Councils lose out in airport stoush
CLARENCE and Northern Midlands councils have lost a yearslong battle against Hobart and Launceston airports, failing to prove they were owed millions of dollars in rates.
The stoush began in the Federal Court of Australia in 2019, when the two councils argued they were owed much higher than the “ex gratia” rates they’d been receiving since 1998.
Under Australian law, the two airports are exempt from paying council rates or state land tax because they are situated on Commonwealth land – with the councils not even a party to the lease contracts in question.
However, in the privatisation push of the late 1990s and early 2000s, the councils were offered an ex gratia, “notional” sum each year – intended to be equivalent to the rates they would have received if the airports weren’t located on Commonwealth land.
But Clarence City Council and Northern Midlands Council argued they weren’t being paid the proper ex gratia sum, claiming much larger areas of the airport sites were being used for “trading or financial operations”, and therefore “rateable”.
Clarence City Council alone claimed the amount they were owed, as of June 2021, equated to $4.02m.
The councils initially lost their case on the basis they were not parties to the contracts.
But following a long-winded appeal process, the High Court of Australia found there was indeed a case to be heard, remitting the case back to the Federal Court.
The High Court found that even though the councils weren’t parties to the leases, they were affected by them and could seek a declaration from the court clarifying the formula by which the payments would be calculated.
In his judgment delivered on Tuesday, Federal Court judge David O’Callaghan upheld the Commonwealth government’s formula rather than the councils’
contentions that they should be able to charge the airports an amount based on the valuation of the land by the Valuer-General.
But Justice O’Callaghan agreed with the Commonwealth’s argument that areas used for “aeronautical services and facilities” could not be rated, as the airports did not enjoy a competitive advantage, because there was no comparable business.