Rate Rises
Update 2020/2021 comparison of neighbouring councils
Port Phillip council has significantly higher rates than neighbouring councils. Read the full article to understand why using average rates per property cannot be used to compare councils, and why more relevant metrics reveal that the City of Port Phillip is a high taxing and comparatively inefficient council. Go to the FACT CHECK article
https://ropp.org.au/fact-check-how-high-are-port-phillip-rates-compared-to-neighbouring-councils/
_____________________________________
We are advocating for:
- REDUCING RATES FOR ALL RATEPAYERS; whether you are in an apartment or a house, we all pay too much. See https://ropp.org.au/fact-check-how-high-are-port-phillip-rates-compared-to-neighbouring-councils/
We propose that council has to find efficiencies without cutting services. - BETTER SERVICES FOR ALL RESIDENTS AND TRADERS. In particular, the current set of "progressive" dominated Councillors have allowed Port Phillip's waste services to fall far behind nearby Councils. They declared a ‘climate emergency’ whilst at the same time deciding to allow 8,000 extra tonnes of waste to landfill every year, by not providing food and green waste bins. See https://ropp.org.au/vote-for-sustainability-in-port-phillip/
- BRING PORT PHILLIP INTO LINE WITH NEARBY COUNCILS Whether it be extremely high rates and staff numbers or poor services for residents and traders, Port Phillip residents and traders are clearly worse off than nearby comparable Councils. For example, should residents have to pay to park outside their property? Or is this just another revenue raising exercise, to fund Council’s spending on ideologies and a massive bureaucracy?
- Glen Eira residents receive 1 free parking permit
- Stonnington residents receive 2 free parking permits
- Bayside residents receive 4 free parking permits
- City of Port Phillip: we have to pay for every single one
- PROTECTING ALL RESIDENTS AND TRADERS FROM THE COUNCIL'S CLEAR PREFERENCE TO INCREASE RATES AND CHARGES Council complain loudly and openly about the “rate cap challenge” that prevents them from raising total rates by more than a state-wide set percentage, currently 2%. They openly admit to wanting to tax you an additional $15m per year!
Council tried to get around the problem via a “bin tax” that would have charged you extra for beach cleaning, public bins and other “waste & amenity” services. This new tax is now on hold, as we applied significant public pressure to prevent its introduction.
Make no mistake: if we don’t get a new set of independent Councillors elected, who are not driven by political party ideologies, WE WILL HAVE A NEW BIN TAX WITHIN THE NEXT 4 YEARS.
Go to https://ropp.org.au/council-waste-levy-a-load-of-rubbish/ for more.
The above attitude stands in stark contrast to Council's statement recognising “community concern about affordability of council services, with rates and other essential services forming an increasing share of average household expenditure". Why say that, and then take the opposite actions, continually extracting the maximum possible rates and charges from the community?
________________________________________
Many ratepayers have expressed their shock and disgust with the City of Port Phillip when receiving rate rises of up to 35% in their rate notices in recent years. We have just received our rate notices for the 2019-20 financial year and we were not surprised to see that 69% of properties had rate increases above the rate cap of 2.5%. Our members and neighbours in Port Phillip have expressed concerns about council spending and rate increases being out of control. The staggering growth in rates is unsustainable over the long term and is forcing some ratepayers to leave the City of Port Phillip or reverse mortgage their homes. Rate increases are calculated on the basis of property values and vary by suburb, lot size and type of dwelling ie house versus unit. Rates are now recalculated every year based on property value. Prior to 2019-20, properties were re-valued every second year, which meant rates were capped at the inflation rate every year.
Ratepayers in the CoPP, particularly owners of single dwelling residences have seen double digit rate increases in recent years while units/apartments have seen falls in their rates.
Figure 1 Example of rates rising over a 20 year period for a single fronted dwelling in Middle Park
Figure 1 shows the council rates for a single fronted dwelling in Middle Park for the past 20 years. The curve of best fit for these council rates shows a yearly compound interest rate of 7.7% when inflation over the same period, averages out at approximately 2.5% pa. The correlation coefficient for the curve fit is 0.99 (= 99%). Compound rate increases of 7.7% pa are unsustainable.
The previous Local Government Minister, Ms Marlene Kairouz was quoted in The Australian (23/3/2018) as saying “For too long, rate payers were subjected to unfair rate hikes. Now councils can’t get away with slugging us each year with double-digit rate increase”. Unfortunately, Port Phillip Council is slugging us with double digit rate hikes every year.
