Rates exemptions make sense
Tasmanian retirement village residents already contribute to many charges plus pay for upkeep, says Ray Groom
FOR many decades, residents of retirement villages operated in Tasmania by not-for-profit organisations have been exempt from paying the “General Rate” component of council rates.
The exemption is in Section 87 of the Local Government Act. The purpose of the exemption was, in part, to support and encourage charitable organisations to be involved in providing care and support for Tasmania’s senior citizens.
This longstanding concession has achieved positive results and now some 90 per cent of aged care services in Tasmania is provided by not-for-profit organisations.
If those organisations did not provide these services it would be then left to local government, state government or for-profit commercial organisations to undertake that responsibility.
I can fully understand why a pensioner living in a house and paying rates would be upset that a retirement village resident living in a village operated by a charity is not paying council rates.
But it is wrong to say residents in retirement villages do not pay any council rates. They do. The only element of council rates they are not required to pay is the General Rate. For example, in the City of Hobart they contribute to the cost of the Waste Management Charge, Land Fill Rehabilitation Services Charge, the Stormwater Removal Service Rate and the
Fire Service Rate. They also contribute to the cost of various charges imposed by TasWater.
Importantly, residents pay directly for the upkeep and maintenance of the village in which they reside. This includes the cost of maintaining roads, footpaths, gutters, drainage, lighting, gardens etc.
As an example at the Fairway Rise Village at Lindisfarne, a relatively new village often referred to in this debate, the residents in each villa pay approximately $5000 a year as a service and maintenance charge to pay for the maintenance of the village and some other costs. Residents of other new villages pay a similar amount. It can be considered a village “rate”. The local council makes no contribution to the maintenance of these villages.
The decision by four councils (Hobart City, Clarence City, Kingborough and Meander Valley) to impose the general rate on retirement village residents came as a blow to many.
Residents in the villages believed they would not have to pay the general rate when they decided to enter the village. Many are on pensions and limited fixed incomes. Quite a number could not afford to pay it.
In the City of Hobart, for example, the additional financial burden was as much as $1500 a year and even more. Imagine the reaction if all ratepayers faced a sudden increase in their council rates of $1500 a year.
The Full Court of the Supreme Court of Tasmania, in a unanimous decision, recently decided that the attempts by the four councils to impose the general rate was contrary to the existing law. An application for leave to appeal was refused by the High Court of Australia. The councils were ordered to pay the legal costs involved.
Predictably, there are now some indications that councils may ask the State Government to remove the exemption in Section 87 of the Local Government Act.
Before Southern Cross Care Tasmania initiated a test case by challenging the councils’ decision to impose the rate, we sensibly sought an assurance from the relevant minister that there was no intention to amend the Act. That assurance was provided in writing.
On the basis of that assurance a lot of money and effort was expended in proceeding with the legal challenge. There obviously would have been no point in a legal challenge if the Government was intending to amend the legislation.
It has been suggested that councils now have to manage a “hole in their budget”. That claim is grossly misleading. For many decades councils have acted according to the law and have not imposed a general rate on retirement villages. This additional income was never legally available to them. It is false to claim that they have suddenly lost income to which they were previously entitled.
The other point is that unlike the current rate issue relating to the University of Tasmania, generally speaking, there has not been a general
rate income from the land on which retirement villages have been built by Tasmanian charities.
The university is buying some commercial properties in the city on which rates were previously paid. In contrast the land on which retirement villages have been built was often council land or Crown land on which the general rate was never charged. For example, the Fairway Rise Village at Lindisfarne was formally partly Crown land and partly council land.
There are 24 not-for-profit charitable organisation operating in Tasmania. More than 2000 people reside in those villages. It is estimated, on average, that they are supported by four or more family members who are also concerned about the sudden cost to their fathers, mothers, aunties and uncles. That means there is a total of an estimated 8000 concerned citizens of Tasmania who were upset about the general rate being imposed on their family members.
Any attempt to remove the exemption is likely to result in a huge outcry from retirement villages residents and their families throughout Tasmania.
If councils are struggling to provide essential services with the income they currently have, then perhaps more serious consideration should be given to the amalgamations of at least some of the 29 councils we have in Tasmania. This would lead to financial efficiencies and assist the future viability of local government in our state.