Council to consider rate payment options and Revenue and Debt Collection Policy

Councillors will consider a change to rates payment options for the 2024/2025 financial year and a revised Revenue and Debt Collection Policy including Financial Hardship.

The changes have been proposed in response to the City seeing an increase in financial hardship issues as part of rates collection.

Currently, the City generates around 62,000 rates assessments annually and there are three primary payment options:

  • Pre-pay in full with a small discount, due September 30 (currently 32% of ratepayers choose this option)
  • Pay by four instalments, due dates September 30, November 30, February 28, and May 30 (42% of ratepayers choose this option)
  • Pay in full, due February 28 (26% of ratepayers currently choose this option)

The City also encourages other flexible payment options that provide smaller, regular payments to meet instalment timelines. Fortnightly, monthly direct debits and Centrepay are popular ways to pay amongst ratepayers.

Councillors will consider the removal of the later pay in full option which is due in February each year. This is to encourage more rate payers who are facing financial hardship to seek and engage with the City for assistance much earlier.

Under the proposal, the primary payment options would be for quarterly instalments with the flexibility to retain direct debit and other deduction arrangements. The pre-payment in full on September 30 with a small discount for ratepayers would also remain.

The Local Government Act 1989, which guides rates and charges, requires Councils to provide the option of payment via four instalments, with payment in full being optional.

City Director Corporate Performance Jess Howard said this year saw a marked increase in unpaid rates notices.

“There has also been a significant year on year increase of 88 per cent in outstanding debts moving to the next stage of debt collection,” Ms Howard said.

“The proposed change is to remove the larger financial burden of an annual payment and encourage smaller and more regular payments. Hardship issues with some ratepayers are most stark where there is no engagement with the City until after the February pay in full date had passed, and this new proposal will hopefully help.

“We know that a greater proportion of the community is facing financial stress with household bills. Many who contact the City mention the impact of higher mortgage rates, the current cost of living and the reduction in personal and business cashflow for their reasons for seeking a payment arrangement for rates. Historically in March each year, we normally see a rise in payment arrangements, but this year the City has seen a significant increase.

“As an organisation, it is important to take into consideration how we can best support ratepayers facing financial hardship in the current financial climate in a way that is still equitable between ratepayers, whilst still enabling the City to fund and deliver services that are valued in the community.

“By removing the full payment in February option, it supports earlier discussions with ratepayers who may be facing financial difficulty, and for appropriate supports and arrangements to be put into place to help them.

“Currently, around a quarter of ratepayers choose the full payment option in February. It is clear that most ratepayers prefer to have smaller, regular payments over the financial year either by instalments or flexible payment options rather than the financial stress of paying a large lump sum.

“This trend is in line with many utility companies, insurance, telecommunication companies and Vic Roads that offer monthly or quarterly billing. This provides their customers with more predictable and manageable payment schedules they can budget for, which reduces the burden of a large sum.

“The City understands this will be a change for many people who wait for February to pay their rates. However longer term, providing a more regular payment process for rates will help reduce the burden on those who haven’t been able to manage paying a larger annual payment late in the financial year.

“In year one of the change for 2024/2025 for those that pay or engage in February, there would be no late payment interest, or fees charged for the first two missed instalments to help with the transition.”

Council will also consider a revised Revenue and Debt Collection Policy (the Policy) which requires review every four years. Council endorsed the last policy on November 21, 2019. This Policy outlines and details the City’s debt management and recovery decisions, process and practices.

The Policy aims to ensure overdue general debts, rates and charges are collected in a fair and reasonable manner and, where required, in line with the City’s Financial Hardship Guidelines. The Guidelines aim to provide transparency, fairness and consistency when dealing with ratepayers experiencing financial hardship. Key changes to the Policy and the Guidelines include more detail for ratepayers on the City’s debt collection processes.

Two key principles in this policy are:

  • Equity – ensuring the fair and consistent application of lawful recovery principles without bias, considering all relevant considerations
  • Financial viability – that the ongoing financial viability of the City is ensured

/Public Release. View in full here.