Rates applied to commercial properties by councils frequently lacking in rationality & justification

The Property Council of Australia (QLD) and the Queensland Resources Council have recently released a study Nick Behrens from QEAS and I did for them earlier this year on local government rates paid by non-residential property owners. The study revealed a lack of rationality in how councils are setting rates for commercial property owners, who are apparently seen by several councils as cash cows. Councils offer little justification for the very high rates they charge on properties where certain activities are located, such as mining and power generation. Nick has a nice summary of the findings of the study on his QEAS blog:

Qld councils revenue grab on non-residential property owners

Consider, for example, the much higher average rates for properties zoned for resources activities than for other uses, illustrated in the following chart, which reports average rates (cents per dollar of rateable value of property) for councils containing significant resources sector activities in their boundaries. The so-called resource councils/LGAs are Central Highlands, Mount Isa, Gladstone, Isaac, Toowoomba, Whitsunday, Western Downs, and Maranoa. Note the “average” rate in the chart below is the mean rate, which is much higher than the median for resource and non-residential activities generally due to some extremely high rates being applied to properties zoned for particular activities, such as LNG processing.  


You could argue some property owners have deeper pockets and it is equitable for them to pay more. Or you could argue that some commercial activities impose greater costs on local communities than other commercial activities and residential uses. I accept there may be some justification for higher rates being paid by some property owners. But councils need to be able to make the case for such higher rates, rather than simply imposing higher rates on unlucky commercial property owners, and occasionally jacking them up even higher without justification, as has happened in the past. 

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