Combined rating system lessens the impact of change

Council amalgamations bring about cost savings in the long run, but in the short term require considerable reorganisation. This includes the need to reconcile different practices of the merging bodies. Faced with the problem of two different ratings systems used by its former Cities, the City of West Torrens Thebarton in South Australia has come up with an ingenious system to bring about a common rating system while minimising the impact on ratepayers.

This innovative 'combined values' ratings system effectively phases in a capital based system as it phases out the site value system. Previously, West Torrens based rates on site values, while Thebarton residents were rated on the basis of capital value.

The new Council opted to rate all properties on the capital based system due to its equity principle of 'capacity to pay' which is less a feature of site value rating. The decision meant some 8,000 ratepayers would have higher rates. Only 12 percent of these faced increases over $200 but some faced in excess of $50,000.

Having observed difficulties experienced by other Councils in similar circumstances, the new Council was determined to manage the change with minimum disruption.

The decision was made that changes would be introduced over a four year period. Although this delayed full reductions for some, it enabled a softer impact on those who faced increases. This means that rates for 1997/8 and the following two years will be based on a combined but changing proportion of site and capital valuation. Full capital valuation is to be achieved in 2000/1

A community information campaign has been put in place to demonstrate the fairness of the strategy and prepare ratepayers for the eventual change. The positive effect of this carefully considered approach to change is evidenced by the small number of objections Council has received regarding the proposed new system.

For further information contact Bill Ross, Finance Manager, telephone (08) 8443 6555.