Rate pain ahead on back of surging land values

One draft budget, already released, has factored in an agricultural land value increase of 14 per cent, although the Victorian Valuer-General annual revaluations are yet to be released.

In Campaspe Shire, in north-central Victoria, the draft budget proposes 20.36 per cent of rates will be raised from the farming sector, compared with 13.37pc for general properties.

But the council has stressed the figure is likely to change, subject to receipt of the Valuer-General's final figures.

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Campaspe has set a differential rate for farms of 90pc of the general rate, one of many local authorities likely to use that lever to ease pressure on the farming sector.

Differential rating means councils can reduce the percentage of rates paid by owners of certain classes of land, such as residential or farmland, within their local government area.

"Differential rating allows council greater flexibility to distribute the rate burden between all classes of property and link rates with the ability to pay (while) reflecting the tax deductibility of rates for commercial and industrial premises," Campaspe mayor Chrissy Weller said.

"The differential has remained consistent at 90pc of the general rate."

Campaspe expected to receive final valuations, signed off by the Valuer-General, in mid May.

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In Yarriamback, another shire to have already released its draft budget, estimating the value of agricultural land has gone up by nearly 14 per cent on the previous financial year, to $322,739 million.

The value of residential land is estimated to have increased by nearly 8pc to $344,467m.

Yarriamback shire mayor Kylie Zanker said it was likely the shire would again adopt a differential rate for the farm sector.

The differential for agricultural land was currently 62.5pc of the residential and commercial rate.

"It's not council saying 'cough up, we need you to pay more,' it comes on the valuations," Cr Zanker said.

"We are not saying 'no' to a differential, that is something the council is looking at.'

"We are mindful farmers are often asset rich and cash poor, so that's hard too."

Cr Zanker said most unpaid rates came from residential properties.

"It's hard, but who do you put the burden on?" she said.

"We are trying to juggle it and make it as fair and equitable for everybody."

She said the system was 'insanity.

"We are not disputing it is not a fair and equitable split, but how to you challenge that when no-one wants to listen?"

Northern Grampians shire mayor Tony Driscoll said the council had started public consultation on its draft revenue and rating plan.

"We are aware of the fluctuations in land values and the differential rating system," Cr Driscoll said.

"We are aware its a brutal system and we are trying to smooth out basically all the huge fluctuations."

The council was constrained by the rates cap, which restricted local authorities to a rates increase of only 1.75pc.

"Northern Grampians shire only raises another $300,000 (as a result of the rates cap) between all the various sectors, whether it be ag, whether it be industrial or residential," Cr Driscoll said.

"It's a really crazy system, it really is," Cr Driscoll said.

Council was 'painfully' aware of the wild fluctuations in valuations.

"Some sectors in the community think' my house price has gone up, my land price has gone up, the council must be rolling in money.

"The reality is, we are not."

"We are getting the valuations in now and we know what's going to happen - land prices have gone crazy, house prices in places like St Arnaud and Stawell have probably gone up by 20-25pc but rural land has probably gone up 50pc.

"The ag sector is still outstripping the other sectors."

A draft budget was likely to be released by the end of May.

Ararat Rural City Council mayor Bill Waterson said it would be the third year in a row in which rates would not be increased.

"We are trying to best we can but land values have gone through the roof, it's just crazy," Cr Waterson said.

"It's just not us, it's everywhere."

Land values were going up in both residential and agricultural sectors and Ararat wanted to make sure the rating system was as equitable as possible.

"That's what we are discussing right now," he said.

A draft budget should be released in June.

The Victorian Farmers Federation has urged councils to curb the impact of rising values on farm rates.

Livestock and grains producer Karen Hyslop, Campbell's Bridge, north of Stawell, said rates had gone up in consecutive years, last year increasing by $5000.

She is in the Northern Grampians shire.

"We pay about $30,000 a year in rates," Ms Hyslop said.

"I want people to get to think about their rates and realise they can have a voice and speak to councillors and just try and get that conversation going about why rates are going up and what is the council doing about it?"

She said the differential should be used to ease pressure in the farming sector.

"We wouldn't pay that much money for land, but we are penalised, because there are people buying land around us and paying big money."

The state government should also look at the way rates were calculated.

She said Northern Grampians lowered the amount of rates it had first intended to raise from the farming sector, after a protest from residents.

"I don't think farmers realise that, if they are willing to challenge and put pressure on local governments, make them listen, they can get changes."

Grain grower Ross Johns has properties in Nhill and Warracknabeal and pays rates in both Yarriambiack and Hindmarsh shires.

"The issue centres around the fact we have very rapidly increasing rates," Mr Johns said.

"I have lots of areas in the business I pay money for, but in this particular area the quality of our services, our rural roads and access o our paddocks is declining.

"So we are not just paying ever increasing rates, we are actually not getting a service we are paying for."

He said it was a perennial problem and no-one seemed to have looked at it in a fair and reasonable way.

"When I looked at rates in the likes of suburbs like Toorak and inner-city Melbourne, per millions of dollars of council valuations, their rates were around about half, whereas rural rates are a lot more expensive, for each million dollars of market value."

He said there did not appear to be any points in fixing the system, for any of the parties.

When former Local Government minister Adem Somyurek addressed the Victorian Farmers Federation several years ago, he didn't appear to have any interest in service delivery or addressing the issues.

'That, to me, was quite a large shock, because agriculture provides quite a large percentage of the state's revenue and as such deserves a reasonable level of service at reasonable price."

It was reasonable to levy rates on valuations, but he said he was concerned about the discrepancy between city and country.

"Such things as roads are not being funded by state governments, so it is falling back ratepayers."