Victoria's rural councils are setting budgets they hope will shield farm businesses from sharp rate increases - after the latest round of annual revaluations saw another spike in property values.
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Several councils said they have budgeted to help small businesses, hit hard by the coronavirus pandemic, saying many farmers were experiencing a good season.
But Ararat has reduced its rates, Wellington has voted for a zero rate increase, and Southern Grampians has set aside funding for ratepayers, facing hardship.
And in Buloke, the council has proposed setting aside more than $12million for road upgrading and repairs.
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Grain grower Chris Plant, who is in Swan Hill Rural City Council, said the state government's 'Fair Go' rate cap, of 2 per cent, was not applied to each rating category individually.
That meant many councils were shifting the rate burden onto farmland.
"For example, the estimated total amount to be collected by Southern Grampians Shire Council from farm rates for the last three years increased by 29.23pc, while residential rates decreased by 13.29pc," Ms Plant said.
"Local government is the only level of government where what you pay depends on where you live.
"Ratepayers in rural Victoria pay a lot more in rates than ratepayers in Melbourne."
For example, a property valued at $400,000 paid rates of $3,500 if it was in Swan Hill but only $993 in the inner Melbourne suburb of Brunswick.
"Put another way, a property in Brunswick would need to be valued at $1.41m to pay the same rates as the Swan Hill property."
Councils use an equity-based system to charge municipal rates, with higher value properties paying more.
Rates are calculated based on the Capital Improved Value (CIV) of a property, determined through an annual valuation process. The general rate in the dollar is based on dividing the total rate revenue required to fund council's budget, by the total value of all rateable properties in the municipality.
Ms Plant said rural residents paid a higher proportion of their income on rates.
"Someone earning $60,00 pays 5.8pc of their gross income for rates compared to Brunswick resident 1.7pc," she said.
Property numbers for metropolitan councils were increasing at a faster rate than rural councils, thus increasing the ability to generate more rating revenue.
"For example, the total number of assessments in Moreland increased by 1,089 in the past 12 months, whereas Swan Hill increased by 30," she said.
Ararat
Ararat Rural City Council mayor, Cr Jo Armstrong said farmers would pay 53pc less than the general property rate.
The council is believed to be the only one in Victoria to introduce a rate cut, of 1pc.
"Our methodology is based on equity, and we do acknowledge there has been a significant increase in the value of our farmland," Cr Armstrong said.
"Not acknowledging it would have brought about a really serious rate shock, for that sector."
She said the Council was not reducing services but had found efficiencies, across the shire.
The value of farmland in the shire rose by 22.28pc, on last financial year, to $1,966,601,000, but ARCC dropped the rate in the dollar for next financial year by 18.72pc.
Last year, the value of the shire's famland was assessed as $1,608,291,500.
The number of farm and general assessments dropped by 174, or 10.13pc, due to a number of properties being reclassified from the farm rate to the general rate.
This followed an extensive review, where all ratepayers receiving the farm rate were required to re-apply to verify their eligibility.
The value of farmland increased by $358,309,500, but Ararat dropped rates to 29.49c/$.
Cr Anderson acknowledged the value of some farming properties had risen significantly, so their rates would go up.
Average increases were not an accurate reflection of how much rates would rise, or fall.
"An average property doesn't apply, when you are talking about farms, as it does when you are talking about residential entities," she said.
"The real issue is that we have a ratings system that is completely broken, it's antiquated and it doesn't relate to 21st century local government.
"An increase in value in farmland has no direct correlation to capacity to pay - it's an unrealised gain."
Ararat mixed farmer Sam King acknowledged the local Council had done all it could, within its power, to keep rates constrained.
"Things got out of hand before," Mr King said.
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"There were three principals rates are formed on, the benefit, the ability to pay and wealth.
"Wealth is subjective, the ability to pay is subjective, and the benefit is subjective.
'As far as I am concerned, the whole system being based on asset values is totally archaic."
He said he believed as Cr King was a farmer herself, she had a greater understanding of the pressures faced by primary producers.
"We've also now got a chief executive running our council as a business."
Wellington
Wellington has frozen its rate increase, with council opting not to apply the 2pc rate cap.
Mayor Councillor Alan Hall saying representatives were conscious of the "quadruple whammy" of drought, bushfires, the closure of the native timber industry and coronavirus.
The council was keen to put additional support behind small business, retail and tourism who were doing it tough.
Wellington had allocated more than $500,000 in next year's budget for tourism and business support and promotion.
Cr Hall said with farm values rising by 16.8pc, council was also conscious of the impact of drought and trade tensions with China, on farmers.
The Valuer-General had advised council farm sales data supported the increases.
"Most ratepayers see these valuations as being set by council, whereas they are done independently by the state government's Valuer-General, and are driven primarily by historical sales data," Cr Hall said.
"Most realtors I have spoken to in Wellington say they are not having any trouble selling farms, so their insights support the upward valuation trend we are seeing.
