Councils juggle rural land valuation spike

Victoria's rural councils seek to ease rate pain for farmers


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Revaluation forces Victorian farm rates up

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Victoria’s rural and regional councils say they’re seeking ways to ease rates pain for farmers, after a surge in the valuation of Victoria’s agricultural land.

Rates are calculated by multiplying the valuation of the property by the rate in the dollar.

The latest revaluation forced up agricultural land rates, after the property market continued to surge.

Victorian Farmers Federation president David Jochinke said meetings and rallies had been held in Kalkee and Ouyen, to protest the increasing rates burden on farmers, across many councils. 

“We want to work with councils across Victoria to promote a balanced rating strategy that shares the burden between all rating categories,” Mr Jochinke said.

Victoria’s 38 rural councils make up 79 per cent of Victoria’s land area and 15 per cent of the state’s population.

Mr Jochinke said councillors had the power to levy a differential rate on up to five categories of land use, including residential, commercial/industrial and agriculture.

Differential rating means some sectors pay less than the general rate, while others pay more.

Council praise

Mr Jochinke praised Northern Grampians Shire Council for taking a decision not to increase farm rates by 25.5 pc, as initially planned.

The council had shown leadership by adopting a budget that balanced the rates increase between residential, farm and business land to 2.25%.

In the draft budget, the council was set to increase farm rates by 25.5pc, with a 35pc differential for farm land.

It adjusted the differential to 52.87pc of the general rate, to spread a 2.25pc increase across all ratepayers.

Northern Grampians Shire mayor Tony Driscoll said some farmers were facing rate increases of between 40 and 50pc.

Tony Driscoll, Northern Grampians mayor

Tony Driscoll, Northern Grampians mayor

“We had an avalanche of submissions and numerous phone calls to councillors and myself, expressing concern about the inequity of what is essentially a broken system,” Councillor Driscoll said.

“It’s about being fair to the whole community.”

Cr Driscoll said it highlighted the need to look seriously at the rating system.

“It affected the farming sector, because of a massive spike in land values – agriculture has a fair bit of enthusiasm for it, going on at the moment.”

He said council expected to raise about $7 million from the residential sector and $5m from agricultural land.

Submission response

St Arnaud sheep and grain producer, Tim Polkinghorne couldn’t be more pleased with the response from the shire to his submission on the rate rise, which was originally proposed.

Mr Polkinghorne argued the previously proposed hike of 25.5pc would have a ripple effect throughout the community.

“Most of the businesses in rural communities are based on agriculture and a rate rise of the original proposed would have impacted how much we could spend in the local community,” he said.

“The end result showed the council was proactive rather than reactive. 

“It will benefit everyone because of the extra money that can now flow through.”

But he said a new rating system was needed.

“Farmers and rural councillors and communities should unite to come up with a long-term, sustainable ratings model,” he said.

‘Land tax’

The Rural Councils Victoria chair Councillor Rob Gersch, from Hindmarsh, said valuations in the shire had risen between 10 and 18 pc.

 “Hindmarsh is a little bit fortunate, we only have a 10 per cent differential between our farm and general rate, but we know a lot of councils in the north-west have a large variation,” Cr Gersch said.

“One of the problems is the revaluation – the farming sector is not doing it that easy, yet land is going up in value.

“It’s really a ‘land tax’ on our farming sector.”

He said councils were stuck with the current system.

“We have tried to come up with a better solution, but no-one seems to be able to find one,” he said.

Rates juggle

Municipal Association of Victoria rural deputy president Councillor David Clark, Pyrenees Shire, said basing rates on CIV worked well in the cities, but it was harder to balance the books in the country.

“If you are going to tackle the pressure of rating, you have to give councils another form of income,” Cr Clark said.

“If you are a Bendigo, Ballarat or Horsham, you can balance it out.

“You can use the rating differential to push costs onto other sectors.

“But you’re fortunate that you have someone to push it to, as someone has to pay.”

Pyrenees was one of a number of councils, which would rework its rating strategy, this year.

