Almost two per cent of rates collected at an inner-city Melbourne council is subsidising religion and private schools in what one councillor has described as an “unjust burden on ratepayers”.
At a meeting of the Boroondara council late last month, Councillor Rob Baillieu (pictured) sought to table a confidential council report that detailed the cost of the rates exemptions.
Although the report was not made public following the meeting, Councillor Baillieu had, in a speech broadcast as part of the council meeting, detailed many of the key findings in the report.
He said that 279 of 801 properties exempted from rates were religious sites, while another 76 sites were for private education.
Taken together, he said, these sites represented $2.7 billion of the total $5.44 billion of exempted property in the council area and about 1.8 per cent of the total property that could be rated.
“That, functionally, means that in Boroondara 1.8 per cent of all rates go to subsidising religion and private education,” he said.
“This is both inconsistent with the separation of church and state, and an unjust burden on ratepayers.”
Because of these exemptions, the burden is spread on to all other ratepayers.
In his speech to the meeting, Councillor Baillieu said that removal of all rates exemptions – applying also to public education sites and, for example, and land used by health services and charities – would deliver an annual $75 reduction in rates for median residential ratepayers and save them about $865 over 10 years.
The Boroondara City Council, located in Melbourne’s inner eastern suburbs, has an existing policy opposing rates exemptions and has previously called on the Victorian government to remove these exemptions.
Under the state’s Local Government Act 1989, exemptions to rates apply to land used exclusively for: charitable purposes; religious worship or purposes directly connected with religious activities; and education. As these are state laws, councils have no power to rate such properties.
The council’s Revenue and Rating Plan: 2025-29 said the foregone revenue “represents a significant portion of the potential rating base and highlights the importance of ensuring equity among remaining ratepayers”.
A 2019/20 Victorian review of statutory rate exemptions by an independent panel recommended, among other things, repealing exemptions for land used exclusively for charitable purposes and for a public benefit test be applied, while noting that religious schools would likely become rateable under such a test.
However, the state Labor government rejected recommendations calling for changes to the current exemption arrangements.
In a submission to the 2019/20 review, the Municipal Association of Victoria (MAV) highlighted Boroondara as an example of how private schools in the council area were exempted to the tune of more than $1.3 million annually in rates.
That MAV submission argued that private schools placed a burden on councils due to the traffic generated, plus the costs of road and other infrastructure.
The submission also noted that some private schools lease out their facilities to commercial activities, such as swim schools.
“There is no broad-based community justification for these commercial entities being subsidised by the hosting LGA ratepayers when other alternate commercial providers are not subsidised,” the submission said.
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Si Gladman is Executive Director of the Rationalist Society of Australia. He also hosts ‘The Secular Agenda’ podcast.