The Victorian Farmers Federation (VFF) has labelled the Victorian Government’s local government rate capping policy ‘ineffective’ and unable to protect farmers – with recently announced council budgets demonstrating farmers continue to get the raw end of the rating stick.
VFF President Emma Germano said rate capping had failed to stop some regional councils forcing rate increases onto farms.
“Councils are failing to use their differential rating power to equalise rate increases across different classes of land,” Ms Germano said.
“The burden of funding local government is shifting more and more onto the agricultural sector.
The VFF wants to see a fairer distribution of the rate burden between land types.
“These tax hikes show that Victoria’s rate capping system is broken.
“It is completely unfair to have rate increases exorbitantly high for one group of ratepayers but have no increase or even a reduction in rates for others.”
VFF analysis of all council budgets for the year 2024/2025 shows 19 regional councils increasing farm rates above the state government rate cap of 2.75 per cent, while residential rate increases remain at or below the cap.
In the East Gippsland Shire, the average farm rate assessment increase was 3.29 per cent,
while the average residential assessment increase was 2.95 per cent.
As can be seen in the table, farmers in other shires have been slugged almost four times that with the average farm rate increase in the Ballarat local government area lifting 12.57 per cent, while the average residential rate increase was just 1.45 per cent.
In Mildura and Moira shires the residential rate decreased while the farm rate increased 15.91 per cent and 25.85 per cent respectively.
Closer to home, in South Gippsland the farm rate went up 10.14 per cent while the residential rate rose just 0.05 per cent.
“Unfair rate increases take money away from farmers investing in their businesses, growing more food and fibre and providing local employment opportunities,” Ms Germano said.
“Ultimately this either drives up the cost of food or puts farmers out of business – or both.”
East Gippsland Shire Council (EGSC) chief executive officer, Fiona Weigall, said rates were necessary to keep more than 100 council services to the community running.
“This year’s budget kept overall rate increases less than the Reserve Bank’s forecast inflation rate,” Ms Weigall said.
“The budget also included a range of efficiencies to ensure we have a strong focus on managing within our means.
“Approximately 45 per cent of council’s budgeted income comes from rates and charges in 2024/25.
“We are aware of cost-of-living pressures and that many in our community are experiencing financial hardship and we have considered this in setting our rates and encourage ratepayers who are struggling financially to get in touch and see how we can help.”
While she acknowledged rating was complex, Ms Weigall said it was an important part of council’s budget process that identified and costed the services council would deliver over the next year, as well as the priority actions it would deliver from key plans.
It also involves identifying areas where services may be able to be made more cost efficient or reduced.
She said EGSC currently uses a differential rating system, which allows for a different rate in the dollar for different property types or categories.
There are three different rate categories depending on how a property is used:
– General residential
– Commercial/industrial
– Farming
These categories contribute $39.9 million, $5.8m and $5.9m respectively to the income from rates.
Ms Weigall said this year in the budget, council had reduced the differential rate for farms down to 75 per cent of the general rate, in 2023/24 the Farming Differential rate was 80 per cent of the general rate.
“Farms also get the benefit of having just one municipal charge per single farming enterprise, this means that 37 per cent of our farming properties are exempt from the municipal charge,” she said.
The VFF’s recent submission to the Victorian Parliament Inquiry into Local Government funding
and services recommended the government require councils to apply the rate cap to each class of land.
“The annual cap determined by the Essential Service Commission should be applied to residential, farming, commercial, industrial and any other differential land category,” Ms Germano said.
“Increasing farmland values have no bearing on famers’ ability to pay exorbitant rates bills.
“The fundamental principle should be that as the value of farmland increases, the differential rate is adjusted to reduce the rate in the dollar so that the rate burden paid by the farm sector remains stable.
“This system would ensure a fairer distribution of the rate burden between land types.
“It would also put pressure on councils to look for greater efficiencies and cost savings rather than passing costs onto particular land types,” she said.