"We have spoken to the state government valuer general about this because it has always seemed counter-intuitive to us that valuations have increased while farm production is down due to drought."
Council continued to support an 80pc differential rate for farms despite the financial pressure of adopting the rate freeze.
Cr Hall said although residential values had also risen, the sheer volume of farm properties meant they did the "heavy lifting" when it came to generating rate income.
Wellington's 'average' farm, valued at $733,000 last year, was now valued at $856,000 - an increase of 16.8pc.
"As such, the increase in general rates that applies to an average farm property of $856,000m is not quite the same as the 16.8pc increase in valuation, but it's still 11.5pc, or $348.92 of their total rates bill," Cr Hall said.
Wellington shire's Tim Waite, Glengarry East, said he felt rates were already overinflated.
"I don't think they were thinking where the farmers' money comes from," Mr Waite said.
Last year, Wellington offered rate relief, provided through the State government, to primary producers.
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"We finally got a bit of a reprieve, and then they are going to slam this into us," Mr Waite said.
"It's a disgrace - what were they thinking they could do to the farming community?"
He said he, and his father Bill, paid about $20,000 in rates, each year.
"We don't get any services from the council, it's all about the towns, it's all about spending millions of dollars on arts centres, swimming pools and that sort of thing, and it doesn't benefit the rural community," Mr Waite said.
"It's a significant cost in that I think you could be spending that money elsewhere to improve your property.
"If they put money back into the community, into our roads and a bit of upkeep, it wouldn't be so bad, but we don't get any service."
Buloke
Buloke Shire mayor, Councillor Carolyn Stewart said the local authority had tried hard to reduce the burden on farming properties, by further changing the differential.
She said Buloke had dropped the differential to 80pc of the general rate and brought down the farm rate by 3.08pc, to 61c/$.
"The value of farmland has gone through the roof," Cr Stewart said.
Farmland values rose by 6.15pc, to $1,379,033, up $79,899, on 2892 properties.
"One thing we are really trying to do is put more money back into our road network, that is something that is really critical to the agricultural sector," Cr Stewart said.
"It helps maintain productivity and efficiency."
Buloke had budgeted to spend $12.5m on roads.
"That will be how we can give back to the farming community, in a positive way."
Craig Henderson, who has a cropping property near Berriwillock, said Buloke raised an enormous amount of money, for very few services.
"They've still got to try and find some way of funding services, instead of just using land values," Mr Henderson said.
He said while the council was using the differential, to ease the burden, the rating system was "a grossly unfair tax.
"With the superannuation funds coming in, and buying land, that hasn't contributed to our bottom line
"But it's added to land values, and that - in turn - has put up our rates.
"The rates burden is shifting to landowners, more and more."
Horsham
Horsham Rural City Council mayor Mark Radford said the local authority's draft budget,which proposed a 2pc rate rise, was out for consultation until July 17.
"Last year, we undertook a complete rating review strategy, and reduced the farm rate differential from 80pc, down to 67pc," Cr Radford said.
The farm rate, levied on the shire's 2182 properties, would rise from 3527c/$ to 3533c/$.
The draft budget proposed the differential would remain unchanged, this year.
"We recognise some people call rates a 'wealth tax", as your wealth increases, you pay more tax.
"Although the council doesn't have a lot of levers to pull, looking at the differential is one of them."
Due to coronavirus, the Council had opted to focus on small business relief, in this year's budget.
"It would be a fair comment to say most farming businesses had a reasonable, to good, season last year," Cr Radford said.
Farming land valuations rose by 4.4pc, or $72,047m, to $1,709,769, while residential values went up by 2.95pc.
Brimpaen wool grower and lamb producer Peter McGennisken said he was on the council rates committee for several years, but hadn't made any progress in reducing the burden on farmers.
"We think it's grossly unfair, it's a capital tax," Mr McGennisken said.
"It's a grossly unfair capital tax, in that someone in Horsham could be on $400,000 a year, and pay $2-3000 in rates, while we pay $9494.
"It is out of their (the council's) hands, but they make it hard to get that differential, we have to fight for it, continually."
Corangamite
Corangamite mayor Cr Neil Trotter described the current rating system as "feudal'.
The shire had again seen sharp increases in valuations, particularly in the northern part of the shire, with some rising by 30pc.
"There were rises in the value of cropping land, dairying is pretty static, if not going the other way, residential is pretty much flatlining and, some of our industrial rates have gone down," Cr Trotter said.
"Because of the coronavirus, we are not having a rate rise, but in some pockets, rates will go up.
"Last year it was probably around Mingay, the previous year it was Vite Vite, and north of Lake Corangamite and Foxhow."
Corangamite councillors are due to vote on the 2020/21 budget on Tuesday, June 23.
Councillors proposed a reduction in the farming rate of 0.17991c/$, or 4.47pc.
The value of farmland rose 7.52pc to $3,280,878, up $229,459.
The shire has also proposed freezing rate increases, and continued to reduce its farm rate differential by half a per cent a year.
