A Greens councillor in Sydney’s affluent eastern suburbs is pushing to raise the amount paid in rates by its wealthiest homeowners, with claims cheaper properties have been subsidising mansions.
Woollahra councillor Nicola Grieve wants to change the way council rates are calculated by relying entirely on land value, rather than charging every ratepayer a base rate, which she says is more beneficial to those in expensive homes.
“Why should a family living in a palatial home with harbour views be given a discount while a family living in a two-bedroom apartment with the view of the wall of the neighbouring apartment block be paying more,” she said.
Council rates can be calculated in a variety of ways that produce very different results. Woollahra Council’s rates on residential properties consist of a base amount – which in 2021-22 is $645 – plus an ad valorem amount based on land value.
The base and the ad valorem amounts each contribute half of the total residential rates collected by the council.
Ms Grieve’s model would instead only calculate rates on the land value, subject to a minimum amount.
The owner of a $1.4 million property – the average land value in the Woollahra LGA – would pay $1312.32 in the next financial year under the existing model, but under Cr Grieve’s proposal, they would pay $1197.64.
In comparison, the owner of a $53.9 million property would go from paying $24,955.82 to $43,822.46.
Cr Grieve lives in a bungalow with a garden in Bellevue Hill, which she said was “not a palatial home at all”, but would attract higher rate payments if her proposal was adopted by the council.
“I would pay an extra $148 a year which I am happy to pay if it means others in apartments will save money,” she said.
A Woollahra Council spokesman said all residential ratepayers contributed a base amount towards the council’s core services: “The services and infrastructure available to the highest valued properties are not so dissimilar as to warrant them paying disproportionately greater rates.”
HOW THE RATES WOULD CHANGE IN WOOLLAHRA
Land value: $28,200 Current model: $660.72 Proposed model: $568.96
Land value: $113,970 Current model: $699.40 Proposed model: $568.96
Land value: $454,000 Current model: $852.74 Proposed model: $568.96
Land value: $791,200 Current model: $1004.82 Proposed model: $643.27
Land value: $1,473,048 Current model: $1312.32 Proposed model: $1197.64
Land value: $2,200,00 Current model: $1640.16 Proposed model: $1788.67
Land value: $4,410,000 Current model: $2636.82 Proposed model: $3585.47
Land value: 8,800,000 Current model: $4616.62 Proposed model: $7154.69
Land value:$16,100,00 Current model: $7908.78 Proposed model: $13,089.82
Land value: $53,900,000 Current model: $24,955.82 Proposed model: $43,822.46
The balance of rates paid then reflects the respective land values of properties, he said. “Given the range of values and their size at the upper end, the 50 per cent base structure is considered to be the most equitable distribution of rates levied.”
The council’s suggested rate structure for the next financial year will be considered at its next meeting on March 28 and, if approved, placed on public exhibition before a final vote in June.
The council spokesman said this rates structure was “well-established and widely accepted” across NSW.
However, Waverley Council, the City of Canada Bay and Northern Beaches Council all determine rates on a similar model to Ms Grieve’s proposal.
Cr Grieve said determining council rates by land value, with a minimum amount to cover basic costs incurred by the council, is “clearly fairer”.
“Rates are not a fee for service. They are a tax that funds the council as a whole,” she said. “The current system is perverse where the average person is subsiding the very people who can afford to pay.”
The debate over how council rates are calculated comes as local councils seek permission to raise rates beyond the 0.7 per cent “rate-peg” set by the Independent Pricing and Regulatory Tribunal of NSW for 2022-23.
Hunter’s Hill Council has asked the tribunal for permission to raise rates by almost 30 per cent over the next two years to complete capital works programs and reduce its asset backlog.
Cumberland Council is seeking to increase minimum rate payments for residential properties from $650 to $715 next year, $785 in 2023-24 and $860 in 2024-25.
The Central Coast Council, which is currently run by a state government-appointed administrator, is seeking a 15 per cent a year rise in council rates for the next decade to repay a $150 million emergency loan.
The council’s submission has attracted 280 submissions, including from Adam Crouch, Liberal member for Terrigal, who said: “I am furious that our community might be forced to continue to pay for the appalling mistakes and failings of Councillors and senior Council staff.”
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