Councils in Queensland are worried that their ability to use differential rating is directly under threat after a Supreme Court judgement found Mackay Regional Council’s decision to impose higher charges on investment properties was legally “invalid”.
Local governments across the state now fear the decision will undermine their revenue base unless they get legislative protection to charge different levels of rates for properties based on the nature of their ownership.
Although other states use differential rating, the revenue measure is particularly unpopular in the sunshine states where property investors have started litigating against councils in a bid to avoid higher charges.
Queensland’s Supreme Court handed down its judgement on 30th April, 2014 in the case of Paton & Ors v Mackay Regional Council case, a precedent that sent shockwaves through councils trying to forward plan their budgets.
The questionable legal validity of the revenue mechanism has the potential to open big funding holes for councils in the event they cannot collect on the charges.
Now Queensland’s peak local government body has called on the state government to introduce legislative and regulatory reforms to “put councils on a sound footing as they prepare their budgets for the coming year”.
Local governments want legislative protection from legal challenges on differential rating because of the risk that a precedent that could force councils across the state to repay a whopping $2.4 billion to ratepayers who believe they have been unlawfully gouged.
The Local Government Association of Queensland (LGAQ) is vehemently defending the use of differential rating, saying many councils use the revenue powers to categorise residential land based on whether it’s used as a principal place of residence or for investment purposes.
LGAQ President Margaret de Wit said while the Supreme Court’s judgement is being appealed, other councils need to make sure their communities can enjoy certainty in regard to future revenue options.
Brisbane Lord Mayor Graham Quirk said he supported the LGAQ’s call for Queensland Minister for Local Government David Crisafulli to introduce legislation to protect ratepayers from the possibility of being liable for retrospective rate refunds to investors.
“I urge the Minister to amend legislation to ensure that Brisbane owner occupier ratepayers are not at risk of being slugged for retrospective payments,” Mr Quirk said.
He said “as a matter of policy”, Brisbane City Council believes that the ability to categorise residential properties for rating purposes according to whether they are owner occupied or not is a “fair, equitable and reasonable” rating arrangement.
Comment below to have your say on this story.
If you have a news story or tip-off, get in touch at editorial@governmentnews.com.au.
Sign up to the Government News newsletter
Well, of course Councils scream. But it is high time that Councils start learningg to live within their means.
this of course means that they stop taking on “responsibilities” that is not theirs to take, such as Sister City relations in far-away lands, which gives Councilrs/Officers a nice free holiday at rate payers expenses. Of course there are many other “responsibilities” too numerous to mention, simply because those Councilors/Officers are very good of dreaming up other rorts which need to be funded by rate payers.
The best way of stopping rorts is for the LGA in every State to be changed, clearly spelling out what Council can and cannot do.So the responsibility is with the State Government.
CHANGE THE BLOODY LGA.
I for one have never been able to see how an investment property incurs any greater cost to Council than owner occupied.
It is patently unfair to have a different rate. If Councils are dependant on that I can only suggest they should perhaps trim their sails and stick to the basic functions they are charged with supplying.
It was my – unqualified opinion – that differential rating was for the purpose to equalise the “Rate Burden” and ensure that it was proportional to the services Council was providing in a geographical area. At least, that would make sense!
After all, as Councils art NOT part of the Aust Constitution, they are NOT allowed to LEVY TAXES!!!!!
This document seems to suggest a deviation from this attitude and suggests that “Revenue Gauging” should be allowed as it is suggested that rates for rental properties be higher without providing ANY additional Services.
Can anybody provide me with directives relating to how Differential Rating is “MEANT to be Applied” as per its “Original Inception”?
Local Councils are doing their best to become a law unto themselves, they try and nibble away at the rights of citizens to question their every day practices. There must be no new legislation passed that gives local councils more power to short change the rate payers, we should all write to the minister and complain bitterly about local councils money grab at the expense of freedom of speech, as in our right to legal proceedings against bullying council tactics.
I am appalled at our state government passing legislation to over ride the court’s decision, no wonder there is so much conflict in our world when you have governments continually trying to suppress the rights of the people