HOMEOWNERS experiencing hardship will no longer have to endure harassment from local councils following the introduction of reforms by the Victorian Government, to protect them from debt collectors or legal action for unpaid rates or charges.

The government’s Local Government Legislative Amendment (Rating and Other Matters) Bill 2022 introduced into Parliament last week, presented the first stage of reforms that will benefit over 3 million ratepayers.

In May 2021, the Victorian Ombudsman’s ‘Investigation into how local councils respond to ratepayers in financial hardship’ recommended stronger laws, capped interest rates and improved oversight of debt collectors to protect rate payers from harassment.

Southern Grampians Shire Council (SGSC) chief executive, Tony Doyle said Council would continue to examine the recent Local Government Legislative Amendment (Rating and Other Matters) Bill 2022 over the coming weeks and undertake a review in line with current policies and processes.

“Referral for debt collection is seen as a last resort once all other options have been exhausted,” he said.

“During the 2020/2021 financial year, Council responded to the COVID-19 pandemic by placing the rate increase into a Hardship Fund specifically to address hardship applications by affected individuals and businesses.

“Payment plans, interest free periods, deferral of payments or in some cases the write off of minor amounts are all options Council considers when faced with hardship applications.”

Among the reforms in the Bill, will be a fairer and more flexible system for councils to recover unpaid rates, in addition to the four instalments mandated now.

The Local Government minister will set the maximum interest rate on unpaid rates and ensure greater consistency in how councils deal with ratepayers experiencing financial hardship.

The government has also expanded the criteria for councils to provide rate rebates and concessions for properties that provide a public benefit.

In its examination, the Ombudsman assessed how struggling homeowners would be treated if they fell into debt, and whether council practices were fair and reasonable.

It examined the states 79 councils which showed widely varying practices that revealed some offered easier ways to pay rates and demonstrated fair practices, including engagement with financial counsellors and recognition of family violence as a sign of hardship.

Other councils had policies that were deemed unfair and wrong, and included harassment of a woman who worked two jobs to pay off rates – but the interest accrued was more than the rates.

In another example, a council bankrupted a pensioner with mental health issues over $30,000 in unpaid rates.

However, the Municipal Association of Victoria (MAV) issued a response on Friday last week stating it was given only 10 minutes notice of the amendments and that it was a “kick in the guts to hard working councils”.

MAV said the local government membership welcomed the Victorian ombudsman’s 2021 report, “that the government claims to be acting on,” however, president Cr David Clark said, “unfortunately, for a sector …who turn up each day to make our communities better, (the) announcement has been a cheap shot from a State Government bent on grandstanding rather than governance”.

Under the changes, Local Government minister Shaun Leane will consult the Essential Services Commission to set a maximum on the amount of interest added to unpaid rates and charges.

Moyne Shire Council participated in the Ombudsman’s 2021 investigation.

Director of corporate and community, David Rae said Moyne Shire Council had has always invited ratepayers to make contact and make alternative payment arrangements if they were experiencing hardship.

“Council takes a range of matters into consideration including family violence and loss of employment,” he said.

 “We understand these can be difficult calls for people to make, but the earlier they can make the call the better. 

“All matters relating to hardship are dealt with in the strictest of confidence.

“Interest on outstanding rates is charged at the statutory rate which is set by the Victorian Government.

“Council does use a collection service to remind people who haven’t made alternative arrangements of their responsibilities and possible action, should payment not be made.

“Taking legal action for the collection of rates is always the last resort.”

Glenelg Shire Council advised its hardship policy had been in place for some time, information on which is provided on the rates notice.

The hardship policy includes consideration of domestic violence under the category of compassionate grounds, and Council has recently made refinements to its policy following the release of the Ombudsman’s report and its recommendations.

Glenelg Shire Council does use debt collection and legal avenues however only under extreme circumstances, instances that are very rare.

Interest on unpaid rates is based on the percentage referred to in the relevant legislation.

A Glenelg Shire Council spokesperson said, “the bill was just released last week with very little consultation”.

“We are currently digesting it.”

The new laws have been designed to prevent legal fights that potentially force Victorians to sell their homes just to pay back council debts.

The laws also provide clearer definition of what constitutes financial hardship and will require local governments to deal with ratepayers early to address stress on their household budgets.

Mr Doyle said SGSC would continue to play an active role working together with ratepayers to find solutions that do not put community members under undue financial stress.

“Council’s current Hardship Policy addresses financial hardship and considers each application individually - on a case-by-case basis.

“Whether it’s job loss, family violence, or natural disasters, individuals needing help are handled with discretion and compassion as the privacy of impacted community members is paramount to Council.

Mr Doyle encouraged community members experiencing financial hardship in relation to Council charges to get in touch with staff to discuss options.

“The link to our Hardship application is also available on our website,” he said.