Councils will only be able to sue for struggling ratepayers’ homes as a last resort under new proposed financial hardship laws.
Local Government Minister Shaun Leane said the legislation introduced to State Parliament on 8 June would ensure people in hardship were not “driven further into debt or out of their homes”.
It follows a State Ombudsman’s report that described some councils as “too quick to sue”.
The report found that often battling ratepayers faced “heavy-handed” debt collectors or charged interest when they did offer hardship relief, such as payment plans or deferrals.
Under the changes, councils would not be able to use debt collectors or pursue legal action to sell off homes to pay back debts to council unless ratepayers refuse to engage and all other options exhausted.
“We know that many Victorians are doing it tough and that’s why we are working to reform the rating system,” Mr Leane said.
“Good hardship relief schemes strike a balance where the rate burden is shared while ensuring people in hardship are not driven further into debt or out of their homes.”
City of Greater Dandenong hasn’t pursued court orders or evictions against ratepayers in the past two Covid-impacted years – after 319 court actions in the two years before that.
During the pandemic, the council also granted increased waiver relief.
Greater Dandenong finance executive manager Michelle Hansen said in the past two years the council had issued 447 waivers out of 615 applications.
Across 2018-’19 and 2019-’20, 76 waivers were granted.
The Ombudsman noted some councils’ “blanket” refusal to grant waivers, but Greater Dandenong was one that offered “substantial” waiver relief.
In other proposed changes, a maximum amount of interest on unpaid rates and charges would be set by the Local Government Minister, in consultation with the Essential Services Commission.
The Ombudsman had observed councils charging ratepayers hundreds or thousands of dollars in interest charges.
“In some cases, the interest charges have built over time and now make up anywhere from a quarter to nearly 50 per cent of the ratepayer’s total debt.”
Currently, Greater Dandenong charges 10 per cent interest – “as per the Penalty Interest Act 1983”, Ms Hansen said.
No properties were on deferral plans, she said.
The Council’s Rates and Hardship Policy, which “covers the key information contained in the Ombudsman’s report”, is shortly due for review.
