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Monday, 12.18.2017
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2:11 PM
Councils go to extremes to justify their greed for money.

Let me explain what happens.

 

How the scam works.

Land that is used for recreational purposes, i.e. clubs, golf courses and so on, are thought of as providing a service to the community. Because of this, clubs can negotiate a reduced rate bill from Manningham Council.

That seems fair enough. Clubs often have larger land holdings, big club buildings and so on and possibly they cannot afford large expenses. Also the community can join their clubs or use their facilities. So because of this service they provide to the community, they can negotiate a reduced rate bill with the council.

But problems arise when that club building or land is sold.

The new owner will have to make up the difference in rates that the council missed out on over the last 10 years.

So if you buy a recreational land/building that granted a reduced rate bill by Manningham council, the club will be able to keep their savings. But the council will come after the new owner to make up for the council's losses over the last 10 years.

These 'back rates' could be a large bill especially if the club owned a large piece of land, as was the case with the eastern golf course.

Back rates for the eastern golf course land were some $1.9 million. (Page 3. Financial Status report for December 2015. See council meeting for Feb 2, 2016).

 

A few things need to be said about this practice.

a)       It is an indecent grab for money.

Yes, it is indecent. The reduced rates were granted by Manningham Council because of the services the club provided to the community. So are we saying that for the last 10 years the club provided no such services to the community and so the money should be paid back?

That is simply nonsense.

And why should it be paid back by the new owner?

The club ceased to provide a service to the community when it sold it's buildings and/or land. From that date forward the full rates should apply. Prior to that time, a reduction in rates was justified.

An important question is, how can the council justify demanding these 'back rates'? I will go into that shortly.

b)       Don't think the land developer is paying these back rates.

Many people today think that these 'bourgeois' or 'capitalist' land developers should pay the back rates because they are robbing ordinary hard working people all the time.

I hope that you don't think that way.

Do you really think that the land developer will be the ultimate person who pays these 'back rates'?

What will happen is the land developer will most likely pass these costs onto the buyers by adding this cost to the price of the dwellings they sell. These back rates are a cost to build a dwelling just as are timber, bricks and cement, etc.

These back rates are really paid by people like you and me – i.e. By ordinary people who will buy the new units and homes.

I think the council knows this. And this talk of capitalists, etc. simply serves their ends.

It is not the greed of the land developers that push the prices of these new homes up. It appears they do all they can to keep the costs down. It is the greed of the bourgeois people in the council who want to plunder as much as they can from everyone they can, who push the prices up.

You don't agree with me? I will show you shortly how the land developer is taking Manningham Council to court to restrain their greed and keep the price of the new homes as low as possible.

Back rates are really a hidden, backdoor tax imposed by the council on ordinary people. Back rates inflate the cost of units and houses in a new development such as the Eastern Golf course development.

  1.   Why do we have these back rates?

     How can Manningham and other councils get away with this and also silence any critics?

They can do so because this practice has been enshrined in law.

The Cultural and Recreational Lands Act 4(5)(ii) allows councils to charge 10 years back rates to make up the difference when recreational land is sold – effectively ignoring the value and benefits the council agreed these clubs provided to the community during that time.

The 'Cultural and Recreational Lands Act' is a bit of a misnomer which, I think, is very misleading. You would think it contains laws about how to manage recreational land, maintain it, allow the public to use it, etc.

But it is absolutely nothing of the sort.

Contrary to what it's title might  suggest, this small act of just 10 pages only deals with a council's rights to charge rates for recreational land. That is correct. It concerns itself with council rights to charge the owners of recreational land rates, it provides avenues of appeal and conflict resolution if council's charge unreasonable rates and it concerns itself with a councils right to charge the new owners of recreational back rates to make up the council's losses in revenue.

The problem is that most people would see the right to charge back rates as enshrining greed and theft.

The question we need to ask is, who pressured or lobbied the state government back in 1963 to allow all this fundamentally dishonest practice? And who continues to lobby the state government to make amendments to this act?

I think the answer would probably be that local councils have made a big contribution to all aspects of this legislation.

