Rates Harmonisation - what you need to know
- What is Rate Harmonisation?
Rates Harmonisation is a requirement of the NSW Government for all merged councils. It will create a more equitable rating structure and will replace the former Conargo Shire Council and Deniliquin Council rating structures. In the past, our two Councils had separate rating structures. We’re now one council, meaning we need to establish the one rating system.
- Does Council receive additional revenue by harmonising rates?
No. The harmonisation process takes the current total general rate and apportions it differently across revised subcategories designed to reflect the diversity of the merged councils. The result is that the total rates revenue for Edward River Council remains the same.
- Will my services change if my rates do?
Rates Harmonisation will not see an increase in Council’s total rate revenue. Whilst a majority of rate payers (more than 77%) will not see an increase in their rates, other charges such as sewerage and water are subject to change. If your property does not have access to town water or sewerage, you will not be charged. The total rates component collected will fund the provision of other general services that the community requires. Council has a list of priorities in its Capital Works Plan and will continue to advocate for more funding for roads and infrastructure from the State and Federal governments.
- How can changes in land value affect your rates?
Councils must set rates based on the value of each parcel of land in their area. The values are determined by the NSW Valuer General. The Valuer General issues Notices of Valuation to advise landholders of their new land value that will be used in the calculation of their council rates. Notices of Valuation are generally issued every three years. This will almost invariably result in land value fluctuations every three years and therefore individual ratepayers may see a change in their council rate component. This in turn will result in a proportional shift of each property owner’s share of the total burden for rates.
- How many and what percentage of Edward River Council ratepayers will receive an increase or a decrease?
- 3,875 (77.2%) properties will receive a slight rate reduction or no movement at all.
- 533 properties (10.6%) will have a less than 5% rate increase.
- 342 (6.8%) will increase between 5% and 30%; and
- 273 properties (5.4 %) will have their rates increased over 30%, due to higher land valuations or a harmonisation from the previous rate structure.
These figures have been modelled on the general rate (levies), based on land values; this is separate to service levies (Water and Sewer charges) which are excluded from this harmonisation process.
7. I have more than one property, can my rates be amalgamated?
You can contact the Valuer General to apply for amalgamation. Click here to do so and for further information: NSW Valuer General - amalgamation form
8. Will Council be providing more information?
Council hosted the following public meetings which were advertised in the local media and social media:
Tuesday 24 November at 0900 at Pretty Pine Hall; Tuesday 24 November at 1400 at Wanganella Hall; Wednesday 25 November at 0900 at Blighty Hall;
Wednesday 25 November at 1400 at Conargo Hall; Thursday 26 November at 0900 at Deniliquin RSL Club.
A video of the presentation is available on our Facebook page and a powerpoint presentation here: Edward-River-Rates-Harmonisation-Engagement-TC.pdf(PDF, 1005KB)
You can also call our Rates team on 03 58983000 to discuss your individual situation or email us at firstname.lastname@example.org
Need more information?
• Edward River Council is required to create one general rate structure for the previously Deniliquin Council and Conargo Shire Council.
This harmonisation process is:
• A requirement of the NSW Office Local Government under the Local Government Act 1993;
• Harmonisation must be effective from 1 July 2021 for the 2021-22 Rate year;
• Deniliquin Council and Conargo Shire Council’s rating structures varied greatly and the harmonisation project has attempted to realign to a common rate structure, that is fairer to all Edward River Council ratepayers
Where to now?
• Edward River Council has been engaging with the community in the second and third rate instalment periods of the current rate year, 1 October 2020 to 31 March 2021 about the preferred rate structure option; the mandatory implementation date is 1 July 2021.
• The new harmonised rate structure will result in variations to individual general rate amounts, ratepayers may experience an increase, decrease or no change in the amount of rates for 2021-2022 rate year, as a result of the rate category structural differences between the former Councils’ rates models, and the new “Harmonised” Rate Structure.
Council welcomes and values feedback on the proposed new rating structure and we will be updating you regularly via our website, on social media, through the local media and newsletters such as this one.
Understanding Your Rates - Useful information
Rates and charges provide Edward River Council with a major source of revenue which is used to meet the costs of providing services to businesses and residents of the Edward River local government area. Each year, the New South Wales Independent Pricing and Regulatory Tribunal (IPART) determines the allowable annual increase in general income for NSW councils, known as the rate peg.
How are your rates calculated?
