Victoria's rural councils seek an equitable rating solution

Mildura Rural City Council mayor Simon Clemence said it was intended to set a 76 per cent differential rate for agricultural properties.

Read more: Mildura council will review its rating strategy

Mildura also intended to split rates for primary producers into two categories - irrigated and dryland farms.

"We will then have two levers to pull when it comes to differential rates," Cr Clemence said.

"Given general revaluations will now occur annually, the draft rating strategy proposes mechanisms that would allow annual adjustments to the classification ratios where required."

"We will then have two levers to pull when it comes to differential rates," Cr Clemence said.

"If the capital improved value of dryland farms went up 20pc, and irrigated land went up 10pc, we were only able to apply one remedy to the entire farm category."

He said defining farming properties as either dryland or irrigated land was driven by a push to provide flexibility.

"Each of these two different categories can react differently, about capital improved value."

Both farm types experienced similar price changes in the 2018 general revaluation.

"Given general revaluations will now occur annually, the draft rating strategy proposes mechanisms that would allow annual adjustments to the classification ratios where required," Cr Clemence said.

He said the council was also looking to introduce a trigger point for revaluations.

"If any category goes up by eight per cent in value, or more, we can then review the level of differential, we can adjust it, as needs be," Cr Clemence said.

The council was expecting another valuation increase.

"We aren't expecting any good news, as far as capital improved value goes.

"We don't think it will be as bad as the previous one, but it's not going to be any good."

Values had increased in the area, partly due to the rise in corporate farming.

'They are multi-million dollar concerns, and that pushes the rate value up

"Farmers themselves, or their sons and daughters, are buying neighbouring properties to increase their holdings

"Costs are blowing out; returns are not keeping up with costs, so they are looking at expanding to try and make their positions more secure."

The shire has maintained its 10 per cent differential, meaning farm properties will pay 90pc of the general rate.

But commercial and industrial properties will be slugged 145pc of the general rate.

The shire estimates the total amount of revenue to be raised from farming land will rise by 12.09pc, compared with 8.67pc for residential properties and 5.32pc for commercial and industrial land.

Mayor councillor Natalie O'Connor said the shire was also putting aside $500,000 to be able to respond to drought-affected communities, without the constraints of external funding criteria.

"We are 10 per cent of the state's land mass, but 80pc of our land is unrateable (National Parks and crown land)," Cr O'Connor said.

"You drive for four hours, and you are still in our shire, it's crazy when you compare it to other places."

Read more: Rates a big impost for drought stricken Gippsland farmers

"Council will identify the social and economic activities required to best support our community in this time of need, in consultation with stakeholders, to provide an appropriate response," Cr O'Connor said.

She said the council did look at reducing the farm rate differential but found that every percentage increase would place an additional burden on residential or industrial/commercial properties.

Increasing the differential would also mean council would have to look at cutting services and capital works.

"Each percentage increase in the differential farm rate equates to $50,000, so a ten per cent increase would be approximately $500,000," Cr O'Connor said.

Wellington Shire Council has also allocated funding for drought assistance and recovery.

The shire will set aside $1 million in the budget, as well as continuing its 20 per cent discount on farm rates.

Acting mayor Malcolm Hole said council was tightening its belt, in recognition of the tough times communities were facing.

"Our rural community has been telling us that financial relief is what they want, and while Wellington farmers have had some assistance from the State and Federal governments, rate relief hasn't been forthcoming," he said.

Council was working with its agricultural reference group and the broader farming community to work out how the money could be spent to maximum effect.

"If we used our million dollars to provide further rate relief over and above the 20pc discount already in place, this would equate to around $750 per farm enterprise for the year, a figure unlikely to be a significant factor.

"So, we will look to invest our million dollars into projects like water carting and bores and continue to lobby state and federal governments to come to the table with genuine and immediate financial assistance."

Ararat Rural City Council mayor Peter Beales said council wouldn't release its draft budget until early May, but it was likely the farm differential would remain at 55per cent of the general rate.

Cr Beales said the council was yet to decide whether or not it would introduce the full 2.5pc rate cap, as legislated by the State Government.

"We are going through the budget, line by line, but there will be no change to the differential, as we went through a rating review, last year."

But setting a rate was made more difficult because the council had to work off valuations, which were nearly 12 months out of date.

"Valuations are being done every year, but we haven't heard anything so far, and we have to make an assumption, based on last year, what they will be," Cr Beales said.

"We hope it will be pretty right."

Cr Beales said while the residential market was pretty buoyant in the shire, due to increased employment, farm values appeared to be relatively stagnant.

Ballyrogan's Peter Oddie said he did expect to pay more in rates, this year, despite the significant differential.

"I'm not sure what's driving the rise in land values," Mr Oddie said.

"When we have seen values around Ararat heading for $4000 an acre, I don't know how you can pay that sort of money, and make a dollar."

"Rates went up last year, not to the extent I thought was going to happen, but we see more sales around, and it's going to have an effect.

"Last year, they were trying to change the differential, which, in turn, would have put more pressure on farmers to pay more rates."

He described the rate cap as "disappointing", as increases in land values negated any benefits from fixing the amount councils could charge.