The CoPP is required to calculate rates in accordance with the Local Government Act of Victoria (refer to Section 4-153 of the Draft Council Plan 2017-2027 for CoPP http://www.portphillip.vic.gov.au/council_plan_budget.htm) on the basis that ‘local government rates are levied in accordance with the rate payer’s capacity to pay as measured by the Net Annual Value (NAV) of the property owned within the municipality’. However, this assumption is flawed as many longstanding residents in the CoPP have owned their properties for many, many years and would not have the income to purchase their properties at today’s market prices. Some of these people are ‘asset rich and income poor’ and include pensioners and self-funded retirees who are under pressure to reverse mortgage their properties at the CoPP’s suggestion or leave the CoPP. Many long-term residents are on fixed incomes and may be cash poor and struggling to pay unrealistic rate increases. We understand some ratepayers have reverse mortgaged their properties which means borrowing from a bank to pay their rates. In other situations, people have sold and left the municipality
We question why the Port Phillip Council needs to spend over $224 million pa and employee 879 people. We believe Council spending is out of control and that something must be done to control rates and rein in spending.
We cannot see how this uncaring and predatory behaviour by CoPP is consistent with Part 1 Clause 7 which states: “The role of a Council is to provide good governance in its municipal district for the benefit and wellbeing of the municipal community”. If people are being forced to reverse mortgage their properties or leave the CoPP how is this predatory property tax for the benefit and wellbeing of the community?
If you would like to know how fast your rates have been growing over the past 10 to 15 years, contact us.
Council Rates in Other Municipalities
Ratepayers in other municipalities are paying much less for their annual rates for similar residential properties to those in the CoPP. Our friends in the Cities of Bayside and Boroondara pay approximately half the rates that we are paying in Port Phillip for similar properties. Ratepayers in CoPP pay massive rates when other municipalities are charging more reasonable rates. Perhaps the next council election should be a referendum on Council spending and the services that ratepayers are willing to pay for.


What can be done to stop this Council?
We understand that Cr. Andrew Bond and Cr. Marcus Pearl, who are two of the nine Councillors at the CoPP who voted to reject the spending and rate increases outlined in the 2019-20 Budget and the Updated Council Plan 2017-27. However, the other Councillors voted in favour of increasing spending and rates for the 2019-20. It is clear that we need more Councillors to vote in favour of controlling spending and preventing excessive rate increases. Council elections will be held in October 2020 and it is our desire to identify and support the election of candidates who will rein in spending and rate hikes.
Our concerns have been falling on deaf ears at the council because when ratepayers contact the council, we so often hear that there is nothing that can be done or that no one will listen to them.
One councillor - whom shall remain nameless suggested that ratepayers should take out a reverse mortgage if they could not afford to pay their rates.
In the past when people have genuinely complained to the CoPP about double-digit rate hikes they have been told that nothing could be done because the Council was following Victorian Government legislation that regulates the method for calculating rates. Evern if the property owners asked Council staff to have their properties revalued they were informed to be careful taking this action as they could end up paying higher rates! Most people end up pay their bills promptly because they don’t want to pay late fees or penalties or possibly paying higher rates.
We welcome new members to our community action group who share our concerns and want to stop the Council ripping off ratepayers in Port Phillip.
Up to 35%
Rate increases
1.5% pa
Inflation Rate
$224
Million Spent
879
Staff
Council Expenditure & Waste
Spending by the City of Port Phillip is out of control. In the current financial year (19/20) the council will spend $224 million and this includes employing 879 people at a cost of $95.9 million in salaries and $86.5 million on materials and services.

We believe the Council can cut its expenditure by cutting the waste of ratepayers’ funds to accommodate more reasonable rates. We want the CoPP to stop wasting ratepayers’ funds and better manage their budgets. For example:
- CoPP has wasted approximately $8.7 million since 2004 on plans for the St Kilda Triangle with no tangible benefit or development at the site. https://www.theage.com.au/national/victoria/bold-pitch-for-st-kilda-triangle-put-a-deck-on-the-parking-lot-put-up-a-paradise-20170303-gupx6a.html
- CoPP has numerous and deliberate under-performing assets eg St Kilda Marina and South Melbourne Town Hall. These should be brought into line with market rates as they do so diligently with housing rate reviews.
- Remove expenditure on overseas and interstate travel to visit other cities to receive rewards.


Method for calculating rates
A ratepayer’s ability to pay council rates is assumed to be linked to the value of a ratepayer’s property. So if you own a property with a high valuation then it is assumed you have a high income to pay higher council rates. However, people on low incomes including self-funded retirees and pensioners may have limited capacity to pay these massive rates which continue to grow relentlessly. Council rates represent a massive proportion of the costs of living or annual household budget for many people.
This method results in disproportionately large differences in council rates across the CoPP and range from as low as $1,000 p.a. to as high as $18,000 p.a. There is no correlation between the level of services provided by the Council and the amount of rates paid. It is not equitable or sustainable to expect that ratepayers living in houses to subsidise those in apartments when everyone has the same access to all services. But this is what is happening.
