Why do we pay rates?
Across Australia, Local Governments deliver critical community services such as building and maintaining road infrastructure, collecting and processing waste and other community-focused activities and projects. While the delivery (size, amount and frequency) of these services and activities can change, they must be annually funded by Local Government.
Each year, the Shire of Denmark raises funds to cover the cost of those services and activities through the following means: Grants and contributions, fees and charges, rates and other. Last financial year, money raised from ratepayers was equal to $38 of each $100 needed to cover the $18.5M operating budget.
For many Local Governments, ratepayers pay for more than 50% of the annual operating budget, but in the Shire of Denmark, we rely heavily on other revenue streams to keep rates as low as possible.
Each year we talk about a percentage when we’re talking about how much rates are going up. What does that mean for me? Do all rating categories go up by that percentage amount?
Local Governments examine each rating category to ensure all rate payers contribute in a fair and equitable way. Some categories might increase more than others, depending on what Council decides is fair and equitable.
In the Shire of Denmark, the increase in total revenue from all six rating categories will equal the percentage increase you hear about in the media.
Why is the Denmark Council proposing to raise rates revenue by 7.9% this year?
It’s widely acknowledged that the cost of living and the cost of doing business has risen substantially in Western Australia. Denmark isn’t immune to these challenges, meaning the cost of delivering services and infrastructure for our community has increased in line with inflation and other economic challenges.
In order to maintain the Shire’s standard of service delivery, Council is opening the discussion on rates for the coming financial year at a total rates revenue increase of 7.9%.
At 7.9%, Council will be able to continue the level of service delivery that enables road maintenance, keeps our tip functioning and our community services running. A 7.9% increase will also make it possible for Council to deliver on a number of exciting community-focused projects which are slated for the year ahead in our draft budget. This includes delivering on our sustainability commitments, improvements at Ocean Beach and installing youth-focussed infrastructure such as a pump track and volleyball courts at McLean Park.
It’s important to note that this is the start of the rates discussion. The 7.9% increase isn’t final or approved by Council yet. There will be a public comment period in July ahead of Council’s final decision on setting rates in early August.
What are the implications of reducing rates?
In the Shire of Denmark, we rely heavily on grants, contributions, fees and charges to fund the majority of our operating budget. This reliance carries a risk because funds generated through grants and contributions are not guaranteed. If rates were to reduce, the community’s reliance on other funding streams would increase beyond a sustainable level, as would the associated risks. Our community would have to accept a reduced level of service delivery to mitigate this risk.
Council and staff have already made strategic cuts to the proposed projects for the coming financial year to allow for the proposal of a 7.9% total rates revenue increase to be considered. Further cuts will be required to bring that percentage increase down, meaning some of the key community projects in the draft budget may no longer be possible for delivery.
Why do rates increase each year?
It’s important to remember that no one at the Shire of Denmark enjoys considering the idea of a rate rise - our staff and Councillors are ratepayers too!
Each year, the revenue streams which feed into the annual budget are carefully reviewed, with the interests of the community at the forefront of any decisions. Rates revenue makes up a critical portion of the Shire’s annual operating budget and without these funds, essential services could not be delivered.
As the costs of service delivery are exposed to the same economic conditions every business and household are faced with, Council has to factor those pressures, like inflation, into decision making.
What are other Local Governments in WA doing with their rates this year?
Councils across Western Australia face the same pressures faced by businesses and households. Our discussions with other Local Governments are that ratepayers across the State can expect to see rate rises to meet the implications of current global economic conditions.
When looking at what other Local Governments might be considering for their rate rises, it’s important to keep in mind that it’s difficult to make direct comparisons and any comparison should be taken with a pinch of salt. For example, the Shire of Denmark is not comparable to Local Governments like metropolitan towns or cities because we have a drastically different number of residents and ratepayers and opportunities to generate income (such as parking fees or commercial rent for example). Nor are we comparable to similar-sized Local Governments because communities have differing sets of delivery priorities.
