IN the wake of residents receiving their rate notices for the upcoming year, many have been left wondering why some rates have gone up beyond the rate peg limit of 2.4 per cent.
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Great Lakes Council’s general manager Glenn Handford said the answer lies in the interaction between the rate peg and the Valuer General's recent updated valuations on properties. The total rates and rate rise that council can receive is set by the Independent Pricing and Regulatory Tribunal (IPART). For this year IPART advised that the total rate income could rise by 2.4 per cent across the state.
“Think of it as a huge pie cut up into 26,000 pieces” Mr Handford said.
The ‘pie’ is the council’s total rate income and the pieces are the individual rate payers. IPART’s rate peg sets how much that pie is allowed to grow each year. The confusion arises because land valuations do not actually set the rates but can impact upon the portion of pie held by each rate payer.
“Valuations don’t change the total amount received by council but do change an individual’s portions of the pie. If there wasn’t a change to valuations, everyone’s rates would just go up by 2.4 per cent,” Mr Handford said.
Land valuations given by the Valuer General can vary considerably across the Local Government Area. At last count, many land values went up and many went down. Tuncurry held its values more than properties in Forster. Some properties in the Great Lakes dropped substantially in value. Whilst council does its “best to even out the impact on rates due to the value fluctuations, there is a limit as to what they can do.”
Therefore an individual's portion of the total rates ‘pie’ can go up or down accordingly. Within the recent rate notices issued, 13,206 properties had a rate increase of less than the 2.4 per cent rate peg; 120 properties had a rate rise of 2.4 per cent; 13,013 properties had a rate increase of more than 2.4 per cent. And according to Mr Handford, a number of people actually had their rates go down.
“It is important to note that this situation only occurs once every three years,” he said, adding that rate increases reflect the IPART determination for 2016-2017 and 2017-2018.
The Valuer General’s office said that land values are one factor used by councils in the calculation of rates and that increases in land values do not necessarily lead to similar increases in rates.