Southern Grampians mayor Mary-Ann Brown said she was also concerned at the 12-month lag in valuations.

She said the council would introduce a 20pc farming rate differential, although there were some pockets where rates would rise, as values had jumped.

"I live at Dunkeld, and it's been more than 10pc," Cr Brown said.

"In some areas, there will be reasonable rate increases."

The council estimates it will raise an additional 12.35pc from farm rates, while the take from industrial land drops the most sharply, by 13.53pc.

She agreed it was frustrating that the valuations often came out, just after councils had set their budgets.

"It's not 100pc satisfactory, and rural councils have written to the valuer general about this, because of the problems it poses with budgets."

She said the freezing of Federal Financial Assistance Grants in 2014 had hit local government hard.

"The challenge for rural councils is they have large infrastructure spending," Cr Brown said.

"We have 3000 kilometres of roads, and we are not alone - the cost of maintaining those roads and bridges is significant, a bridge might cost half a million dollars.

"We have static, or declining, populations, and we don't have significant other sources of income.

"The Melbourne City Council raises $60million from parking fines, and we don't have that."

Southern Grampians was looking at reviewing all the services it offered, how they were funded and whether it should still be providing them.

Horsham Rural City Council will lower the farm rate differential from 80pc to 67pc of the general rate.

And councillors also resolved to lower the rating differential trigger review point from five pc above average property values, to 3.5pc.

The draft budget shows the estimated total rate to be raised from farming land is down 5.83pc on last financial year; the take from residential land rises 9.19pc while commercial/industrial land jumps by between 2-3pc.

Mayor, Councillor Mark Radford, said the council had conducted an independent rates review and had taken some of the recommendations of a panel, formed to carry it out, on board.

"We have accepted some, altered others, and come up with what we think is fair," Cr Radford said.

The trigger point for a review of the differential rate covered both a rise or fall, in valuations.

"I would like to think the system we have put in place will help our farmers," he said.

But councillor John Robinson said he believed the farm rate differential should go even lower.

"The differential should go even lower - there is no more farmland being created so pressures will continue to rise," Cr Robinson said.

"I don't think its a State Government issue; I think it's a Federal issue - we need to look at GST and less than half of one per cent of GST would cover that rate component."

He said the highest amount of rates came from the smallest percentage of properties, farms, but urban residents enjoyed most of the benefits.

"The rating system is nothing short of a wealth tax, and that needs to change," he said.

"The significant thing for this municipality is to make sure those paying rates get value for money.

"Horsham, as every municipality should, needs to look very carefully at how much money we need to raise."

He said one practical way of giving farmers a return on what they were paying was to ensure roads were up to scratch.

"Another thing we are looking at is absorbing some of the power costs for rural halls and community facilities."

Doeen grains and pulse producer Scott Johns was part of the Horsham rate review committee, after last year's budget.

Read more: Horsham Rural City Council to form Rates Strategy Advisory Committee with ratepayers

He said there had been a passionate response to what he said was council ignoring farmers, which saw an average increase for primary producers of 11pc.

"They decided they had better do something to recognise the pain, so they had a rates review," Mr Johns said.

He farmed 4000 acres, paying about $45,000 in rates.

"That's the fair part of a standard wage if I want to employ another farmhand."

But he said even with the differential adopted by the council, land values were going up.

"Half my farmland is valued at $3000 an acre and half at $2500 an acre, I can pretty much guarantee an increase in my valuation, so my rates are going up, regardless of the valuation."

He said land in the area had sold at prices of up to $3700 an acre.

'I'm sure that will be used to determine valuations, in the area."

"There's also a major windfarm being built, north of me, which will increase land values significantly."

Farmers couldn't avoid paying their rates, or shift their businesses elsewhere, to somewhere cheaper.

"The asset, which is your business, is the land," Mr Johns said.

"We are not like a motor mechanic, who can rent another building, somewhere else."

Corangamite, in the south-west, was also facing revaluation pressures, according to mayor Neil Trotter.

The total value of farms, outlined in this years draft budget, was $3,053,252,000 and farms would pay 89.5pc of the general rate.

Cr Trotter said the eventual aim was to bring it down to 85pc.

Farm properties would pay 89.5pc of the general rate, with the shire estimating it will raise an additional 2.09pc from rural properties, 3pc from residential land, 0.7pc from commercial and 3.6pc from industrial land.

"The effects have been negated, to a certain extent, in the northern part of the shire, due to rapidly rising values," he said.

"A significant rise in value will make rates even higher, and we are getting a bit of kickback from farmers in that northern section."

Cropping land values, around Vite Vite and Derrinallum, had risen sharply, in some cases even doubling.

"You are looking at land that was valued at $1500 an acre a few years ago and is now valued at $3000-$4000.

"Anyone who is still grazing is not seeing the return of those croppers, but values are being applied, across the board, and some of those grazing families are feeling the pinch."

The rise in values was not as significant in the south of the shire, due to the downturn in the dairy industry.

"In some areas, values may even have gone down - and we have farmers from up north, buying up dairy farms to use as grazing properties."