Local Government Bill 2018

Division 2—Budget process

Clause 89 provides that Council must prepare a Budget. This must be done each financial year for the next 4 years by 30 June each year or any other date fixed by the Minister by notice in the Government Gazette.

Subclause (2) sets out the information that must be included in the Budget. This ensures that the Budget details the services, infrastructure, amenities and initiatives specified in the Council Plan to be funded in the Budget and how the Council intends to fund them.

Subclause (3) provides that if applicable, the Budget must contain a statement that the Council intends to apply for a special Order to increase the Council's average rate cap, the Council has made an application to ESC for a special Order and is awaiting the outcome or a Special Order has been made and a higher cap will apply, to that effect. This ensures that the community is notified through the Budget if the average rate cap is not going to apply (or may not apply) for that financial year.

If the Council intends to declare a uniform rate for all rateable land, the Budget must contain a statement of the objective of, and reasons for, applying a uniform rate.

Clause 90 subclause (1) provides that Councils must prepare and adopt a revised Budget before a variation can be made to the declared municipal rates and service charges, any borrowings can be undertaken that have not been approved in the Budget or any changes can be made that the Council considers should be the subject of community consultation.

Subclause (2) provides that the revised Budget must include the information prescribed in the regulations.

Subclause (3) provides that Councils must adopt a revised Budget as soon as practicable after the date it has been developed.

Clause 91 provides that Councils must develop the Budget and any revised Budget in accordance with the principles of sound financial management and the Council's community engagement policy.

Clause 92 subclause (1) provides that the CEO must present to the Council at a public meeting a quarterly Budget report. This promotes transparency and ensures that Budget variations are brought to the attention of the Council.

Subclause (2) sets out the information that must be included in the quarterly Budget report, which includes a comparison of the actual and budgeted results to date.

Subclause (3) provides that the second quarterly Budget report must include a statement by the CEO as to whether a revised Budget is, or may be, required.

Division 3—Reporting

Clause 93 provides that Councils must prepare an annual report of the Council in respect to each financial year.

Subclause (2) provides the matters that the annual report must include. The ensures that Councils are reporting on their performance and financial position.

Subclause (3) sets out the information that must be included in the report of operations of the Council, which must be included in the annual report. This ensures that Councils are reporting on the implementation of the Council Plan and Budget and the results of the Council's assessment against the prescribed governance and management checklist.

Subclause (4) sets out the information that must be included in the performance statement. This ensures that the information needed for the performance reporting framework is captured in the performance statement.

Subclause (5) provides that financial statements must include any other prescribed information and be prepared in accordance with the Regulations.

Clause 94 sets out the process for preparing the annual report of the Council at the end of each financial year.

Under this process, Councils must prepare the performance and financial statements for the financial year as soon as practical after the end of each financial year and submit these statements to the Victorian Auditor-General for auditing. Once the statements have been assessed by the auditor and finalised they must be certified by 2 councillors and any other prescribed persons.

The auditor must prepare a report on the certified performance statements under this Bill and the certified financial statements under Part 3 of the Audit Act 1994 and submit a copy of these reports to the Minister.

Clause 95 requires the Mayor to present the annual report at an open Council meeting and report on the implementation of the Council Plan as detailed in the annual report. This must be done within 4 months of the end of the financial year.

Division 4—Financial management

Clause 96 sets out the financial management principles. These principles ensure that Councils are dealing with finances and assets responsibly, are appropriately managing financial risks and are being transparent in their financial dealings.

Financial risk is taken to include the Council's financial viability, management of its liabilities and the beneficial enterprises in which it engages.

Clause 97 requires Councils to prepare and adopt financial policies that give effect to the financial management principles and contain any matters prescribed in Regulation. These may include policies that deal with borrowings, investments, revenue raising and rating.

Clause 98 lists the securities and entities in which Councils may invest.

Clause 99 requires councils to include proposed borrowings in the Council's Budget or proposed Budget before the Council can borrow money.

Clause 100 requires the Council's designated Principal Accounting Officer to ensure that proper accounts and records are kept of the transactions and financial affairs of the Council. Any failure to do so must be reported in the Council's annual report.