“It’s really tricky because you don’t want to be flip-flopping on your rating strategy, every year.

“To me, the challenge is where do you get the money from?”

He said there had been a big lift in valuations in the southern part of the shire, with some areas rising by 30 pc, as blue gum plantation land was put back into agricultural production.

Differential rating was a useful tool for councils but only a short-term measure.

“The solution is basically other sources of money, which allow council to take the pressure off rating.

“The Federal Government’s Roads to Recovery money is really critical.”

St Arnaud sheep and grain producer, Tim Polkinghorne was among farmers who objected to sharp rate rises for agricultural properties, brought about by the revaluation.

St Arnaud sheep and grain producer, Tim Polkinghorne was among farmers who objected to sharp rate rises for agricultural properties, brought about by the revaluation.

Farmer influence

In Colac-Otway, councillors voted on a rate increase of 2pc.

Mayor Joe McCracken said Colac Otway was one of only four of the state’s 79 councils to increase rates by less than the 2.25pc cap.

Councillor McCracken said the budget also reduced the Rural Farm Rate Differential from 77 to 75 per cent of the Residential Colac Rate, to offset the 2018/19 valuation increase for the agricultural community.

“There has been a lot of advocacy work done by our farming community regarding the fairness of the differential rating system and we’ve listened to those concerns by easing the farm rate,” he said.

Wangaratta Rural City Council mayor Ken Clarke said the farming rate had been reduced to 65pc and 70pc of the general rate, following analysis of the impact of the revaluation.

Councillor Clarke said there would still be a 2.25pc increase, across all properties, but council had to intervene, after the spike in rural valuations.

 “The value of Rural two (farms above 40ha in size) properties has gone up by 17.54 per cent, while general properties have gone up by just 7.08 per cent,” he said

“The farmers were being unfairly treated, and so we decided to drop rate a little bit more.”

He said the shortfall would be made up by a slight increase in the urban rate.

Indigo Shire Council corporate services director Greg Pinkerton said the shire had five differential categories. 

Farms greater than 40 hectares would pay 75pc of the general rate, as valuations had by a combined total of 19.21% over the last two years.

But he said the rural differential percentage was not the full picture and it wasn’t accurate to compare rates using that percentage alone. 

“Instead of looking at property values or differential rates Indigo Shire has maintained that the only real way to measure rates is to take a property of a particular size and value, and then assess what the rates would be if that property was in different council areas,” Mr Pinkerton said. 

“It is, therefore, accurate to say that Indigo Shire Council is confident that its rates, including rates for farming properties, are (relatively speaking) on the low end of the scale.”

Unfair burden

Mr Jochinke said Yarriambiack Shire Council had also tried to share the rates burden by setting a standard 2.25% rates increase across all categories.

Councillors increased the farm differential from 23 pc to 28pc, of the general rate.

Natimuk resident David Sudholz told the council he “strongly objected” to the proposed increases in the draft Budget.

“The budget states that farm valuations have increased by 16.93 per cent and the rate in the dollar applied to CIV has increased by 2.25 per cent, which means an average rate increase of 19.18 per cent,” his submission read.

“However, the rate increase in the Murtoa area is much higher because the valuation of my farm as increased by 41.5 per cent, and with the 2.25 per cent increase in the rate in the dollar applied to CIV, my rates will rise by 43.75 per cent. 

“This rise in my rates is unfair and unjustified, and the shire needs to address this problem.”

The gallery of Yarriambiack Shire Council's June meeting was packed with residents. Picture: JADE BATE

The gallery of Yarriambiack Shire Council's June meeting was packed with residents. Picture: JADE BATE

The council found there was a 16pc increase in rural land valuations.

Mr Jochinke acknowledged that using differential rating was not a long-term solution to funding rural councils.

“There is a lot more work to be done to create a sustainable funding framework for rural councils that address the broken rating system and the clear inequities between urban and rural councils. 

“But while we work on those long-term solutions, we cannot expect farmers to shoulder the rates burden,” said Mr Jochinke. 

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