Council’s ‘bin tax’ vote prompts calls for rates transparency across the state

Victorians have been left in the dark over how charges for bins and street cleaning are used by councils due to a lack of oversight, which has left the door open to price gouging, according to the state’s peak ratepayers body.

City of Yarra became the last council to adopt an uncapped waste levy on top of general rates after a heated council meeting on Tuesday night, when more than 100 residents protested at Richmond Town Hall over what they dubbed a “bin tax”.

A crowd of at least 100 rallied outside Richmond Town Hall on Tuesday night.Credit: Luis Ascui

Councils can circumvent the Andrews government’s rates cap rules by separating charges for rubbish and recycling on residents’ rates notices. Councils can also use this set-up to recover the costs of water supply and sewerage services, but it is uncommon, according to the Essential Services Commission (ESC), which oversees rate changes.

Before Tuesday’s vote, all other 78 Victorian councils had voted to implement a separate waste levy – some had done so at least five years ago.

By splitting the waste charges from the overall rates, councils can increase the charges for waste beyond the rates cap, something they argue has been a financial necessity since Victoria’s recycling system fell into crisis and the state government launched a four-stream waste system.

Yarra council’s annual bill for sending residential rubbish to landfill, for example, has increased 90 per cent over the past three years to $1.8 million, according to council documents published before Tuesday’s meeting.

The value and calculation of waste charges are inconsistent between Victorian councils. Some only use waste charges to recover the costs of household bins and pick-up, but others use the charges to fund street cleaning, public bins and litter collection in public places. Some councils use a flat fee per household bin, some charge a variable rate depending on the value of the property and some use a mix of both methods.

Dean Hurlston, vice president of Council Watch Victoria (formerly Ratepayers Victoria), said this lack of uniformity and a weak watchdog could allow the uncapped waste fees to be misused.

“We wanted one standard [waste fee] model so you could compare,” he said. “There’s no ability to compare one council to another council, which means we have no way to understand the value councils are giving to their communities.”

“We’re also concerned that the ESC is not going to police what’s appropriate to cover in the waste charge, that they are just going to sign off that the information is correct. They aren’t actually verifying those costs and judging whether they are reasonable to include.”

At least one council has been caught gouging residents for waste fees: The Wodonga council was called out by the ombudsman in 2018 for overcharging its residents by $18 million over 10 years.

The council was found to have inappropriately allocated the surplus funds to other council services, such as maintaining gardens and parks. Ombudsman Deborah Glass said this was as at odds with the Local Government Act but stopped short of saying laws had been broken. The council defended itself by labelling the use of the bonus revenue as waste-related.

The ESC compiles a report each year to “ensure that councils moving revenue between general rates and municipal charges (capped revenue) and service rates and charges (uncapped revenue) are transparent and accountable to their ratepayers”.

And according to its guidelines, councils should undertake community engagement and “ensure the new waste service charge has a neutral impact on ratepayers and does not result in a windfall gain to the council”.

But an ESC spokeswoman said the agency does not have any powers to consider whether what is being recovered through waste charges is appropriate, nor can it veto the charges.

In its latest report, the ESC found that three out of five councils that introduced a waste fee in 2022-23 were not “cost-neutral” – Darebin, East Gippsland, Melbourne City Council – but were “cost-reflective”, meaning the revenue generated from the waste charges was more than what the council could have raised if waste was still under the rate cap, but the costs were no more than the raw costs that councils were incurring.

Port Phillip council’s and Banyule council’s new waste charges were shown to be “cost-neutral”. All councils were found to be compliant, according to the ESC.

“Each council’s compliance information is certified as accurate by the council’s chief executive officer,” the report says.

“We run a range of checks on the data submitted by councils to validate their compliance, but do not independently verify the underlying data submitted by each council.”

Minister for Education and Women Natalie Hutchins said on Wednesday she wouldn’t rule out the local government minister reviewing the rate capping applications under the current legislation but acknowledged there was standalone legislation that allowed councils to levy rubbish separately.

She criticised the City of Yarra for not consulting the community before voting on the waste charge, a requirement under the state’s rates system.

“I’d say that this council has potentially skipped that process,” she said.

A spokeswoman for Local Government Minister Melissa Horne did not respond to questions about the lack of uniformity across council waste charges or ESC’s limited scope, but said more than $127 million was available to all councils through a Kerbside Reform Support Fund to buy new bins and fund infrastructure for the waste reforms.

“Councils are responsible for setting their annual budgets in consultation with their community – this includes the distribution of rates and fair issuing of charges,” she said.

With Sumeyya Ilanbey

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