Victorian Government’s “Fair Go” rate capping system introduced on 1 July 2016 is misleading. The State Government announced “Placing a cap on rates eases cost of living pressures on Victorians, delivering a fairer system of council rates. The cap delivers on a key election promise to ensure fair and effective policies and processes for Victorian ratepayers”. https://www.localgovernment.vic.gov.au/our-programs/a-fair-go-rates-system-for-victorians
Under the State Government’s “Fair Go” rate capping legislation, councils are required to restrict rate increases to the prevailing inflation rate which is 2.5% for 2019-20 on the previous year’s rate notice. However, under this system rates bills may be increased by more than the capped rise if the value of a property has changed in relation to the value of other properties in the municipality.
Prior to 2018/2019 properties were revalued every second year.
For those alternate years when properties were not revalued, rates were increased by the CPI.
In 2016/17, a rate cap was introduced by the Victorian State Government. We all expected that the rates on each property would increase by no more than the rate cap of 2.5%.
But this is not what happened. The rate cap is the maximum amount (or percentage) of money a Council can increase their previous year’s total rates revenue by which is raised from property rates. The total revenue is then redistributed across the entire municipality according to the NAV of each property. This ended up in the unintended consequence that the rates of house dwellings increased dramatically by as much as 35% (well in excess of the 2.5% rate cap) while many units and apartments had a decrease in their property rates.
Unfortunately this was seen to be OK as long as the average rate increase across all properties has been capped at 2.5%
It is not a wonder that ratepayers were up in arms. And on top of that, Council ignored their demise and provided no equitable solutions. What about finding efficiencies and reducing unnecessary spending?
From 2019/20 onwards, properties are revalued ever year (no longer every second year and with no relief of just a CPI increase applied to your rates). Rates on every property are calculated on property values which means rate increases are heavily biased or skewed towards house dwellings or other properties with high valuations compared to apartments.
Note another unfair consequence of the rate cap is that since the collection of rubbish is built into your rates, this means that higher valued properties are paying as much as 10 to 15 times that of a unit for collection of their rubbish.
CoPP is bound by the Local Government Act of Victoria to use either the Capital Improved Value (CIV) or Net Annual Value (NAV) method for calculating rates. The NAV is calculated to be 5% of the CIV and is meant to reflect the annual rental value of a property but in reality is an overestimation. Five inner city Melbourne councils use the NAV method and the remaining 74 councils of Victoria use the CIV method.
The CoPP use the NAV method while most Councils in Victoria use the capital improved value (CIV) that reflects the value of the land and all fixed improvements, including property and the council. Every year the council Valuers have a statutory requirement to conduct a review of property values based on market movements and recent sales trends. The Council then applies a formula that distributes the cost so that rate payers who own houses are paying significantly higher amounts and higher % increases relative to those who own apartments. The theory is people in high value properties can subsidise people in apartments based on the estimated rental value of the property.
What should you do?
If you feel you are being slugged with massive rates and want to do something about it, we encourage you to get involved.
Become a member of the Ratepayers of Port Phillip, Incorporated
Get involved in community discussion and help influence Council spending and rate rises and elect Councillors who will control Council spending and control rates. We will invite you to participate in community discussions where you can have your say and help achieve better outcomes for ratepayers. Look at your previous 5 council rates notices and see how your rates notices have increased significantly in the five years from 2015/16. This year (2019/20), 69% of properties received rate increases above the 2.5% cap on rates revenue. Also look at your rates notice for 2016/17 which was another re-evaluation year and when Council spending was capped at 2.5% by the Victorian Government and compare your 2016/17 rates with the prior year 2015/16.
Formal objection
Ratepayers may formally object to a valuation. The objection can be made in relation to the value of a property or on other grounds specified in the Valuation of Land Act. A formal objection must be registered with the Council within two months of the date of the rate notice which is the end of September 2018. A formal objection should be in the prescribed form. The prescribed form may be obtained by contacting the Valuations Department on 9209 6733. Refer to http://www.portphillip.vic.gov.au/property_valuations.htm
Write to the Mayor and Victorian Government
Write to the Mayor and Councillors (refer to http://www.portphillip.vic.gov.au/your_councillors.htm) or meet with them because apart from Cr. Marcus Pearl and Cr. Andrew Bond they don’t think there is a problem, since according to some, no one has complained about rate increases.
Write to the Member for Albert Park, The Hon. Martin Foley (martin.foley@parliament.vic.gov.au) and Minister for Local Government
Have your say.
Join the discussion on our Facebook Group Page:
Recent Comments