Farmers in the south-west are the latest to be stung by rating increases

Properties in the north of Corangamite Shire have been the latest to feel the effects of revaluations, following last year's steep land price increases in the north.

Victorian Farmers Federation southern region grains councillor Anthony Mulcahy said increasing the municipal charge, while reducing council costs, could help cut rates for farm businesses.

"My view is that it's an unsophisticated tax, it's a revenue stream for council, so I call it a tax," Mr Mulcahy said.

"There is no consideration of your ability to pay, or your equity levels."

The rating system was not working for rural councils, and needed to change.

"Rural councils don't have the revenue streams of city-based councils, they don't have growing populations, their costs are increasing, but the revenue isn't," he said.

In recent years, farmers in several northern Victorian shires, including Ararat and Mildura, have felt the brunt of sharp rate rises, after steep land revaluations.

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

Corangamite set a differential rate of 89.5 per cent of the general rate in this year's budget, following advice from council officers.

Differential rating allows councils to discount the rate paid by each land use sector, with some coming in over the 100pc general rate and others below it.

The state government capped rate increases, after what it said was a decade of uncontrolled rises.

But as rates are calculated by multiplying the valuation of the property by the rate in the dollar, land revaluations have forced up charges for agricultural land.

Corangamite Shire Council officers successfully argued for the 89.5pc differential, with farmers paying just over 10pc less than the general rate.

"A more aggressive change in the differential would result in instability in the rating burden," the budget papers stated.

They did acknowledge farm profitability was affected by the vagaries of weather and international markets.

"Farms are seen to be more susceptible or fragile than other commercial and industrial operations," the officers said.

The Essential Services Commission (ESC) has found Corangamite's rural ratepayers pay the largest share of rates and charges.

"This group of ratepayers, on average, experienced a 6.6pc increase in their rates notices between 2015-16 and 2017-18," the ESC found.

"The difference in rate increases can be due to relative changes in property valuations, and changes in property numbers, the council's rating structure, and uncapped rates and charges."

But farmers also said that what they couldn't understand was the significant difference in rates between neighbouring shires.

Mr Mulcahy has properties in four shires, Corangamite, Moyne, Ararat and Pyrenees.

"Moyne is half the cost per hectare of Corangamite but there is only a creek, which divides the properties," he said.

He said it appeared the main differences were that Moyne had a higher municipal charge and more ratepayers than Corangamite.

Moyne would soon also have another revenue stream, through renewable energy projects.

"They deserve that income stream because of the inconvenience and controversy surrounding such things as wind farms, being imposed on the council," he said.

Rate increases might be more palatable if farmers saw improvements to roads or less red tape, such as streamlining permits for B-Double access to farms.

"There's a permit system in place, but it's not a workable one," he said.

Will Mercer has properties at Vite Vite and Mingay, near Lake Bolac, and said his rates had risen by nearly $12,000 in one year.

"That would have an impact on any business," Mr Mercer said.

Last year, his rates went up by $11,600, or more than 42pc, after sales of significant properties in the area pushed up land valuations.

He said he was growing canola, wheat, fava beans and barley and producing fat lambs and wool.

"We've had a good year, but they are not all like that," he said.

"If you get back to an average, or low year, you will feel it a bit more.

"We can't change the system, but they could put a ceiling on the increase and decrease, even it was a 5pc maximum, at least."

Council didn't have to pass on the effects of revaluation of land, which was likely to hit the Mingay area this year.

Mayor Councillor Neil Trotter said Corangamite was waiting on the state government's rate review, before making any significant decisions.

Read more: Leading Victorian chief executive heads up government rates review

Council would put in a submission to the review but wasn't hopeful.

"Unless there is a dramatic change by the government in the way they look at the whole rating strategy, we are not hopeful of seeing any great change," Cr Trotter said.

He said the switch to annual valuations had exacerbated the problem, making them more volatile.

"Once we used to do them every seven years, which meant those peaks and troughs levelled out, over time," he said.

Council had introduced a differential rating system, to try and help.

"It's got to be done incrementally, as you are robbing Peter to pay Paul," he said.

Corangamite was one of many shires that had a problem with a static, or declining population.

"We are madly trying to attract business and new farming operations, but you have to be careful about overburdening certain sections of the community," he said.

Rates levied on vacant industrial blocks had increased to encourage development, as it felt some owners were 'land banking' in the hope of increased property values.