So Manningham council is not only at fault here. The state government is also and so are the other councils who supported and lobbied for this corrupt legislation.

  1. Note the type of arguments that justify back rates.

Many of us have heard the types of reasoning used to support these types of dishonest practices.

Government bureaucrats can say that it is their right under the law! Therefore they can charge back taxes and not be concerned with whether it is right or wrong.

Some go even further and define right and wrong in terms of what the law says. They are so corrupted by their greed that they say 'because it is in the law, there is nothing wrong with it'.

What we have here is nothing but theft and out-of-control greed.

 

Why Back Rates are indecent.

Simply because a rate reduction was given to the clubs because of services provided to the community. The fact that club land or buildings is sold does not mean that services were not provided over the prior 10 years. Those services were provided and were recognized by the council as being of value to the community and so justified a reduction in their rates bill.

Now the council says 'forget the services, forget any value to the community, we just want our money back'. We cannot go after the club so we will go after the next owner who comes along.

You can see how the council's greed for other people's money corrupts them.

Most decent people would be outraged by the council's greed and hypocrisy.

If people in private industry provide a discount or price reduction for any reason, they typically accept responsibility for it and manage without the money as best they can. They typically make up for such losses by honest and decent work by providing better services, selling more goods, finding more customers, etc.

But not councils. They don't need to work harder or smarter. They have the law on their side and can forcibly take back what they lost from the next person that comes along. This is certainly not the same thing that happens in private industry.

 

Manningham Council's crocodile tears.

Yes, Manningham Council cries crocodile tears over problems they helped create themselves.

Please see the "Plan Melbourne Refresh Submission" from Manningham Council which can be downloaded from the meeting notes for Feb 2, 2016.

The Plan Melbourne Refresh is a type of survey sent to council's by the state government. The state government is looking for ideas to 'freshen up' Melbourne for the future to make sure is stays up to date etc.

Throughout this submission, Manningham Council decries the fact that there is not enough 'affordable' housing in Manningham. They claim 'affordable' housing in Manningham is 'critical' for the future (page 1). It is a key issue facing future generations (page 4). They want to set housing targets to deliver affordable housing (page 14). And they go on and on about the need for affordable housing.

But isn't it odd that Manningham council do all in their power to inflate the cost of housing for ordinary people. Even by resorting to back door methods of hidden taxation, hoping that people will not catch on to what they are doing.

Instead of stealing money from future residents of Manningham, they should be working to reduce the price of housing and the cost of council. But it seems that is only something they wish for (page 16) not something they actually do.

 

So who is your friend, the council or the land developer?

Many will say that government is our friend. They will look after us. They will give us what we want, etc, etc.

Really?

In my view, it is the government that, at all levels, use their power to further their own interests -- be their interests financial or otherwise.

Currently Manningham Council is locked in legal battle with the developers of the Eastern Golf links.

The developers apparently dispute that the Cultural and Recreational Lands Act should be applied to the Eastern Golf Links.

If it should not be applied, then presumably the developers will not need to pay the back rates or, in this case, they can get the back rates refunded.

If the back rates are refunded, that will mean cheaper housing for new residents.

Now the cynics among us might say that they just want more profit.

But I think what is going on is that the developers see that the current housing bubble has peaked and is on it's way down. Some people are saying the current housing market is heading for a correction.

If that is true, then presumably the developers want to reduce their cost so they can keep their prices low in anticipation of a coming slow down in the housing market.

It is most likely that the developers have in their mind the very real possibility of a reduction or slowing in housing prices and they want to retain their current profits.

 

Manningham Council rakes in the money from new developments.

On page 3 of the Financial Status Report for December 2015, we read:

"The first supplementary rate run for 2015/16 raised an extra $150,000 rates revenue above budget forecasts due to an increased number of properties being rated for the first time."

So the council has a sudden windfall of rates from new properties and new homeowners that they had not anticipated. How about that! Money is coming into to Manningham Council from places they did not even anticipate.

So on the one hand, they claw back money to cover discounts they gave to recreational land owners, then they provide high density housing and get an unexpected windfall in rate money.

 

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