State bias against site-value rating

Differential rating causes a problem: it lets councils give special favours to special interests. So councils like it. So the Victorian Government allows it only for capital-improved-value rating, which the Government prefers in spite of its economic deadweight.

That is the context of the following letter by Andrew J. Gunter in the Age (Aug.11, 2009):

Different thinking

EVERYONE'S in favour of more compact urban development (“Grow Melbourne from within”, “No need to expand Melbourne's boundary”, “Melbourne's empty nests” and “Let's win our city's battle with the bulge”, The Age, 8/8). Your editorial and Moreland Mayor Lambros Tapinos rightly identify rates and taxes as able to provide incentives to more appropriate development of urban land, yet few councils take even Moreland's partial approach and impose higher rates on vacant land.

Only one, Monash, goes the whole hog with the strongest incentive to develop underutilised urban land available to local government in Victoria: site-value rating. Too bad that a group of Monash councillors are considering repealing it.

Site-value rating acts as a powerful antidote to urban sprawl, but councils that adopt it are permitted to make almost no distinction between the residential, commercial and industrial rates they impose.

Local councils' take-up of site-value rating as an anti-sprawl antidote will be much greater if the arcane “limited differential” restrictions in rating legislation are repealed. Melbourne would be the better for it.

[Posted September 5, 2009.]