An update on rates while Councils wait

An update on rates while Councils wait

The Local Government Act 2020 (new Act) has implemented a long awaited overhaul of the Local Government Act 1989 (old Act). While the new Act received Royal Assent early last year, such an ambitious reform of the local government sector necessarily requires a reasonable time for transition. Parliament has chosen to address this by gradually repealing most sections of the old Act and proclaiming the new Act in various stages, with the last stage of the new Act set to commence on 1 July 2021, but leaving a “rump” of the old Act still in operation.

During and after this transition period, Councils need to be aware of the co-existence of the new Act and the old Act as it is particularly important for Councils in meeting their governance obligations.

Old rates methods in new Annual Budgets

For example, the provisions dealing with rates and charges in the old Act are still very much in operation, and will remain so even when all provisions of the new Act have commenced, on and from 1 July 2021. Section 94 of the new Act sets out the procedure for Councils to prepare their budget for the financial year, including proposals to levy Council rates. Each Council is able to set a uniform rate across all types of properties or differential rates that will apply to different categories of land (e.g. residential land, commercial land, farm land etc.). If a Council proposes to declare a differential rate, section 94(2) of the new Act requires the budget to contain matters specified in section 161(2) of the old Act, so that the budget defines and identifies the types, classes or zoning of land to which each differential rate category would apply. Council is therefore required to comply with the relevant provisions of the old Act in parallel with the budget provisions of the new Act.

Councils have had various concerns about the current local government rating system, as ventilated in a number of their submissions to the 2019-20 review of the rating system by a specialist panel appointed by Local Government Victoria (LVG). Following the rating system review, the Victorian Government has expressed support for 36 of the LVG Panel’s 56 recommendations in full, in-principle or in part. The Government says it’s response prioritises the reforms that will support ratepayers in financial hardship, improve the transparency and consistency of decision making regarding proposed rates and charges, and build greater equity and fairness in the rating system. The final report of the review and the Government’s response are available here.

An end for the transition?

We anticipate that there will be further amendments to the new Act and that the rating provisions of the old Act will eventually be repealed when the new Act is amended, as with the repeal of other sections of the old Act. However, at this stage we do not know the Government’s proposed timeline for rating amendments to the new Act, or how long the current but temporary transition phase will last.

For the time being, and possibly into the 2022-23 Financial Year, Councils will need to continue to refer to both Acts when setting budgets and Council rates. Local Government Victoria has a range of resources to provide Councils with guidance and support. If you have any specific questions in this area of law, including on Councils adopting revenue and rating plans under the new Act by 30 June, please contact our local government specialists at Hunt & Hunt.


~ with Michelle Nguyen, Lawyer

Our Government and Public Sector Lawyers