Add Category
- In short? As more Victorians have struggled to pay their council rates, financial aid advocates have criticised councils' heavy-handed approach to those in financial hardship
- What's next? Council Watch Victoria has called on the state government to clarify what is an acceptable minimum standard in dealing with people facing hardship
Jane* calls her home her "safe haven".
She moved into the 12-acre regional Victorian property in 2018, having developed severe depression following a family breakdown and the loss of her job.
The serenity of the bushland covering the property — and the refuge of the century-old home at its centre — was integral to her recovery.
"This was my shelter for the last four to five years, due to not being able to get out of my deep depression," Jane said quietly, sitting at the dining table in her timber-floored kitchen.
"During COVID it was also a saving grace. It gave me more time to get back on my feet mentally.
"This place helped me to do that, it was a safe haven for me to be able to grow stronger mentally and be able to pick myself up again."
But during this time, Jane's debts were growing.
The annual rates bill on a property like this is more than $5,000, and by the time her council added penalty interest to her debts she quickly found herself owing more than $30,000.
"They built up because I couldn't face them, basically. I couldn't face myself," Jane said as her voice broke.
"I was quite embarrassed and ashamed that I got to that place, to the place of no work, because I've worked all my life.
"I couldn't face the reality of the debt that I was getting myself into ... so, it kept piling up."
Then the council's debt collectors arrived.
"They just drove up the driveway and came out of their black car and gave me a piece of paper and then left," she said.
"They were going to take the house if I didn't pay the full amount.
"To think that this haven that helped me through so much would be taken away from me, it just brought up a lot of, you know, I could feel myself falling again."
Rise in Victorians seeking help with council rates
Mortgage Stress Victoria had already helped Jane through separate issues with her bank, and soon they were dealing with the council.
Jane had a few local jobs by this point and had wanted to chip away at her debt, but the council wouldn't come to an agreement on a weekly payment within her reach.
That came despite the council's financial hardship policy noting ratepayers' rights to nominate payment arrangements that are affordable, regardless of whether they would be sufficient to repay debts.
Jane has a clean slate with her council now and is keeping up with her mortgage payments, but she said the council's aggressive pursuit of her debts still filled her with "fresh feelings of panic and anxiety and nightmares".
Jane's situation is not unique, with Victorians increasingly struggling to pay their rates, and financial aid advocates criticising what they say is a heavy-handed approach from councils to hardship assistance.
Rising cost-of-living pressures have prompted more and more Victorians to seek financial counselling in dealing with their debts — particularly council rates bills.
The Victorian arm of the National Debt Helpline is seeing mortgage stress — including rates — as the leading issue for the first time in a decade. The service has already helped about 200 people with rates arrears in 2023.
Fresh figures from Financial Counselling Australia also show demand for assistance from Victorians jumped by 48 per cent in the first five months of the year, with about 13,000 people asking for help with their debts.
Concern of 'systemic' issues for those in greatest financial need
Mortgage Stress Victoria legal director Matthew Martin said there was no doubt demand for financial assistance from people falling behind on their rates was growing across the state, putting a spotlight on the poor hardship assistance practices of most councils.
He said some councils could even be breaking the law by refusing to consider waiving any debts for residents most in need of assistance.
"When we make a debt waiver request to a council, often they are saying that it is a part of their hardship policy, or a part of their internal policies, not to consider debt waiver requests," Mr Martin said.
He said any blanket refusal to consider a debt waiver request put councils in breach of the Local Government Act.
"It's a decision that's creating a systemic issue for people who are on the greatest margins of financial hardship," he said.
Consumer Action Law Centre CEO Stephanie Tonkin said there was no consistency across different councils in their approach to hardship assistance — meaning residents struggling to pay their rates were left with a luck-of-the-draw response from their councils.
"At some councils, if clients of ours are doing it tough they might receive a waiver, that's very few councils, but in almost all the other councils they won't even entertain a waiver in really serious circumstances," Ms Tonkin said.
"We need more consistency, it's a real concern for people who are struggling in the cost of living crisis.
"We're not seeing enough deferrals. We're not seeing generous enough hardship assistance for ratepayers who are doing it really tough."
Criticism of poor hardship assistance practices of councils — who on average derive more than half of their revenue from rates and charges — is nothing new.
In 2021 the Victorian Ombudsman released a largely scathing report following an investigation into how councils responded to ratepayers experiencing financial hardship.
While Ombudsman Deborah Glass found some councils managed the issues "very well", others employed practices that "were simply unfair and wrong", including "some common practices that could not be justified".
Those practices included councils failing to inform ratepayers of options for deferrals or waivers, refusing to even consider deferrals or waivers, and charging penalty interest on debts.
The investigation found in 2018-19 more than 7,000 Victorians were sued for unpaid rates while councils also forced the sale or transfer of land on 28 occasions.
The report prompted the state government to last year introduce the Local Government Amendment (Rating Reform and Other Matters) Bill 2022, which it said would "explicitly define financial hardship and require early engagement from councils with ratepayers".
Calls for government action, rather than 'toothless tinkering'
The state government this week confirmed it was developing ministerial guidelines for the payment of rates and charges, but would not provide specifics on what the guidelines would include.
When asked what specific changes had been enacted by the government to protect ratepayers since the release of the 2021 ombudsman report, a government spokesperson said a "raft of reforms" had been introduced.
"That includes laws that require councils to offer a payment plan as an alternative to paying rates in the four installments.," the spokesperson said.
"Our changes mean councils cannot seek a court order to recover unpaid rates and charges unless the rates and charges are overdue by two years or more and no payment plan has been established."
Despite the 2021 Ombudsman report and incoming changes from the state government, ratepayer advocacy group Council Watch Victoria said too little had been done to protect ratepayers and improve their access to reasonable hardship assistance.
"What we've seen is toothless tinkering around the edges, we haven't seen clear direction from the state government," Council Watch spokesman Dean Hurlston said.
"The minister should set the agenda, should set the legislation, and make it really clear on what is an acceptable minimum standard in dealing with people in hardship.
"Until that happens it's just hot air.
"The biggest problem is that councils don't understand hardship, and they don't understand their responsibility as a good corporate citizen."
*Names have been changed to protect identity