In accordance with the Local Government Act 2020, Council is reviewing its Revenue and Rating Plan with a requirement to adopt the plan by 30 June 2023. The Revenue and Rating Plan must be reviewed by the elected Council following the local government elections (every four years).

Council raises revenue from a variety of sources to fund the provision of services and infrastructure to the community. Major sources of revenue include rates, grants, fees and charges and contributions.

The largest component of revenue is the general rate, which generates 67% of the total revenue received by Council.

The general rate is a form of property tax that is used to fund the essential community infrastructure and services that all ratepayers benefit from. The value of each property is used as the basis for calculating what each property owner will pay. Council can make decisions to differentiate the general rate by applying a different rate in the dollar to different types of ratepayers.

The purpose of this review is to determine the percentage of rates collected through each of the different property types in our municipality – not the total value of rates generated.

The current share of the rates is outlined in the table below. Residential properties are contributing 64.7% of the general rate used to fund Council services and infrastructure. Farmland properties contribute 17.3% and business properties contribute 17.9%.

Council has considered 14 different options, comparing the impact each option has upon the share of rates across residential, business and farmland properties as well as the impact the options has upon individual landowners – including the maximum, minimum, average and median rate assessments.

Council is considering an option to increase the share of income raised from business and farming differential rates. This will in turn will reduce the share residential properties contribute to rates. The option would be implemented by changing the rate in the dollar applied to each property valuation – residential would decrease by 4.5% while farmland would increase by 13.1% and business would increase by 3.5%

The impact of the change will be to decrease the general rate amount for residential properties and increase the general rate for farmland and business. The average residential rate will decrease by $80 for the 2023/24 financial year, the average farmland rate will increase by $463 and the average business rate will increase by $170.

The graph below outlines that since the 2019 financial year, the share of the general rate has increased for residential properties from 57.82% to 64.72% in the current 2023 financial year. This is predominately due to land valuation movements, increase in assessment and changes made in previous reviews of the rating methodology. The rates burden for business has historically remained steady at around 20-22%, however in recent years has reduced to 18% in the 2023 financial year. The farmland rate burden has historically fluctuated between 15% and 19%, and for the 2023 financial year is at 17%.

During the review Council has considered a range of information that has been provided by Council officers and a consulting firm AEC Group. AEC Group has provided Council with a socio-economic profile of the region, highlighting indicators of wealth and capacity to pay for residential, business and farmland properties.

The socio-economic indicators provided by AEC Group suggests that:

• The average residential rate of $1,772 per year is 2.53% of the median household income ($69,924). AEC Group advice is that this percentage is relatively high and, where possible, Council should consider options to reduce rates on residential properties.
• The total rates received by productive industries (farmland and business) as a percentage of the total gross operating surplus generated is 2.4% which is relatively low, and where possible, Council should consider options to increase rates on farmland and business properties.

When considering options on how to share the general rate, the Council has been guided by rating principles. The wealth tax principle is a key consideration – being rates paid are dependent upon the wealth of the landowner – as well as principles of equity, efficiency and simplicity. The equity principle can be viewed both as horizontal equity (ratepayers in a similar situation should contribute similar amounts) and as vertical equity (those who are better off should pay more than those worse off). In making a decision the Council will need to balance the importance of the principles, as it is not possible to completely satisfy all principles, but rather the principles will guide the Council’s consideration.

Council considers the community needs first before deciding on how much to raise through the general rate. The total amount required is split across the different rating categories – residential, farmland, business and cultural and recreation land. The amount required by each category is divided by the total valuation of properties in the category to achieve a rate in the dollar for that category. The rate in the dollar is then applied to your property valuation to calculate your rates assessment.

All feedback will be collated and used to determine a preferred option. Councillors will endorse an option at a future Council Meeting, before the Draft Revenue and Rating Plan is made available for public feedback.