Local governments impose rates on the properties within their district to raise revenue to fund the services and facilities provided to residents and visitors.
The quantum of rates payable is determined by three factors: the method of valuation of the land, the valuation of the land and improvements, and the rate in the dollar applied to that valuation by the local government.
Land is rated according to its unimproved value for land used predominantly for rural purposes or gross rental value for land used predominantly for non-rural purposes.
The Valuer General values the land in accordance with the provisions of the Valuation of Land Act 1978. A rate in the dollar is imposed by the local government on this valuation to determine a ratepayer’s rates liability.
A minimum payment can be imposed by a local government irrespective of what the rate assessment would be if the rate is applied to the property valuation.
The purpose of the imposition of a minimum payment is generally to ensure that every ratepayer makes a reasonable contribution to the rate burden.
This document describes the legislative and policy basis for the application of minimum payments to land being rated by a local government. In particular, it sets out the policy that guides the Minister for Local Government’s exercise of the power
to approve the imposition of a minimum payment on vacant land which does not comply with legislative provisions covering the percentage of properties affected.
The document also explains the application of the legislative provisions, particularly in relation to general and lesser minimums.
The second part of this document provides guidance for local governments in requesting such an approval.
Local Government Act 1995
6.35. Minimum payment
- Subject to this section, a local government may impose on any rateable land in its district a minimum payment which is greater than the general rate which would otherwise be payable on that land.
- (A minimum payment is to be a general minimum but, subject to subsection (3), a lesser minimum may be imposed in respect of any portion of the district.
- In applying subsection (2) the local government is to ensure the general minimum is imposed on not less than:
- (a) 50% of the total number of separately rated properties in the district; or
- (b) 50% of the number of properties in each category referred to in subsection (6), on which a minimum payment is imposed.
- A minimum payment is not to be imposed on more than the prescribed percentage of:
- (a) the number of separately rated properties in the district; or
- (b) the number of properties in each category referred to in subsection (6), unless the general minimum does not exceed the prescribed amount.
- If a local government imposes a differential general rate on any land on the basis that the land is vacant land it may, with the approval of the Minister, impose a minimum payment in a manner that does not comply with subsections (2), (3) and (4) for that land.
- For the purposes of this section a minimum payment is to be applied separately, in accordance with the principles set forth in subsections (2), (3) and (4) in respect of each of the following categories:
- (a) to land rated on gross rental value; and
- (b) to land rated on unimproved value; and
- (c) to each differential rating category where a differential general rate is imposed.
Local Government (Financial Management) Regulations 1996
52. Percentage prescribed for minimum payment (Act s. 6.35(4))
The percentage prescribed for the purposes of section 6.35(4) is 50%.
53. Amount prescribed for minimum payment (Act s. 6.35(4))
The amount prescribed for the purposes of section 6.35(4) is $200.
A minimum payment can be separately applied to gross rental value (GRV) properties, unimproved value (UV) properties or each differential rating category where differential rates are imposed. This is known as the general minimum for each category.
There is no restriction on the proportion of properties subject to the minimum providing the minimum is not more than $200.
If the minimum is over $200, no more than half of the properties (50%) can be subject to the minimum unless the differential rating category is for vacant land and Ministerial approval is granted.
Ministerial approval is required when a differential general rate is applied to land where the differential rating category is vacant in the following circumstances:
- Where the minimum payment is to be imposed on more than 50 per cent of the properties in a differential rating category for vacant land, unless this minimum is no more than $200 (6.35(4)).
- Where a lesser minimum than this general minimum is proposed to be imposed and this lesser minimum will apply to more than 50 per cent of the properties in a differential rating category for vacant land to which the general minimum would have applied
(6.35(2) and (3)).
If the land subject to the minimum is not in a differential rating category for vacant land, there is no Ministerial discretion to approve a local government imposing a minimum (general or lesser) that applies to more than half of the properties
– and the local government cannot impose such a minimum.
A new industrial site within the Shire of Alpha is being developed. There are twenty lots consisting of eight large lots and twelve small lots. Six of the lots (three of each) have services supplied and have higher valuations.
The Shire of Alpha sets a differential rate on the land in this development, classifying it as vacant industrial land. It further decides to impose a general minimum payment, which is more than $200, on the lots that do not have services supplied. As
these make up
70 per cent (14/20) of the properties within this rate category and it is vacant land, Alpha must apply to the Minister for approval to set a rate that does not comply with section 6.35(4).
Following submissions to the local government from the owners of the smaller lots, Alpha decides to set a lesser minimum on the smaller vacant lots. As there are nine of these and five vacant large lots, the lesser minimum will apply to 64 per cent (9/14)
of the lots subject to the general minimum and Ministerial approval for that lesser minimum will be required as the conditions in 6.35 (2) and (3) are not met.
The Minister may approve the imposition of a general minimum payment that applies to more than 50 per cent of the properties in a differential rate category for vacant land or a lesser minimum that applies to more than 50 per cent of the properties on
minimum payment in a differential rate category for vacant land.
The Minister’s approval under section 6.35(5) will be made consistently with the key values of objectivity, fairness and equity, consistency, transparency and administrative efficiency. The Minister will not approve an application (the application)
under this policy unless satisfied of the following matters.
- A differential rate category of vacant land is in place for the land to which the application relates.
- If approved, the minimum payment would apply to more than 50 per cent of the properties in that category.
- If approval is sought for a lesser minimum, the lesser minimum would apply to more than half of the properties on a general minimum payment.
