Vic Govt rules out use of debt collectors to chase unpaid rates

Victorian councils will no longer be able to use debt collectors to pursue unpaid rates under new legislation introduced in State Parliament last week.

During the pandemic, many local governments relaxed their hardship policies to provide relief to those struggling financially, and started engaging earlier with ratepayers who did fall into debt.

Local Government Minister Shaun Lean said the Local Government Amendment (Rating Reform and Other Matters) Bill 2022 would ensure councils “did not revert to past practices”.

“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,” Mr Leane said

The legislation follows the release of the Local Government Rating System Review and the State Ombudsman’s “Investigation into how local councils respond to ratepayers in financial hardship” report.

The report found that people struggling to pay their rates were often met with debt collectors, high penalty interest, and in some cases costly litigation –  and recommended greater support for ratepayers in financial hardship.

The Municipal Association of Victoria (MAV) has criticised the proposed legislation saying it has been calling on the state government for more than two years for guidance as to what councils do when it comes to hardship.

MAV President Cr David Clark said: “Not only have councils already improved their policies but most have also been road-tested during COVID and found to be delivering for affected residents.”

“If   the Government wants to help communities, then there are two immediate actions of value to everyone: Firstly, work with us respectfully and we will work with you in the same way.”

“Secondly, use the 2020 rating inquiry to reduce the rating burden on ordinary hardworking Victorians by dealing with the range of rating anomalies that currently exist across the State, which means many do not pay their fair rating share,” Cr Clark said.