DIFFERENTIAL RATING POLICY REVIEW – City of Victor Harbor

Business Victor Harbor recently made a detailed submission to the City of Victor Harbor outlining the chamber’s position regarding the Council’s ‘Differential Rating Policy Review’. The review (as part of regularly scheduled rating base reviews), proposed a reduction or removal of the differential rate on commercial and industrial properties whilst increasing the rate for rural, residential properties and vacant land.

Updated 01/07/2021: On 28/06/2021, the City of Victor Harbor responded to questions from Business Victor Harbor. Read the reply at the bottom of this page or by clicking here


In summary, BVH’s original point of contention and potential disagreement on the council’s rating policy for business was not the levying of the differential in the first place, but rather the accounting for those funds and the Victor Harbor business community having input on how such funds were spent.

Whilst Business Victor Harbor encourages any activity that reduces the business cost base to operators and enhances return on investment for risk taken to operate a business, we strongly support the continuation of the differential rate for commercial and industrial property, on the condition that businesses have a much broader and meaningful say on what the rate is spent on, namely proper economic development. A continuation of the differential rate ensures that our community continues to grow and be sustainable.

The current differential rate for commercial and industrial properties is also an essential element to allow the recently adopted ‘Economic Development Plan’ to be successfully delivered for both our business community and the wider Victor Harbor region. Business Victor Harbor’s work with the City of Victor Harbor to enhance economic development is now starting to take shape very effectively and the removal of the differential business rate, would be poorly timed and of questionable overall value.

The differential rate review, prompts the BVH to ask CVH how it commits to work with us to improve the process of accountability, consultation, and discretion as to how the differential rate paid by commercial and industrial ratepayers be spent. As the peak chamber of commerce, with an increasing ‘representation footprint’ for the interests of business, BVH seeks to work co-operatively with the Council to ensure the maximum value for business rate payers funds is made in this area of economic development.

To better understand Business Victor Harbor’s position on the differential rating policy review, you can read our full letter to City of Victor Harbor CEO Victoria MacKirdy at the download link below.

Business Victor Harbor’s Executive Officer Derek McIlroy will be presenting on its position on the ‘Rating Policy Review’ at our next Business Collaboration Networking Event. Details coming soon!


City of Victor Harbor – Economic Development Strategy – Click to download

Download the 2020/21 City of Victor Harbor Annual Business Plan and Budget


Rating Review Background

Councils are responsible for the delivery of a broad range of services to their communities. These services can vary as each community is unique and has different priorities. Councils receive income from a number of sources to pay for the services they provide, and the largest revenue source is rates.

The Local Government Act 1999 allows councils to raise rates and provides a degree of flexibility in the options used by councils to do this. Council have a responsibility to determine the best method for their communities, and review this from time to time to ensure the system used is relevant.

The City of Victor Harbor has concluded public consultation on proposed changes to its rating structure. The consultation, which closed on the 26th of April, did not focus on the revenue raised through Council rates, rather it looked at the distribution of rates across different land use types.

Upon undertaking a review of its rating structure, the Council sought community feedback on a proposal that would change the application of its differential rates, specifically to:

  • decrease the commercial and industrial differentials to the same as residential properties
  • increase the vacant differential to 160% of the residential differential
  • increase the primary production differential to the same as the residential differential.

Council’s rating structure

The City of Victor Harbor’s council rates are made up of a fixed charge and differential rate. There is also a separate rate for the Regional Landscape Levy, which councils collect on behalf of the SA Government.

  • Fixed Charge – the fixed charge is a base amount paid by all rateable properties irrespective of their value that contributes to the delivery of services, programs and projects that support each property.
  • Differential Rate – the differential rate proportion is based on whether the land is used for residential, commercial, primary production, industrial, vacant land or other purposes. It is calculated by multiplying the individual property value (which is provided to Council each year by the Valuer-General) by the differential rate in the dollar adopted for the relevant land use category.

