Victoria’s 79 councils rely heavily on the
revenue generated by property-based rates and charges to provide
services to local communities. In 2011–12, Victorian councils
generated operating revenue of $8.18 billion, with rates and
charges accounting for $4.09 billion, or 49 per cent, of the
While councils work within a common rating
framework comprising the Local Government Act 1989 (the
Act) and sector guidance documents when determining their rates,
these lack clarity and detail. This has contributed to
inconsistencies in the rating practices of the councils audited,
and the quality and soundness of council rating decisions.
The audit found there is limited assurance
that all councils systematically and rigorously consider the
information and evidence needed to adequately understand the impact
of their rating proposals on their communities. This includes
proper consideration of the principles of stability, equity,
efficiency and transparency in their rating decisions. Councils do
not consistently calculate, and transparently report, key rates and
charges data in a way that promotes scrutiny of decisions and
comparability between councils.
At the state government level the Department
of Planning and Community Development, through Local Government
Victoria, does not provide proactive support to councils on their
rating practices, or monitor and report on their performance in
this area, including their compliance with the Act.
Council reporting of rates and charges data needs to be improved
so that ratepayers and the general community can easily understand
and compare the information within their own and other
municipalities. It is also timely to review the Local Government
Cost Index to ensure there is a valid and accepted sector benchmark
for rates and charges.