This is an opinion piece prepared by Graham Webb PSM on how Queensland Local Governments explain to their ratepayers in a multitude of Differential rating categories, the extent of their annual rate contributions and the services they are receiving for their rate payments.

Explaining rates increases

The common thread in explanations by Councils of their Differential Rate increases each year is the use of terms such as “average” which implies that there will be some ratepayers paying less or more than “average.”   References to “residential properties” are commonly the focus when explaining the extent of rate increases, but a scan of local government Revenue Statements shows that there are many more Differential rating categories than “residential”.  These hardly rate a mention but often bear the brunt of the increases at least in proportionate terms.

To this time, there doesn’t appear to be a legislative requirement, in establishing and defining categories, for Councils to provide explanations for their choice of differential rating categories and the rates that are to apply to them.

In recent challenges to local government differential rating decisions, the Supreme Court appears to acknowledge that the quantum of differential rates is primarily a matter of policy, rather than law, so long as a local government targets a land use, rather than the characteristics of the landowner.

To that extent Councils generally comply with their legislative responsibilities. 

Who are the above average rate contributors?

Depending on their geographical locations and variations in land use local governments tend to use differential rating to spread the rating burden in a way that favours residential categories over others.

 Councils may include categories such as “Shopping Centres”; “Supermarkets”; “Coal mining”; “Workforce Accommodation”; “Commercial”; “Industrial”; “Sugar Mills”; “Gas Extraction”; “Extractive Industries”; “Commercial Water”; and “Rural”. More recently the new renewable energy sector has been introduced with categories for “Solar Farm” for example. Generally, individually or collectively, ratepayers in these categories make greater proportional contributions to the differential rate revenue collection than do “residential” categories.

Reasons given for this apparent higher contribution requirement include that “Council has paid particular attention to the need to carefully consider the impacts that these particular land uses have on the ability of Council to deliver desired levels of service to its community” or “increased use and more rapid deterioration of Council infrastructure” or “ The demand for new and improved services such as health, environmental, planning and community development services.


Recently the Queensland Parliament Infrastructure, Planning and Natural Resources Committee completed an inquiry into the long-term financial sustainability of local government and the issues arising from recent reports of the Auditor-General[1]. The underlying challenges for local councils were identified by the Local Government Association of Queensland’s submission and included that “Councils are also under constant pressure to increase the number and expand their range of services, including as a result of rising community expectations in some communities, increasing demands from other levels of government and changes in standards and legislation.”

Thirty-nine (39) submissions were considered by the Committee. The Final Reporting Date is yet to be confirmed. The extensive terms of reference included amongst other things, local government budget transparency. This was a theme taken up by a number of submissions from ratepayer groups such as the Property Council of Australia, the Urban Development Institute of Australia, the Queensland Resources Council and the Shopping Centre Council of Australia. A recent survey of Council’s using differential rating revealed a significant number where the use of major differentials in the rate in the dollar and very high Minimum General Rates resulted in levels of rating for these types of non-residential properties that raised questions as to the equity in these rating systems.


The current State Government announced before the last election that Labor was committed to publish best practice guidelines, and to establishing principles to assist Queensland local governments in implementing fair and equitable rating systems, while ensuring flexibility for raising sufficient own-source revenue.

As recently as Wednesday 19th of July 2017, Mark Furner MP, Queensland Minister for Local Government addressing the Infrastructure, Planning and Natural Resources Estimate Committee was quoted on the publication of best practice as follows:

The guideline has been developed and is available for Councils to access on the DILGP website (Guideline on equity and fairness in rating for Queensland local governments). … The guideline provides advice on the importance of equitable rating of similar properties, ensuring a user-pays approach, that there are meaningful contributions by different types of land uses, that annual rating is predictable and, above all, that the system is fair.”


Section 170 (6)- Local Government Regulation 2012 provides: “ the Budget must include the total value of the change, expressed as a percentage, in the rates and utility charges levied for the financial year compared with the rates and utility charges levied in the previous budget.”

Although Councils on the whole tend to meet their Legislative responsibilities, few currently identify in their published statements how they spread the general rate burden equitably among broad classes of ratepayers.  One exception is Lockyer Valley Regional Council. This Council has, in recent years, gone beyond the basic legislative requirement. That Council publishes the value of changes expressed in both dollar and percentage terms for their current financial year compared to the previous budget. As well as recording the total value of the change, the Council provides additional reporting of the breakdown for each of their 17 Differential Rating Categories.

Recent moves indicate a growing emphasis by the Government on enshrining the local government principles – particularly those associated with transparency and accountability – in the good governance practice of Queensland local governments. This is illustrated by an expectation of more and better explanations by councils of their Rating policies, including the quantum of revenue levied on each differential category and how that levy is applied fairly and equitably.

Councillors and their senior managers should be aware of the new guidelines as they develop their future rating strategies.

Graham Webb, PSM, Consultant and Advisor

[1] Auditor-Generals Report 2: 2016-17 Forecasting long-term sustainability of local government and the Auditor-General’s Report 13: 2016-17 Local government entities: 2015-16 results of financial audits.

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