Sydney councils clog local courts in chasing millions of dollars in unpaid rates

Sydney councils are racking up hefty legal bills — and clogging local courts with civil matters — as they pursue millions of dollars in unpaid rates.

Parramatta Council is chasing nearly $14 million in unpaid rates from the past two years.

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Sydney’s councils are clogging up the local courts as they chase millions of dollars in unpaid rates and rack up big legal bills.

Attorney-General Mark Speakman has revealed council actions to recover debts for unpaid rates make up 30 per cent of Local Court civil matters.

“More than 80 per cent of these claims involved amounts less than $2000 and a high proportion were settled, paid or written off by councils before judgment,” said Mr Speakman, who released a new Debt Management and Hardship Guidelines with Local Government Minister Gabrielle Upton last week.

NSW Attorney-General Mark Speakman.

Local Government Minister Gabrielle Upton.

“This adds to costs suffered by both councils and ratepayers through legal fees.”

Neighbouring council Cumberland had $3.6 million in outstanding rates in 2016/17, when it spent $280,000 in legal expenses for debt recovery. Last financial year it had $4.1 million in unpaid rates and spent $230,000 in legal costs.

Ms Upton called on all councils to review their policies and procedures to treat ratepayers more fairly.

“While there’s no doubt councils must recover unpaid rates, the guidelines make it clear councils must work better with their ratepayers on payment terms without going to court straight away, especially for those suffering financial hardship such as loss of employment, illness, separation or death in the family,” she said.

A Parramatta Council spokeswoman said it only pursued legal action when more than $1000 in rates was owing and “all other avenues to collect the outstanding payments have been exhausted”.

“For ratepayers who are facing financial difficulties, council has a hardship policy in place,” the spokeswoman said. “It is through the collection of rates that council can continue to fulfil its legislative requirements and provide many valuable services and facilities to our community.”

A Cumberland Council spokesman said legal debt recovery was a “last resort” when notifications were “consistently ignored, payments on a payment plan are regularly missed or a ratepayer refuses to pay”.

The government’s new guidelines include a “stop-the-clock” approach to suspend debt recovery, legal action and interest accrual while a ratepayer’s hardship application is awaiting determination or while they are complying with a payment plan, as well as greater discounts for pensioners facing hardship.