Sounds like Sutherland Shire Councillors are fans of Gordon Gekoo, his infamous catchphrase ” “Greed, for lack of a better word, is good.”
Today’s news article from the Sydney Herald Sun (see quoted news below) reveals that Surtherland Shire Council wants to change their rating method to an Capital Improved Value (CIV) model that maximises future revenue, based on notional market value of a property. CIV valuates the market value of land plus any improvements (ie. Buildings) on it (Prosperous Australia, 2015).
The Victorian experience already proven that Victorian councils were hook winked or hood winked its communities to believe the CIV rating method is a fairer and equitable approach for calculating rates. For farmers, CIV brought about unfair and increasingly unaffordable rates. For live in homeowners or even the small investors, CIV discourages property owners to renovate and maintain their properties. When neighbouring properties are renovated or sold, the impacts on market rates are unfairly applied to other home owners.
The real truth is that CIV allows developers, institutional investors and money laundering schemes to inflate market rates, making properties more affordable exclusively for developers and the super rich, or those with plenty of black money to launder and cleanse via real estate assets.
Why a Sydney council wants to increase rates by almost 50 per cent
Apartment owners in the Sutherland Shire face an almost 50 per cent hike in rates as councils across Sydney seek to narrow the gap in average rates paid for apartments compared with houses.
Sutherland Shire Council has asked the Independent Pricing and Regulatory Tribunal to approve an increase in minimum rates from $602.30 to $900 – a huge rise compared to the maximum increase of 2.7 per cent permitted by the pricing regulator.
A council spokeswoman said most apartment owners in the Sutherland Shire paid minimum rates, which are less than half the $1482 levied on other residential properties, yet all residents are provided equal access to council services.
“An increase in the minimum rate will see the gap between average rates paid for apartments compared to houses reduce,” she said.
“However, because traditional housing will generally have higher land values per individual ratepayers, these types of residential properties will still pay a higher amount of rates.”
Other councils such as North Sydney and Randwick also argue the rates paid by apartment owners are too low because of the way council rates are calculated.
Rates in NSW are calculated according to a property’s land value rather than market value. For apartments, the land value of a site is divided among all the ratepayers in the block, so they end up with a lower comparative land value than homeowners.
Linda Scott, the president of Local Government NSW and City of Sydney deputy mayor, said councils should be able to choose whether they base a component of rates on the market value of a property or just the land value.
IPART will decide this month whether to approve applications from 13 councils including Sutherland Shire to increase rates beyond the rate peg based on criteria such as financial need and the community’s capacity and willingness to pay.
North Sydney mayor Jilly Gibson said all ratepayers used council facilities and services regardless of whether they owned an apartment or house: “However, apartment dwellers may use some services such as parks more than people who have a garden.”
Most apartment owners in the North Sydney local government area paid $583 in council rates and charges this financial year – almost $200 less than owners of detached dwellings.
“While there’s been a huge leap in property prices, our minimum rates have only increased slightly,” Cr Gibson said, adding: “More affordable apartments away from the harbour that don’t have highly prized views pay the same rates as apartments in prime positions.
Cr Gibson said the council’s capacity to provide services was strained as the proportion of apartments increase.
“The discrepancy in the rating framework results in Council receiving less rate revenue per additional person that it services as the population increases with the new developments,” she said.
Sutherland Shire said in its application to IPART that an increase in residential developments had placed “significant strain” on existing infrastructure.
But the council’s attempt to hike rates on apartments is opposed by owners such as Daniel Biro, who said he paid $602 in council rates on his two-bedroom apartment in Cronulla plus $475 for domestic waste collection and storm water management services.
Mr Biro said the rate rise would add to cost of living pressures given the rising price of utilities, financial services and health insurance.
In a submission to IPART Mr Biro said that the council had taken the “easiest and most unfair course of action” of seeking to impose higher rates on a minority of lower-income residents.
“We are hard-working, contributing residents; we do not ask for sympathy, but for a justful, transparent, and substantiated decision-making process by public servants,” he said. “The constant erosion of middle class income has to stop.”
A spokeswoman for Randwick City Council said it supported a move to assess rates based on a property’s market value, as it would be more equitable: “This would mean that a house and an apartment, each with a market value of $1 million, would both pay the same rates regardless of their different land values.”
But Rachel Lynn, the general manager of the Strata Community Association (NSW), said: “We strongly disagree with unit owners being burdened with more costs for no further benefit.”
Ms Lynn said the cumulative rates of a large apartment complex often outstripped the rates paid for a single dwelling on the same land, yet the street frontages and infrastructure were comparable.
“We continue to maintain the view that strata unit owners are not a cash cow for additional revenue, she said.