will be passed in the coming year to allow Council greater rating flexibility, and more power to decrease rates disparity across all sectors of the community.

In other rates news, Council will look to raise overall rates in line with the 2% rate peg set by the Government. This will not be sufficient to cover the annual increase in employee costs (2.75%) or operating costs (4%), and Council will look to find internal efficiencies to try and offset the shortfall.

The budget and long term financial plan are currently open for public feedback. The Draft Delivery Program 2021-2022 incorporating Operational Plan 2021/2022, inclusive of the Statement of Revenue Policy and Draft Schedule of Fees and Charges 2021/2022 (budget) can be found on page 3 of the April Supplementary Agenda, whilst the Long Term Financial Plan can be found on page 107. Submissions to either plan can be made here.