The proposed differential for next financial year is 89pc of the general rate.
"It's an ongoing process, we continue to get that down, but we have to do it incrementally, as it has an impact on other sectors if you do it too quickly," Cr Trotter said.
Corangamite expected to raise an additional $280,000, from farmland, compared with $116,000 less, from residential properties.
Anthony Mulcahy, Streatham, has properties in four shires, including Corangamite.
He praised Ararat for stripping costs out of its budget.
"They are demonstrating it can be done if the shire has an appetite for that," Mr Mulcahy said.
He said he wasn't surprised by any rate increase.
"It's got to the stage where you expect it to increase; it's just a matter of by how much."
Land prices continued to rise.
"We are not sure how COVID is going to affect that and whether we still see a steady increase in prices."
Vern Dawson, Skipton, grows wheat, barley, canola and faba beans in the Corangamite Shire.
He said he had bought another cropping and grazing block south of Lismore, which had ironically probably contributed to the spike in valuations.
"We haven't got our rate notice yet, but the valuation increase has been massive," Mr Dawson said.
"The trouble is that it's an inequitable system, which is fundamentally flawed, and there is no correlation with the ability to pay
"It's an inequitable wealth tax and not a very good one."
Mr Dawson said he saw the opportunity to expand, so bought a new block.
"You can't get a good idea of what your rates will be until you get your notice and that doesn't give you very long to adjust your budgets," he said.
"Rural councils have a very small revenue collection pool, but cover a huge area."
MILDURA
The Mildura Rural City Council retained a 76pc differential rate, for both dryland and irrigated farming.
Land values rose by 3.6pc for dryland farming, while there was a sharp spike for irrigated properties of 14.4pc, on the back of rising prices for almond plantations.
A council spokesman said the 2pc rate rise in the draft budget would see a slight drop in the total value of rates, gathered from dryland farms, while irrigated properites would see a 10.65pc rise.
The number of irrigated farms dropped by 20, to 1782, while dryland properties rose by two, to 1547.
The value of irrigated farms rose by $166,011, to $1,837,820, while the value of dryland properties jumped $30,360, to $885,082.
Ouyen grain grower Ian Hasting said he believed the Council had made a reasonably responsible decision on its budget.
"We are cognisant of the fact there are increased costs for council, probably due to COVID-19," Mr Hastings said.
"They are trying for a minimum increase, to me that's reasonably sensible government."
Grain grower Ian Arney, Werrimull, said every year, rates increased.
'I wonder, at what stage, will they say, 'we don't need to increase it'," Mr Arney said.
Councils should concentrate on maintaining the facilities they already had, or seek external funding for new projects they didn't necessarily need to provide.
And even though The Millewa had just seen three years of drought, valuations had still risen.
"It just seems ridiculous, but it's held its value in every case, and even improved in some cases.
"It's just another fixed cost I have to meet, so I have no real alternative, I just have to cover it."
SOUTHERN GRAMPIANS
Southern Grampians chief executive Michael Tudball said the council had proposed continuing its 80pc differential, for farmland.
The council will adopt its budget in early July.
Mr Tudball said while the proposed rate in the dollar, for rural properties, has been set at 33c/$ there was a 22.08pc increase in value, which meant some primary producers would pay more.
The value of the shire's 3022 rural properties was estimated to be $2,976,036,500, up $538,291,500.
Council has also proposed to revise its hardship policy, setting aside nearly $330,000 for ratepayers who were facing financial difficulty.
"There's a further 2pc discount, if you can pay, all at once, and the council is proposing a revised hardship policy - in essence, that's another 2pc,' Mr Tudball said.
"The guiding principle is that it's easy to access and apply, and it targets those in greatest need."
Assistance included rate relief for the final instalment of the 2019/20 financial year, provided payments were up to date, before that.
"Some ratepayers may be unable to pay their 2020/21 financial year rates and can, therefore, request assistance," the Council said.
"Council can provide a reimbursement equivalent to 2pc of the total rate bill for the financial year."
Economic assistance was also being offered to landlords, while individual ratepayers with arrears facing arrears would be assessed on a case-by-case basis.
Residents and business, in arrears, could also get access to hardship assistance.
"These are assessed on a case by case basis and are tailored depending on the cases individual circumstances."
Mr Tudball said the most significant concentration of rate increases would be in the rural sector, due to the revaluation.
But it wasn't correct to say all farmers were facing a 10pc increase in rates.
"Rates go on valuations, and all that does is shift the burden, between rural and residential," he said.
"We have had a very good season, the farmers I talk to are doing very, very well, but that doesn't mean they have the cash to pay at the moment."
Like Corangamite, there were pockets where valuations rose sharply.
"The most significant valuation increase was 27pc in the north-east, but a valuation increase doesn't mean everyone's rates is going to go up by 27pc - they may stay the same, or go down.
"Everyone's rate notice will be different - rates on rural properties will go up anywhere between zero to 14pc."
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