What next? Tell us where to from here.
On Friday 1 July 2022, the agenda for a Special Council Meeting has been published.
At this meeting, which will take place on Tuesday 5 July 2022, Council will decide on the proposed rating amounts they will advertise to the public for the coming Financial Year.
Once Council decides what rate percentage to advertise, there will be a 21 day period of Public Comment (6 - 27 July 2022).
Public comment submissions will be collated for Council to read ahead of the Special Council Meeting on Tuesday 2 August 2022 at which point Council will vote on the rates for the coming year and adopt the 2022/203 budget. The meeting in August is when the final decision on rates will be set in stone.
How does the rating system work in the Shire of Denmark?
Basically, the value of your property (depending on where it is and what it’s used for) corresponds directly to the amount of the rates you’re required to pay. This is a differential rating system.
What do the different rating categories mean?
There are six rating categories as listed below:
Gross Rental Valuation (GRV) properties:
Non-Rural Improved: All properties held or used for Non-Rural Purposes and not for Holiday Purposes and that are not currently vacant. A property is determined to be held or used for Non-Rural Purposes where the method of valuation used for the property of rating is the Gross Rental Value (GRV).
Holiday Purposes: All properties held or used for Non-Rural purposes and for Holiday Purposes. A property is determined to be held or used for Holiday Purposes where the property has been granted planning approval by the Shire to operate as a holiday home (standard or large) or holiday accommodation, as defined in Town Planning Scheme 3, and where the method of valuation used for the property for rating is the Gross Rental Value (GRV).
Vacant: All properties held or used for Non-Rural purposes and that are currently vacant.
Unimproved Value (UV) properties:
Rural: All properties held or used for Non-Rural purposes and that are currently vacant. A property is determined to be held or used for Rural Purposes where the method of valuation used for the property for the purposes of rating is the Unimproved Value (UV) of the property.
Rural - Additional Use Holiday: All properties held or used for Rural purposes and have additional Non-Rural Holiday Use(s). A property is determined to be held or used for Rural Additional Use Holiday Purposes where the method of valuation used for the property for the purposes of rating is the Unimproved Value (UV) of the property and where it has been granted planning approval by the Shire to operate a holiday homes (standard or large) or holiday accommodation as defined in Town Planning Scheme 3. Where there are approved holiday homes or chalets up to a quantity of four, then this Rural Additional Use Holiday category will apply.
Rural - Additional Use Commercial: All properties held or used for Rural purposes and have additional Non-Rural Commercial Use(s). A property is determined to be held or used for Rural Additional Use Commercial Purposes where the method of valuation used for the property for the purposes of rating is the Unimproved Value (UV) of the property and where the property is operating approved non rural commercial activities. Where there is approved commercial activities or holiday accommodation over a quantity of four then this Rural Additional Use Commercial category will apply.
What does ‘rate in the dollar’ mean?
The percentage applied to the valuation to determine the rate amount. For example, if a property is valued at $10,000 and the ‘rate in the dollar’ for the relevant rating category is 10c, we will multiply the value ($10,000) by the rate in the dollar (10c) and the result will be the value of rates ($10,000 x 10c = $1000).
What does ‘minimum payment’ mean?
If your property’s calculated rate amount is lower than the minimum payment, you will be required to pay the minimum payment amount for your rating category. All Local Governments are required to have a minimum payment category to ensure fairness and equity for all ratepayers.
How do I provide my feedback on the proposed rates for 2022/2023?
When Council publicly advertises proposed rate charges for 2022/2023, the advertised rate is not set in stone. The community is encouraged to provide formal feedback during the public comment period which this year will extend from 6 - 27 July 2022.
What do I do if I think my property has been listed under an incorrect rating category?
The sooner we have information about changes to rating categories, the better for the Shire’s budget formation. But property owners are able to advise us of changes at any time.
Who can I talk to if I have questions about my rates?
Our Rates Officer is available to assist with your questions at (08) 9848 0300 or firstname.lastname@example.org