City of Victor Harbor: Response to Business Victor Harbor Questions

(Business Victor Harbor): “How can the business community ‘as a whole’, be assured that economic development be prioritised for the area, without a differential business rate in place? Without it, we lose any semblance of a link to economic development”

(City of Victor Harbor) Upon consideration of all submissions made during the Rating Review, the Council made the decision to retain its current rating structure with no change. This includes keeping the economic development differential in place. The decision to do so provides assurance to the community the importance Council places on one of its key functions as the local government body, which is to provide an attractive climate and location for the development of business, commerce, industry and tourism within the City of Victor Harbor.

The Council remains committed to delivering economic development activities that support a strong and resilient economy, this has been clearly demonstrated more recently with the financial support provided to Business Victor Harbor to ensure that we have a strong chamber of commerce to work alongside Council with our wider business community. In addition, the development of the Economic Development Strategy 2020-2030 is another demonstration of Council commitment to economic development within its area of responsibility

(Business Victor Harbor) “Can the CVH develop a clear accounting (and accountability), of how the current business differential rate is collected and discretion from the community as to how such rates raised be spent? Business understands the need for economic development and accepts it needs to share its burden to contribute. We would therefore respectfully request, the CVH to engage in a process of equal consultation further and fully with the business community and provide such transparency in the raising of and expending of funds towards sensible economic development?”

(City of Victor Harbor) The differential rating system is implemented based on State legislation and regulations, which includes the requirement for public consultation. The current commercial and industrial differential system was implemented a number of years ago to provide funding for an increase in economic development activities. As part of the implementation, a separate reserve was set up to ensure that monies collected from the differential above the base rate were segregated and able to be regularly reconciled. Internal procedures provide for the annual review of projects that have an economic benefit with a monthly process in place to reconcile reserve funds against project completion.

Funds raised through the economic development differential are utilised proportionally to support projects and initiatives that are consistent with the intent of the City of Victor Harbor’s Economic Development Strategy 2020-2030, a document which Business Victor Harbor and the local business community were widely engaged in its development. This document is a tool which provides a clear direction and actions as to where the economic differential will be directed/allocated. It should be noted that Council’s investment in economic development extends beyond the funds collected through the economic development differential.

In terms of transparency, the Council outlines the projects and initiatives that the economic development differential helps fund within its Annual Business Plan. Further to this, each year the Council consults with its community on its draft Annual Business Plan and Budget. This is an opportunity for the community to provide input on how the budget is allocated and the services, programs and projects that are proposed. During this consultation period, Business Victor Harbor, the wider local business community and more broadly the general community have an opportunity to provide Council with their feedback via a number of mediums.

It is also important to note that when setting the Annual Business Plan and Budget, Elected Members take into account a number of other factors including legislative requirements, budget constraints, public safety and strategic direction at a local, State and Federal level.

(Business Victor Harbor) “How will equity be maintained across all ratepayers if large multinational and national businesses do not contribute their fair share to economic development, clearly something they benefit from doing business in our community? Currently they are contributing fairly to economic development with the differential rate in place. Without it, the burden carries across the whole community unfairly”

(City of Victor Harbor): The view of Business Victor Harbor is noted. No change has been made to the rating structure, supporting the sentiments raised above.

(Business Victor Harbor): “Has the administration of council, or any of their engaged experts, modelled the overall expected economic investment benefits this change in rating policy is purported to have from an investment attraction point of view? We see no clear evidence of overall gain to the economic base let alone the effect on overall rate revenue for the council because of the removal of the differential business rate. To say that just because other councils do not have the differential business rate drives more investment in those council regions seems questionable without supportable logic?”

(City of Victor Harbor): The view of Business Victor Harbor in this respect is noted. No modelling has been undertaken at this point as the reason for the consultation was to gain feedback from those stakeholders affected to gauge if there is an appetite for change. The feedback received showed that there was no strong desire for changing the structure from the business community.

The City of Victor Harbor values the feedback provided in regards to the Rating Review. We thank Business Victor Harbor for taking the time to provide a detailed response, and for collating this feedback from your members. It would be appreciated if this response is shared with your membership.

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