Thursday, 23 June 2022

Bills

Local Government Legislation Amendment (Rating and Other Matters) Bill 2022

Second reading

Debate resumed.

Ms CUPPER (Mildura) (14:47): I rise to speak on the Local Government Legislation Amendment (Rating and Other Matters) Bill 2022. The bill aims to achieve a number of objectives, but I would like to focus on the matters of financial hardship, rate rebates and concessions. Rate rebates are a very hot topic in rural and regional Victoria. If I could speak for a moment on behalf of my constituents, we need a rate rebate alright—we need a mass rebate from the system. The current Victorian rate system makes a mockery of the general Australian tax principle that citizens should not be subjected to wildly different tax rates depending on where they live. In my electorate a farmer in Buloke is paying up to six times the rates of a resident of Toorak with a property of the same value. A farmer in Manangatang is paying four times the rates of their metropolitan counterpart, though with a far more variable income, generally speaking.

I know this issue well, having been a councillor for six years before being elected to state Parliament. Being a councillor is a tough gig, but being a proud Mallee kid and somewhat of a political animal I still loved every minute of it, even if the old boys club did not love every minute of me. Alongside the joys were the challenges. The most challenging aspect of being a councillor in a rural or regional municipality is charging rates, and not just because it is a bill that no-one likes, but because councillors are constrained by a system that is rigged against rural and regional ratepayers. It is a system that councillors have no control over, but they cop the blame for the consequences over and over again. That is why when I was elected to state Parliament I was determined not to throw my former council colleagues under the bus and pretend that it was no longer my problem, because as a state MP it was squarely my problem, and the same can be said of our federal MPs or any federal MP. Rates policy is their problem too, because the origins of the problem for rural and regional ratepayers and the levers for fixing it sit with state and federal parliaments, not with councils.

I have raised this issue, the rural and regional rate scandal, in Parliament many times before as part of my RateGate campaign, and the name works because the statewide rates disparity is an economic scandal. I have consulted widely with stakeholders, including the Municipal Association of Victoria, small councils in Victoria and the Victorian Farmers Federation; I have collaborated with eminent experts, including Merv and Rohan Whelan; and I have co-designed policy proposals that would help fix the problem. I have lobbied the federal government. I have lobbied the state government. I have written to every rural and regional Victorian MP asking them to stand in solidarity with their rural and regional constituents across party lines.

Unfortunately the former federal minister, the assistant minister for local government, declined to help. The former federal shadow minister declined to help. Of the 63 rural and regional Victorian MPs contacted, most did not reply. We received a letter of support from a handful of crossbench MPs and some polite knockback letters from a very small handful of big party MPs, and that was it. I do not know other electorates; perhaps it is not a burning issue in other rural and regional electorates, but it is in mine, and it is not just a matter of economic justice but also one of social cohesion.

When I was a councillor, whenever there was a budget or, even worse, a rating review, different sections of our community would turn against each other. Farmers would be irate at the sheer size of their rates bills and they would demand relief, usually in the form of a blanket differential. That would require the burden to be shifted to another class of ratepayers within the community, usually the business community, which would be just as irate about the size of their rates bills. Meanwhile, residents would be bombarding councillors’ inboxes and the opinion pages of the local papers with stories of major disparities between their rates bill and the rates bill of their friend or sister or family member in Melbourne. And while there were not quite riots in the streets, there were trucks in the streets packed with hay bales and anti-council slogans about the unfairness of the rate burden. Frustrated farmers would gather around both entrances to the council building to eyeball councillors as they arrived. There is a house in one little town in the southern Mallee with a permanent rates protest written across its corrugated iron roof.

I remember as a new councillor still being ambivalent about that farming differential, but it was a tough sell. One family member—remember I come from a long line of family farmers—said I did not deserve the family name. A form letter was produced saying how ashamed my grandparents would be and that I had ‘no children and no family’—that was the quote—and that is why I did not care. The rates debate inevitably turned community members against councillors and each other, because economic stress and economic inequality and inequity does that; it undermines social cohesion. And while everyone is stacking on to councillors and councils, it might be tempting for state and federal governments and MPs to lie low, but, based on my perspective and my experience, that would be unconscionable because, as I have said, councils cannot control the key drivers of their cost pressures and their financial sustainability. They have little choice but to load up ratepayers with a rate burden that is up to six times higher than the average rate in some metropolitan municipalities.

To the credit of the Minister for Local Government, Shaun Leane, he has been very open to this conversation with me. He has committed to doing what he can to allocate more of the financial assistance grants to the small councils that need them most if the federal government will allow it. Unfortunately, as I mentioned, the previous federal government was not interested in using any of its levers to help address the problem, but now we have a new federal government. That provides an opportunity for a fresh conversation. I would encourage our Minister for Local Government in Victoria to have a conversation with his federal counterpart, Catherine King, on two matters: one, restoring the financial assistance grants to 1 per cent of Australian tax revenue, because they have slipped back over past decades, and that has not helped, and also allowing this state government to give a greater share of that money, of the financial assistance grants allocation, to the councils that need it most.

But there is a third conversation that I think should be had, and that is in relation to the special case of farming rates. The core problem for farmers, as distinct from other categories, is that their asset wealth does not necessarily match their income, at least not reliably or with any consistency, and rates bills of $100 000 are not uncommon in the Mallee grain belt. Also not uncommon are drought or poor commodity prices or the multitude of other vicissitudes that impact the real annual income of farming families. Some might believe that the answer to this issue is to implement bigger and bigger differentials, but the problem with this, as I have stated, and it has always sat uncomfortably with me, is that someone else within our community, another rate class, has to pick up that tab. That is residents in the community, and even though they generally have more consistent and reliable income streams, they also have their own set of pressures, so that has never been an optimal answer.

That view has got me into trouble as a councillor, and it has certainly upset members of my family. But I still think there is a better way, and I believe the better answer might lie with the federal government if they would be willing to collaborate. The federal government has a variety of tax levers available to help address the fundamental problem at the heart of the farming rate issue, which is the inbuilt incongruence of a wealth tax that is charged as if its income tax. Finding a meaningful and sustainable solution to the unique situation of farmers is the current focus of our RateGate campaign, and we are researching how this might be achieved with greater fairness for farmers but without shifting that burden to businesses and residents.

In the meantime, I welcome the government’s attempts to alleviate financial pressures within the system. But it has to be said that for many rural and regional ratepayers it is the system itself that is the problem and it is the system itself that needs fixing.

Mr McGHIE (Melton) (14:56): I move:

That the debate be adjourned.

Motion agreed to and debate adjourned.

Ordered that debate be adjourned until later this day.