Victorian farmers call for rates reform

Almost all local governments have submitted their draft budgets for approval before the end of the financial year.

Victorian Farmers Federation stakeholder and policy advisor Charles Everist said most of the councils with particularly high rates increases were in the western district.

Mr Everist said although local governments were restricted to a 1.5 per cent rates cap for the 2021/22 financial year, this related to the total revenue a council could collect from rates.

Areas of particular concern included Ballarat, which had an average increase of 10.8pc for farming properties, compared to a 3.7pc increase for residential properties.

Horsham farmers faced an average rise of 10.3pc, compared to an average 2pc rise for residential properties.

Moorabool had an average increase of 13.5pc, compared a cut of 0.35pc for residential properties in the same zone.

Other areas of concern included Shepparton, with an 8.45pc increase for farmers while residential properties have an average cut of 2.3pc.

Hindmarsh farmers were facing a 6pc increase as residential property rates were cut by an average 13pc.

Mr Everist said a positive example was the Ararat Rural City Council, which applied a 1pc average rate cut across all sectors in last year's budget, even with farm valuations increasing by 20pc.

"That's been replicated again this year in the Mansfield shire," he said.

"They've kept that rating burden - the percentage of rates that each sector pays - the same level.

"That's what we're calling for across the state."

He said the VFF was meeting with councils individually to try and bring equity between all rating sectors.

He noted that increases to property valuations did not improve a farm's earning capacity.

Unlike commercial properties, farmland typically did not lose value either, he said, with a rule of thumb expecting it to double in value every 10 years.

But overall the rating system was not equipped to deal with the property increases that had been seen recently, where land had doubled in value within one to three years.

"If councils do the right thing and use their differential rate, they can offset those rate shocks," he said.

Balliang East farmer Chris Sharkey pays rates to the Moorabool and City of Greater Geelong councils.

Mr Sharkey said his problems with rates rises began nearly 10 years ago, when landbankers began buying nearby properties at inflated prices.

He said the change in valuations then saw rates rise by about 10pc each year.

"Our potential to earn income off the farm hasn't changed, but you're charging us more for it," he said.

He said only about 80pc of his land was arable.

He said even though his rates in more recent years were increasing by a smaller percentage, it was a compounding problem.

He put submissions into budgets for about five years in a row and met with councils but felt there had been no meaningful outcomes.

"It's 'you're a farmer, you've got plenty of land, plenty of money, we don't have to worry about what you say or think'," he said.

Mr Sharkey said the only service he received from council was getting the gravel road graded every 18 months or so.

"We're 45 or 50 kilometres from the centre of Melbourne but we're too far out for rubbish collection," he said.

"We're in the very south-east corner of the Moorabool shire and there's about four property owners that make up about 2500 hectares.

"In that farmland they collect about $50,000 worth of rates.

"There's five houses and about nine adults.

"So you work it out... it's about $10,000 a house or about $5000 an adult they collect off us to grade 7km of road every year."

He hoped VFF lobbying would lead to change.

An independent review into local government rating systems was finalised last year.

The report found applying differential rates to broad categories of property could produce inequitable outcomes within and across categories.

"More specific data on smaller cohorts of ratepayers are needed to be confident that differential rates are not causing more problems than they are solving," the report read.

"In other words, attempts by councils to improve equity by using differential rates to compensate for higher total amounts in rates on large land holdings such as farms, large movements in valuation or perceived higher capacity to pay by ratepayers, may lead to inequitable outcomes."

The report recommended removing the Single Farming Enterprise exemption from multiple municipal charges for farms but this was not accepted by the state government, meaning the exemption will remain in place.

In a statement, a state government spokesperson said each council was responsible for setting rates within the Victorian government's mandated rate cap based on the needs of their community.

"Most councils provide rate reductions for farming properties through the use of differential rates," it read.

"Under the new Local Government Act 2020, councils are now consulting their communities on their 2021-22 Annual Budget and their Revenue and Rating Strategy.

"Ratepayers are encouraged to engage in this process and put forward their views to their local council."