Rate re-evaluation is not a council windfall

July 16, 2017


I am writing in respect to the letter from Neil Gorey published in the Pastoral Times (July 7) with the heading “Land value rises need explanation”.

I feel that some of Mr Gorey’s comments need some clarification in regards to the system of rating when a re-valuation takes place.

Mr Gorey was commenting on the fact that the NSW Valuer General was re-valuing the newly established Murray River Council given that a valuation was undertaken in 2015. (The Valuer General re-values properties every three years which I believe makes the values more relevant and up to date than the four year cycle that previously existed).

Mr Gorey expressed his concern that ‘‘some ratepayers are discovering that their land value has increased significantly without any explanation with some saying figures of 10 to 12 per cent’’.

In this case, Mr Gorey’s concerns should have been allayed by the fact that on the “Notice of Valuation” it is clearly set out that if you are concerned about aspects of your notice, including your new land value, you have ‘‘60 days to lodge an objection’’, including how to obtain a review kit which will help in lodging that objection.

The kit includes an information booklet and a selection of sales that the valuer considered when determining the land values in your area.

A 1800 number was also included on each notice ‘‘for more information about land values, the valuation system or the review process’’.

Mr Gorey also wrote that “I would hope that the increase in land values is not being used as a way of delivering the new councils an underhand windfall through the ability to levy more in rates”.

And Mr Gorey concluded, “I do encourage the Murray River Council to carefully consider the impacts any rate rise brought about as a consequence of the NSW 2016 land values” and that “any decisions should be based on fairness and not bringing about an improved bottom line on council budgets”.

I can assure Mr Gorey that in regard to any council receiving a rates “windfall” due purely to a re-valuation can’t happen due to NSW rate pegging legislation, and for Mr Gorey to indicate such, shows that he either doesn’t understand the system or is being a bit mischievous due to the politicking going on in regard to the forced council amalgamations in NSW.

Below are some points that hopefully clarify the situation:

As a consequence of rate pegging legislation, any Council’s ‘‘overall’’ general rates revenue cannot increase by more than the percentage increase approved by the Minister of Local Government prior to the rating year (the maximum percentage increase for the 2017-18 financial year is 1.5%).

The ‘‘general’’ rate is the rate that is calculated by using the land value and does not include charges such as water, sewerage, garbage, storm water management and the like, and includes such rates categories as Residential, Rural Residential, Business and Farmland to name a few.

If, in a re-valuation, land values in a local government area rise in aggregate, the council has to adjust the various rates categories multiplying figure (rate in the land value $) so that the TOTAL revenue from all relevant properties does not exceed the previous year’s total, plus the percentage increase, e.g. 1.5% for 2017/18.

For example, in general terms, if say the average land value for a general rate category increased by 20%, it does NOT mean that rates would go up 20%. It would mean that the average property (20% increase) would not be affected at all by the land value increase and their general rate would rise only by the 1.5% using the 2017/18 rate pegging maximum as an example.

However, properties whose valuations were over the 20% average would be paying varying increases depending on their valuation as well as the 1.5% increase, as they have to “take up the slack” (to raise the TOTAL revenue) for those properties whose land values were under the 20% average increase.

Other varying factors that can affect rates are adjustments of such things as Base Rates and Minimum Rates, but the above is a general guide to the effects of a re-valuation, one of which is certainly not a ‘‘windfall’’ for councils.

Yours etc.

Greg Collins


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