Queensland Economic Advocacy Solutions

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Queensland Councils revenue grab on non-residential property owners

The Property Council and the Queensland Resources Council recently commissioned QEAS to determine how local councils in Queensland are complying with State Government guideline principles in applying differential and minimum rates on land owners.

The report analyses local government rating practices and performance for non-residential properties across Queensland and illustrates the practical dollar implications of inconsistent, inequitable and volatile rating practices facing property owners across Queensland.

Queensland's 77 councils generate more than $6.2 billion revenue in rates and levies each year representing approximately 65 per cent of their total operating income. For most councils rates are the main source of revenue other than Queensland and Australian Government grant funding. 

The revenue pressure on local councils is significant, and this is evident in their rating practices. Many councils are continually departing from established ‘Guideline Principles’ when balancing competing budgetary pressures. 

Councils in Queensland unlike other jurisdictions are privileged with more autonomy and minimal constraints in levying differential rates - there is no legal obligation on councils to provide justification for their rating decisions.   

The QEAS report confirms that councils are inconsistent in their approaches, are not transparent in their decision-making and lack accountability. The resultant outcome is a lack of consistency, a lack of certainty and a patchwork of approaches that impedes new investment and economic growth across Queensland. 

The QEAS report demonstrates that there is a need for reform of the way council rates are determined in Queensland.

Key findings include:

  • There is considerable complexity in the determination of rates applying to non-residential properties in Queensland.  Over 607 rating categories were specifically analysed for non-residential properties across 15 LGAs. This complexity has only further increased in 2018-19 with an additional 39 non-residential categories introduced.
  • At present there is no overall consistency in approach as to how Queensland councils are applying their rating practices.  
  • The number of differential rate categories within a LGA appear to be based more on the opportunity to raise revenue—by singling out property owners and their capacity to pay —than on its original purposes of better aligning equity and user pays principles.
  • Most councils break up categories by some measure of size.  However some councils have ascending or progressive rates based on size, some have descending or regressive rates and others have no linear pattern whatsoever (often inconsistently within that LGA).  
  • In general the pattern is for an ascending rate applied based on size of non-residential properties.
  • Many councils specifically identify individual non-residential properties or a resource project and apply a higher rate to it. Either non-residential properties are specifically named or the category is defined so narrowly to effectively capture only one property. 
  • The resulting outcome is that non-residential property owners and resource projects pay considerably higher rates than residential property owners 
  • In many instances a council has applied a considerably higher rate increase to non-residential categories between 2017-18 and 2018-19 than for residential properties, further exacerbating an already higher differential rate for commercial properties and resource projects.

A full copy of the report is available through the Property Council website: ‘Review of local government rates paid by Queensland non-residential property owners and resource projects’.

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