Part 5—Rates and charges

Division 1—Declaration of rates and charges

Clause 101 provides that all land is rateable in accordance with this Part unless it is of the following types—

• 
  Charitable land, that is used exclusively for charitable purposes. This exemption is intentionally based on the type of use to which the land is put and is not dependent on the type of ownership.
  

• 
  Memorial or ex-servicemen purpose land. This means land used exclusively as a club for or memorial to people who performed service or duty, as defined in section 3(1) of the Veterans Act 2005 or is used by the specified bodies.
  

• 
  Public purpose land. This includes land vested in the Crown or other specified public body as well as land that is unoccupied or used exclusively for public purposes.
  

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  Religious purpose land. This means land that is vested in or held in trust by a religious body and used exclusively for one of the specified purposes.
  

Subclauses (3), (4) and (5) qualify the application of these 4 rate exemption categories.

Clause 102 provides that a Council may declare municipal rates and must use capital improved value as the method of valuing land.

Capital improved value is defined in clause 3 by reference to section 2 of the Valuation of Land Act 1960. In short, it is the resale value of the land.

Subclause (3) provides for rates to be declared in a uniform manner or by applying differential values for different classes of land.

Clause 103 describes the way a Council must calculate a uniform rate and that the Council must state the objective of applying the uniform rate in the Budget and on its Internet site.

Clause 104 describes the conditions that must be met if a Council declares a differential rate.

Subclause (1) describes the matters that must be described in the Budget and on the Council's Internet site. This includes the criteria used to classify the land and the objectives and reasons for each differential rate.

Subclause (2) limits the extent of variation allowed between differential rates so that the highest rate is no more than 4 times the lowest

Subclause (3) requires a Council to have regard to any good practice guideline issued by the Minister under clause 82 before declaring a differential rate. It is intended that guidelines may limit the types or classes of land that may be subject to differential rates.

Subclause (4) empowers the Minister to seek an Order in Council to prohibit a Council from using a particular type or class of land for differential rates. This provision enables the enforcement of a relevant good practice guideline under clause 82.

Clause 105 enables a Council to declare a component of municipal rates as a fixed amount to cover administrative costs of the Council. The revenue from the fixed component must not exceed
10 per cent of the Council's total rate revenue. This restriction aims to ensure the use of a fixed component does not have an excessively regressive impact on ratepayers and is reflective of the Council's administrative costs.

Subclauses (4) to (7) provide for a person to apply to the Council for an exemption from the fixed component in circumstances where 2 or more separate properties comprise a single farm enterprise.

Clause 106 empowers a Council to declare a service charge on rateable land for the provision of refuse disposal, drainage or any other prescribed service. The Council may use any criteria, including land value, as the basis for assessing a service charge. The cost of the service charge must not exceed the expected cost of the services to be delivered.

Clause 107 requires a Council to formally declare its municipal rates and service charges each year by the dates specified in clause 89 for adopting the Budget.

Clause 108 subclause (1) provides for municipal rates and service charges to be separately levied on each occupancy on rateable land for which the Council has a separate valuation. This builds on section 13DC(1) of the Valuation of Land Act 1960, which requires each occupancy to be separately valued.

Subclause (2) allows a Council to separately apportion municipal rates and service charges between parts of land that are separately owned, even if the valuation has treated the parts as a single rateable entity.

Clause 109 provides for the payment of municipal rates, service charges and special purpose charges.

Subclauses (1) to (8) describe who is liable to pay the municipal rates, service charges and special purpose charges under specified circumstances and for particular classes of land. Except in the circumstances described in subclauses (2) to (8) the owner of the land is liable.

Subclauses (8) and (9) provide that a person with a mining licence is liable to pay municipal rates, service charges and special purpose charges, including on Crown Land. Any municipal rates or service charges cannot be recovered from the owner of the land.

Subclause (10) states that unpaid municipal rates, service charges and special purpose charges, along with any associated court awarded costs, are a first charge on the land. This means that payment of these debts has priority over other encumbrances on the land.