Council debt collection: alternatives to suing ratepayers in hardship

6 December 2012

This report argues that Victorian local councils are rushing unfairly to legal action to recover unpaid rates, despite legal protections guaranteeing rates revenue, the existence of effective alternative payment strategies, and the severe impact of legal action on disadvantaged ratepayers.

Rates constitute the majority of the income of councils. The payment of rates by residents is crucial to the effective operation of local government. However, many residents experience genuine difficulty in paying rates.

The research documented in this report shows that councils in Victoria do not respond consistently to residents experiencing difficulty paying rates and some councils are far too quick to sue residents without adequately exploring alternatives to litigation.

This report recommends reforms to help achieve our aims of:

  • promoting early access to legal and financial counselling help for ratepayers experiencing financial hardship;
  • reducing unnecessary court proceedings by identifying more appropriate ways for councils to seek payment of rates arrears;
  • avoiding court and legal costs being added to unpaid rates debts; and
  • encouraging consistent, ethical debt collection practices by councils across Victoria.

The proposed reforms aim to promote the statutory objectives of councils to seek to achieve the best outcomes for local residents and improve the overall quality of life of people in local communities.

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