Monday, May 26, 2014

Someone give that Judge a Knighthood

A court decision last month has thrown a spanner into the budgeting works of many Queensland councils with differential rating between investors and owner occupiers disallowed: Rates challenge hits council budgets; Councils face huge rates refundsQueenslander tells councils 'they're dreaming'
Budgets about to be handed down in 20 of Queensland’s biggest councils face disarray with a court challenge over their rates policies unlikely to be heard before Christmas.
Queensland Local Government Association this week launched action in the Court of Appeal after the Supreme Court found in April it was illegal for a council to charge investors higher rates than owner-occupiers.
That has become a standard policy in 20 of Queensland’s largest councils.

I previously posted on this last year and fully support the decision: Why should owner occupiers get cheaper council rates?

There is no rationale that stacks up beyond the self-interested politics of being able to vote yourself a benefit for owner occupiers to receive a concessional rate at the local government level.  To our credit Cairns is one of the few large councils not to have differentially rated on this basis, perhaps reflecting our higher proportion of investors and renters.

It has been proposed at times by interest groups and also I believe a few years ago by a councillor with some political profile who is seldom known to let anything rational interfere with a populist policy proposal.

It is interesting that the legal challenge came out of Mackay where rents have been declining for investors as the mining boom recedes at the same time as council decided to hit them with this differential form of rating. What a convenient political confluence of circumstances for Mackay Council, with cheaper rates for owner occupiers and falling rents for renters, now brung unstuck.

A renter is unlikely to be highly aware of council rates unlike an owner occupier where it is likely a key issue at election time. Perhaps renters should be issued with a notice of the rates component implicit in their rent to be able to make a more informed decision?

Meanwhile the Supreme Court Justice who made the decision is now my legal hero for a day!

Arise Justice Sir Duncan McMeekin AK?

Links: Some related thoughts from Catherine Cashmore on housing including how owners are valued over renters.

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