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Ministerial approval to impose a differential rate

A local government requires Ministerial approval under section 6.33 of the Local Government Act 1995 (the Act) to impose any differential general rate which is more than twice the lowest differential general rate imposed by it. The rate-in-the-dollar (RID) is the determinant.

The Minister will consider an application to impose a differential RID if the proposal is compliant with all legislative requirements and the Minister’s Rating Policy — Differential Rates. The Minister’s policy requires an application to satisfy the following key values:

  • objectivity
  • fairness and equity
  • consistency
  • transparency and administrative efficiency.

Common issues with applications and tips to achieving compliance

1. Undetermined budget deficiency

Once the budget deficiency has been ascertained (section 6.34 of the Act) in the context of the strategic community plan and corporate business plan, a rating strategy and proposed RIDs can be determined. Rates should not be increased by a fixed amount without due consideration of the deficiency.

2. Outdated property valuations

Using outdated property valuations from the Valuer General occurs mostly in the UV category and is when a local government applies for approval using outdated valuations. This does not give a true indication of the potential impact on ratepayers once new valuations are received from the Valuer General and are multiplied by the RID.  

If the following suggestions are adhered to there is an increased likelihood that no further action will be required for the application process:

  • Prepare a draft budget (rate setting statement): ensure the council has a draft budget in the form of a rate setting statement that identifies the budget deficiency before it prepares the RIDs.
  • Identify rate yield: identify the rate yield by differential rate category to fund that deficiency.
  • Include rate yield in the public notice: include the rate yield along with the RID and a comment that any updated valuations will result in the RIDs being updated to achieve the advertised rate yield.
  • Apply for approval only after updated valuations are received. Once the updated valuations are received from the Valuer General:
    1. where ministerial approval is required, obtain a resolution from council on the updated RID(s) which demonstrates the rate yield will be unchanged and then forward a copy of the council resolution to DLGSC to enable processing of the application to be finalised, or
    2. where Ministerial approval is not required, update the local government’s budget working documents.

      Note: both options will require the adopted budget document to include the details from the public notice and the reason for the difference, in accordance with regulation 23 (b) of the Local Government (Financial Management) Regulations 1996 (the Financial Regulations).

3. Public notice requirements — amended 6 November 2020

The current public notice requirements for local governments took effect from 6 November 2020 through the gazettal of the Local Government Amendment Regulations (No.2) 2020.

The definitions of local public notice and statewide public notice have been amended in the Act to recognise alternative and contemporary means of communication. These are set out in Part 1A of the Local Government (Administration) Regulations 1996 (the Administration Regulations).

Local public notice will be given when notice is published on the official website of the local government and in at least three of the following ways set out in Administration Regulations r.3A :

  • publication in a newspaper circulating generally in the State
  • publication in a newspaper circulating generally in the district
  • publication in one or more newsletters circulating generally in the district
  • publication on the official website of the department
  • circulation by the local government by email, text message or similar electronic means
  • exhibition on a notice board at the local government offices and each local government library in the district
  • posting on a social media account administered by the local government.

4. Lack of council endorsement

Council approvals are required throughout the entire rates setting process and are to occur via resolution at a formal meeting of council. The Minister’s policy and application form outlines the resolutions required.

5. Insufficient justification for a differential rate — efficiency measures and objects and reasons

The council of the local government is required to review its expenditure and consider efficiency measures as part of its budget deliberations. This is to be reflected in the council minutes when it adopts the budget strategy and endorses objects and reasons for each differential rating category and each minimum payment.

The objects and reasons must clearly explain why each differential general rate is proposed to be imposed and why it is proposed to set the differential general rate at that amount.

6. Key dates for rates setting

The timeline for rates setting is dictated by the Act. The following suggestions are based on these key dates:

January/February — planning

The local government commences budget planning by reviewing the corporate plan and other relevant plans.

March/April — prepare draft budget — identify budget deficiency

  • Council adopts draft budget in the form of a rate setting statement — this will identify the budget deficiency and the rate yield required to be raised.
  • Council adopt statement of objects and reasons — needs to clearly demonstrate why categories of ratepayers are being subject to a higher rate in the dollar over another category.
  • Council resolves to advertise the proposed differential rates, specifying the yield it intends to raise from each ratepayer category.

From 1 May — advertising proposed rates

It is good practice for council to adopt the proposed rate yield before advertising and include the rate yield in the advertising along with the proposed RIDs and a comment that any updated valuations will result in the RID’s being updated to achieve the advertised rate yield.

Ensure the public notice is advertised on the website of the local government and in 3 of the prescribed ways.

Important tools to assist in rate setting process

The department has several guidance materials to assist local governments in the rate setting process, including those requiring Ministerial approval to impose a differential rate in the dollar, in accordance with section 6.33 of the Act.

Rating Policy: Differential Rates

Related pages

Page reviewed 11 September 2023