Rates are calculated based on the NSW Valuer General’s assessment of the unimproved capital value of the land. Council’s 2020/21 rate is based on the Valuer General’s July 2019 land valuations.
Council rates can generally be described as a tax on the wealth of property owners, where their wealth is measured by the value of their land (excluding improvements such as a house). However, in NSW, it would be more accurate to say that rates are a function of a property owner’s share of the total value of land within the local government area. Generally, the greater your share of total land wealth within your local government area, the higher your rates; although this depends on the type of rating system chosen by the council.
What is the ad valorem?
adj; adv. 1. in proportion to the value - often a tax or levy based on the assessed value of an item, such as real estate.
The ad valorem is the rate in the dollar applied to the value of the land (i.e. multiply the land valuation by the rate in the dollar). If using ad valorem only to calculate rates, properties with very low land values would pay comparatively low rates. Under the Local Government Act 1993, there are only two additional systems for imposing rates: a minimum rates system and a base rates system.
What is the difference between the minimum rates system and the base rates system?
Councils can rate on just the ad valorem otherwise they can choose between using:
1. A “minimum rates” system – Under this system a council compares the calculation of the ad valorem to the minimum rate it sets and charges the greater of the two. This is so that those with the lowest values do not end up paying very small amounts compared to others.
2. A “base rates” system – Under this system a council may impose a “base” amount that is the same dollar value for everyone, but they must then add an additional rate per dollar of land value. In this system, the total rates raised by the council from the “base” component cannot exceed 50 per cent of the total rates raised in the area.
Rates applied under either system may vary per dollar of land value depending on the category of land. There are four categories of land to which rates can be applied: residential, business, farmland and mining. Generally, councils apply lower rates per dollar of land value for residential land than they do for land occupied by businesses. While both systems are based on the concept of imposing taxes fairly, they can in practice have quite different effects. Under both systems the total increase in the yield of rates that may be raised by a council is capped each year by the NSW Government to around Consumer Price Index (CPI) but a lot of considerations go towards the rate peg percentage.
Which rating system does Edward River Council use?
A restraint placed on merged councils under the amalgamation proclamation means Council is restricted from consolidating rating calculations or re-categorising until 30 June 2021. This means that Council currently operates different rating systems depending on the location of the property. The rating system in use includes different classifications, base rates and minimum rates. Details of the rating system are in Council's Revenue Policy. Council plans to review the rating system in preparation for the removal of the restriction. Any proposed changes to the rating system will involve community consultation. This work is being undertaken as a 2020-21 Operational Plan action for implementation in 2021-22.
How can changes in land value affect your rates?
Councils must set rates based on the value of each parcel of land in their area. The values are determined by the NSW Valuer General. The Valuer General issues Notices of Valuation to advise landholders of their new land value that will be used in the calculation of their council rates. Notices of Valuation are generally issued every three years, within the three year base year period the VG provides council with Supplementary Lists every four weeks which dictate land value changes to particular properties. This will almost invariably result in land value fluctuations every three years in the relative share of total land wealth in the council area. This in turn will result in a proportional shift of each property owner’s share of the total burden for rates.
Do high land values mean you pay high rates?
The permitted increase in the total yield of rates is capped every year by the NSW Government. Rates are therefore not simply a function of land value. Even though land values can rise very steeply, this doesn’t translate to steep rises in rates because of rate capping. Land values generally increase over time. If the land values issued at the time of the General revaluation were used to generate Councils Rate income at the rate in the dollar used for the previous year’s calculations, then Council would raise more income than it is allowed.
In order to contain Councils income within the allowable limits, Council must reduce the rate in the dollar for each rating category. As the same rate in the dollar is then applied to each property within a rating category, the actual amount of rates payable is determined by the individual land valuation of the property. As a result, due to the individual changes in Land Valuations for individual Ratepayers, some Ratepayers will experience variations in their Rates that will either increase or decrease their rates for the first year after a General Revaluation.
The Rates paid by some rate ratepayers may increase, decrease or stay the same in regard to the rate peg % limit set by IPART on behalf of the State Government each year. This will occur only as a result of a General Revaluation of all land values, which occurs every 3 years. (The determining factor is the land valuation on EACH individual property). OR, if Council is successful in an application to IPART for a Special Rate Variation above the set Rate Peg % amount for that year, which can be effective for up to 7 years.
All enquiries relating to your land value should be directed to the Office of the Valuer General on 1800 110 038. Or you can visit their website https://www.valuergeneral.nsw.gov.au/contact_us to learn more about the valuation of land.