Council hardship policies worse than banks says damning report

“Unfair” councils are dealing heavy-handed blows to struggling ratepayers, including a pensioner bankrupted over $30,000.

The hardship policies of Victoria’s local councils are worse than the major banks, a damning report by the state Ombudsman has found.

The report, tabled in state parliament on Monday, said some council policies were unfair, wrong and sometimes heavy handed with struggling ratepayers.

“We would be rightly concerned if our bank was doing more to meet its social obligations than our council,”, Obmudsman Deborah Glass said.

One family violence victim had to pay a third of her wage in rates while another woman paid more on interest than the actual rates.

Another council bankrupted a pensioner over $30,000 in unpaid rates.

Ms Glass said councils also lagged behind utility companies with their hardship policies.

Deborah Glass said councils lagged behind utility companies when it comes to hardship policies. Picture: DAVID CAIRD

All 79 councils had their own policies meaning it was a “postcode lottery” for those in financial trouble.

Two councils – Hume in Melbourne’s outer north and Moyne in the state’s south-west – were found to have no hardship polices at all. And just seven of the 79 councils mention family violence in their hardship policies.

“Too many people are told their only option is a payment plan, when the legal framework includes waivers and deferrals – which some councils have a blanket policy of refusing,” Ms Glass said.

“While councils should only be expected to waive rates rarely, discretion, not sledgehammer refusals, should be the order of the day.

“The public sector is expected to act in the public interest more than the private sector – but in dealing with hardship, local councils lag behind utility and other companies, including banks.’’

Many of the policies were inconsistent with good administrative practice, Ms Glass said.

That included taking legal action against people in crisis and an over-reliance on debt collectors who caused further stress to vulnerable people.

“When it comes to hardship, too often we’re on our own,” she said.

“Charging penalty interest to people in hardship is also wrong – as well as punitive and counterproductive.’’

Hume Council was found to not have a hardship policy. Picture: Jack Paynter

Most councils charge 10 per cent interest on late rate payments.

“But the good practice we have seen, both in councils and elsewhere, show it is possible to do it better.”

Recommendations from the “Investigation into how local councils respond to ratepayers in financial hardship” report include law changes to have a clear definition of “financial hardship” and capping interest rates on payment plans or deferrals.

Greater Shepparton’s policy distinguished between “reasonable’’ and “unreasonable’’ causes of financial difficulty which allows officers to refuse relief if they believe the hardship was from the ratepayer’s own decisions.

All councils all offered relief of some form during the COVID-19 pandemic but some

schemes have already ended while others will end later this year.

In a statement, Municipal Association of Victoria president David Clark acknowledged “the value of the Victorian Ombudsman’s report”.

“The report highlights best practice in many of Victoria’s councils in responding to ratepayers and residents in financial hardship,’’ Cr Clark said.

“The report calls out a number of areas where there are opportunities for improvement.

“The report acknowledges the difficult issues which arise when hardships faced by individual landowners in paying their rates can have flow-on impacts for the rest of the community who are also reliant on council services.’’

Cr Clark said the MAV was committed to supporting councils and state agencies to progress the report’s recommendations.

Ratepayers Victoria spokesman Dean Hurlston said councils were addicted to revenues that gouge anyone, even those in real hardship.

“Councils are not at all socially responsible, rather, they are self-entitled and out of step with the average person,’’ he said.

“We believe the local government system is no longer fit for purpose and needs a complete overhaul, restoring the power back to the millions of Victorians who fund this over-bloated inefficient sector”

Originally published as Council hardship policies worse than banks says damning report