Stoush brews between Local Government Minister Chansey Paech and council over charity rates

Minister Chansey Paech has written to all councils calling on them to cease imposing rates on land held by charities in the NT. The letter has been poorly received by the local government association.

Local Government Minister Chansey Paech at Parliament House. Picture: Fia Walsh

Northern Territory charities have expressed concern for their financial viability after a number were recently required to begin paying council rates on landholdings, forcing an intervention by the local government minister.

In a stern letter to all councils, Minister Chansey Paech said the rating of land held by charities and public benevolent institutions (PBI) must be “ceased immediately,”.

The letter, which was sent in late November, has been poorly received by the Northern Territory Local Government Association (LGANT).

“I have received numerous complaints from community organisations about land which was not previously being rated but now is,” he wrote.

“This includes land that is used for animal welfare, homelessness support, domestic violence shelters, and many other services that are vital to your constituents and to the Territory community.

“These types of organisations … often rely on donations, tax exemptions and volunteer support [to] survive.

“If and when these organisations cannot survive, communities suffer, and it is local governments and the Northern Territory Government that must then move in to fill gaps in services”.

Mr Paech said “confusion” had arisen due to a loose provision in the Local Government Act 2019, s222(1)(g), which holds that “land used for a non-commercial purpose by a public benevolent institution or a public charity that is registered with the Australian Charities and Not-for-profits Commission” (ACNC) is exempt from land rating.

Excerpt of Local Government Minister Chansey Paech's letter to Northern Territory mayors. Picture: Northern Territory Government

Its understood that some councils are rating charities and PBIs in circumstances where they view the activities being undertaken as commercial in nature, such as a multicultural club hosting frequent functions, parties and events.

“I understand there is some confusion and differing views on how the charity and PBI rates exemption … is to be interpreted,” Mr Paech wrote.

“It appears that the way it is being applied by some councils is having adverse financial effects on the charity and PBI sector.

“This application must be ceased immediately.”

Mr Paech said the government is considering changing the Act to “make it clear that any land occupied by a charity or PBI is exempt from rates unless it is only [Mr Paech’s emphasis] used for purposes other than the charitable purposes of the organisation”.

He invited feedback from local governments on whether such a change would affect the councils’ rate bases, if at all.

Sean Holden is the chief executive of the Local Government Association of the Northern Territory. Picture: Supplied

LGANT chief executive Sean Holden flipped Mr Paech’s argument and said that it would in fact be the financial viability of local governments at risk if such a blanket ban was imposed.

He said the cuts to councils’ rate bases would be especially swingeing if community housing providers were captured by the stricter exemption being explored by the government.

Mr Holden said LGANT “totally understands the angst that community organisations may be feeling,” and appreciated the vital role they played in society.

However, he said the pain should be shared fairly and equitably among all ratepayers, including larger charities that could not prove financial hardship and ACNC-registered organisations that were effectively operating commercial operations.

“Local government provides many of the services that we may take for granted and/or not realise are delivered by councils,” he said.

“Providing those services has to be paid for and there is no bottomless bucket from which to draw.

“We fear that if the minister’s proposal proceeds, councils will have to pass on the reduced revenue and increased costs of service delivery and infrastructure to residents through increased rates.”