“Mum and dad home owners and small businesses are paying their council rates,” says MAV president Coral Ross. “Exempt private and commercial activities should also pay a fair and equitable share of rates.” In a submission to the state government’s rates review, the MAV says 12 per cent of the City of Melbourne’s rates base is exempt. It says the additional income from rating these properties could be used to improve fairness and equity by reducing the rate burden on existing ratepayers. The City of Boroondara, in Melbourne’s eastern suburbs, has 69 properties owned by private schools, according to the submission.

These properties are exempted from paying almost $1.4 million in general rates each year, the MAV estimates, which is the equivalent of 0.94 per cent of residential rates. The MAV says private schools and universities have a long-standing exemption from paying rates. “While this once could have been justified, given how private schools and universities have evolved over time to the commercial institutions they are today, this rate exemption cannot be justified on fairness and equity grounds,” the submission says. It says many private schools charge significant fees and lease their facilities to commercial operators, such as swim schools. The chief executive of Independent Schools Victoria, Michelle Green, said she expected the Victorian government would promptly reject any suggestion that local councils be allowed to impose rates on non-government schools.

“Schools are net contributors to society and the local communities they serve,” Ms Green said. “There is absolutely no reason why any school – government, independent or Catholic, all of which are not-for-profit organisations – should be subject to council rates.” Ms Green said unlike government schools, independent schools required council planning approval to build new schools and facilities. “Some schools have been denied council approval to build new schools on planning grounds,” she said. “The MAV’s proposal ... would further impede the ability of non–government schools to meet the needs of a growing population.”

In another case study, the MAV says electricity generator AGL Hydro owns two facilities in Towong Shire in North East Victoria. The shire will receive $51,176 in revenue in 2019/20 under a payment in lieu of rates set out under the Electricity Act. However the MAV says if Towong Shire applied its business rate, the amount payable would be $751,027. “In effect, the other Towong ratepayers are providing an annual subsidy to international investors and other Australians of $700,000 in 2019/20,” the submission says. “(This is) equal to approximately 11 per cent of the shire’s 2019/20 rates revenue.” The Shire of Towong has gone further than the MAV to call for “significant structural change” including centralised rates collection "administered by the state government”.

The Towong submission says under a centralised system, rate revenue can be “redistributed in a manner that considers equity principles for communities, their ability to pay and a minimum level of services that all Victorians deserve”. The MAV says RSL gaming venues and gaming venues on Crown land are exempt from rates despite competing with local hotels. “It is difficult, if not impossible, to argue how gambling and the social cost inflicted by this activity to the most vulnerable members of the community justifies this rate exemption,” the submission says. It also says there is no apparent rationale for active mining land being exempt from rates. The Andrews government is reviewing the state’s rating system, which has gone largely unchanged for more than a century.

Both Labor and the Coalition promised the review before last year’s election after a parliamentary inquiry into the finances of rural councils called for reform. Farmers, in particular, believe they pay disproportionately high rates and have pushed for change. The MAV is also calling for simplified rates notices, the option of a tourism levy in popular destinations and charging rates for residential village homes. It is also lobbying the state government to establish a funding program for smaller rural and regional shires that don’t have the population to raise enough revenue to provide essential services and infrastructure. A panel chaired by former City of Melbourne chief executive Kathy Alexander is overseeing the rates review.