Fairness and equity
- The council of the local government has reviewed its expenditure and considered efficiency measures as part of its budget deliberations. This is to be reflected in the council minutes when it adopts the budget strategy and endorses objects and reasons
for each differential rating category and each minimum payment.
- The objects of and reasons for the proposed minimum payments are set out by the local government in a publically available document.
- These objects and reasons clearly explain why a minimum payment is proposed to be imposed.
- The objects and reasons clearly explain why it is proposed to set the minimum payment at that amount.
- If more than one minimum payment is proposed, the objects and reasons clearly explain why these differ and the basis on which each is to be imposed.
- If there are fewer than thirty ratepayers who will be subject to the minimum, each affected ratepayer has been informed in writing by the local government of:
- The ratepayers’ submissions, if any, and the local government’s response to each ratepayer’s submission (as recorded in the minutes of the council meeting at which the response was adopted) have been provided to the Minister.
- If the effect of the proposal is to set different minimum payments on different categories of ratepayers, the local government provides reasons for the different treatment.
Transparency and administrative efficiency
- The local government has:
- prepared and made publically available a document clearly describing the object of and reason for each minimum payment (refer to Rating Policy – Giving Notice)
- published the notices after 1 May in the relevant year.
- The public notice published by the local government contained:
- details of each minimum payment that the local government intends to impose
- an invitation for submissions to be made by an elector or ratepayer
- a closing date for submissions which is at least twenty one days after the day on which the notice is published
- advice on the time and place where a document containing the objects of and reasons for the minimum payments can be inspected.
- The council of the local government has:
- considered each ratepayer submission (if any)
- resolved to make the application
- provided the Minister with the minutes and agenda papers relevant to these matters.
Guidance for local governments and affected ratepayers on requesting approval
The guidance below is directed to an application for approval under section 6.35(5) that a general minimum payment apply to more than 50 per cent of the properties in a differential general rate category for vacant land, or that a lesser minimum payment
apply to more than 50 per cent of the properties on a general minimum in a differential general rate category for vacant land.
The policy section of this document identifies the matters of which the Minister will want to be satisfied before he or she approves an application.
Before making an application, a local government should be satisfied that:
- the land, the subject of the application, is land which is in a differential rate category on the basis that the land is vacant land, and
- in light of the application and its supporting material, the Minister will be able to be satisfied that making such a determination would be consistent with the key values of objectivity, fairness and equity, consistency, transparency and administrative
efficiency, as detailed in the policy.
The starting point for a local government will be the matters identified under the key values of objectivity and consistency. The local government will need to ensure that all of the matters identified under those key values are addressed.
Once the local government is satisfied that it has addressed all the matters identified under the key values of objectivity and consistency, the local government will need to address the key value of fairness and equity. This includes the requirement
for the local government to give public notice of its intent to impose the minimum payment(s). The Rating Policy – Giving Notice provides more information on this process.
If there are fewer than thirty ratepayers affected by the minimum in any category, the local government will need to contact those ratepayers directly. This will involve the local government writing to the ratepayer, addressing each of the matters identified
under that key value and giving the ratepayer at least 21 days to make submissions.
Once the local government has given public notice, written to the affected ratepayers if required, and received any submissions from ratepayers, the council of the local government will need to consider:
- those submissions
- other information addressing the key values of objectivity, consistency and fairness and equity.
Even if the council has previously considered the matter, the council must consider the submissions and the other information and resolve to make the application to the Minister.
Once the council has resolved to make the application, the following should be sent to the Minister:
- the application
- a copy of the public notice showing the publication date
- the supporting material addressing each of the matters identified under the key values of objectivity, fairness and equity, consistency, transparency and administrative efficiency.
The Minister will then consider the application and may request more information from the local government before giving their approval.
The ratepayer should respond constructively to a request for submissions by a local government considering imposing minimum payments.
In particular, the ratepayer should form a view as to whether the matters set out under the key values have been correctly addressed.
If the ratepayer considers that these matters have not been correctly addressed, the ratepayer should set out why they hold this view in their submission to the local government.
In their submission, the ratepayer should address any other matter which they wish the local government and the Minister (if applicable) to consider.
In considering an application, the Minister may request information from the ratepayer before making a decision.
The completed application form and relevant attachments are to be sent to:
Executive Director Local Government
Department of Local Government, Sport and Cultural Industries
GPO Box 8349 Perth Business Centre WA 6849
January/February (approximately) – planning
The local government commences budget planning by reviewing the Corporate Plan and other relevant plans.
April (approximately) – budget strategy
The council adopts the budget strategy and endorses objects and reasons for each differential rating category and each minimum payment.
1 May – notice period
In accordance with section 6.36(2)(a) of the Local Government Act 1995, the local government publishes a notice of its intention to impose minimum payments on or after
At least 21 days after the notice is published
(not including the date of appearance)
Council considers submissions and determines appropriate level of minimum payment.
Council decision to seek Ministerial approval for the imposition of minimum payments that fall within section 6.35(5).
A local government needs to allow three weeks for the processing of an application from the date all of the required information is received by the Department of Local Government and Communities.
The local government’s budget is to be adopted by 31 August under section 6.2(1) of the Local Government Act 1995. The budget cannot be adopted until after the Minister makes their decision.
If the local government has submitted the final documents for Ministerial approval later than the end of July, consideration may need to be given by the local government to applying for Ministerial approval for an extension to the budget adoption date.