Differential Rates for the 2022-23 Financial Year

Position Paper

June 2022

Context:

What are Differential Rates and why do we have them?

To comply with Section 6.33 and 6.36 of the Local Government Act 1995 and the City of Fremantle’s intended approach to continue to levy differential rates for the 2021-22 financial year, the City is required to publish an Objects and Reasons for Differential Rates paper located here.

Differential Rates means in simple terms, there is a different rate for different groups namely residential, commercial and industrial.

The council’s justification to introduce differential rates for the 2022-23 financial year, is to better reflect the costs associated across those different groups and improve and enhance those groups, as well as propose a greater spread of the differential rates across the City to reduce the imposition of higher differential rates on CBD commercial businesses who have worn the brunt reduced national and international visitation over the last few years.

Breakdown of Differential Rates:

The City of Fremantle will apply differential general rates and minimum payments for the 2022-23 financial year as follows (Taken directly from the Objects and Reasons for Differential Rates Paper from Fremantle Council):

Rate Category FY 22 Rate in the $ FY 22 Minimum Payment PROPOSED FY 23 PROPOSED

FY 23

Residential Improved $0.084602 $1,388 0.090585 $1,481
Commercial and Industrial General $0.089890 $1,388 0.096174 $1,481
Vacant Commercial and Industrial $0.162689 $1,388 0.171982 $1,481
City Centre Commercial $0.097922 $1,388 0.098241 $1,481
Nightclubs $0.115945 $1,388
Vacant Residential Land $0.128111 $1,344 0.138413 $1,434
Residential Short-Term Accommodation $0.094477 $1,388 0.101024 $1,481

Objective:

The Chamber is committed to working with the City of Fremantle in ensuring its members are provided transparent updates on differential rates for the 2022-23 financial year, including clear direction on impact to local businesses.

Work Done to Date:

The Chamber called for submissions or comments from members in two editions of the Chamber Weekly (distribution to 2,120 members and stakeholders) and directly via Chamber Committees.

The feedback received is summarized in the Chamber’s position overleaf.

Chamber’s Position:

The Chamber appreciates the efforts of the City of Fremantle to provide more clarity around the rationale for the differential rates across each identified sector, and to assist commercial businesses within the CBD recover from the impacts of reduced visitation and COVID-19 closures and mandates over the last few years.

The Chamber supports the CBD security levy and the removal of the additional imposition on nightclubs for security and cleaning. The CBD will require ongoing attention to managing anti-social behaviour and other impacts, both during the day and the evening and we support increased resources dedicated to this. We are also encouraged by the installation of CCTV at JShed and Arthurs Head which we presume is part of this additional expenditure and push to improve security for the CBD.

We would like to see ongoing investment in protecting Port Beach and supporting the positive contribution of Leighton Beach to the amenity of the area.

The focus on improving the urban realm of the City and surrounds is also welcomed. We would like to see specific action on the City’s footpaths, wayfinding and general greening of our urban spaces where possible. The O’Connor, Samson & Hilton areas, in particular, do require attention to the urban realm and improving the link to how important these areas are to supporting CBD commercial activity.

In particular, it is the Chamber’s position that the City looks at the following prior to confirming the rates for the next financial year:

  • We would like to see the rates benchmarked against other metro municipalities to confirm reasonability and enhance transparency. There is no doubt a desire to increase charges in the face of rising costs of doing business, particularly around supply chain challenges and likely wage increase pressure. This is something all metro municipalities, and our own businesses, will face. However, we note that 6.7% (based on minimum payments) is higher than inflation and much higher than property value appreciation. Businesses will not be able to raise their charges, or income, by this much and therefore the proposed increase will be a direct hit on the bottom line. By not being in line with inflation, likely CPI or an appropriate benchmark, it does seem quite arbitrary in it calculation.
  • Perhaps there could be incentives for landlords who improve their properties with an effort to attract tenants, or those that fund tenant incentives (e.g., improved fit outs, rent free periods etc), and a penalty rate only levied if landlords cannot demonstrate reasonable efforts to advertise/secure a tenant.
  • Is there a process to create further differentials across the commercial/industrial categories? For example, should hospitality venues be charged the same rate as a retail business, or artist studio, pop ups and Farmers market vs fixed tenants, galleries vs professional services?
  • A high rate applied to short term accommodation discourages owners of such properties from complying with re-zoning requirements, particularly when not policed. This rate is also higher than the Commercial and Industrial rate, which doesn’t seem reasonable.

In principle the Chamber does support the better balance of rates across our commercial centre and other economic activity areas such as North & South Fremantle. We look forward to seeing the continuation of a strong branding campaign to promote visitation to the region, and a clear breakdown of programs planned to support and improve the urban realm across the City.

Image Credit: Chad Taylor