Homeowners are to be protected from local Council debt collectors under new laws to ensure Councils implement fairer financial hardship policies.
Introducing the Local Government Amendment (Rating Reform and Other Matters) Bill 2022, Minister for Local Government, Shaun Leane said the change would ensure that people who were struggling to pay their rates were not driven further into debt or out of their homes.
Mr Leane said the Bill would explicitly define financial hardship and require early engagement from councils with ratepayers.
“Councils will also no longer be able to use debt collectors or pursue legal action – which can result in homes being sold to pay back debts to council – unless ratepayers refuse to engage and all other options have been exhausted,” Mr Leane said.
“During the pandemic many Councils expanded their hardship policies to provide relief to those doing it tough and started engaging earlier with ratepayers who fall into debt – this Bill ensures Councils do not revert to past practices,” he said.
“It comes following the release of the Local Government Rating System Review and the Ombudsman’s report Investigation into how local Councils respond to ratepayers in financial hardship, with recommendations relating to greater support for ratepayers in financial hardship.”
Mr Leane said the Ombudsman’s Report found that people who were struggling to pay their rates were often met with debt collectors, high penalty interest and, in some cases, costly litigation.
He said this created more stress and fear for people who were already struggling financially and/or dealing with a range of compounding issues, such as family violence and mental health.
“The Bill will allow the Minister, in consultation with the Essential Services Commission, to set a maximum amount of interest levied on unpaid rates and charges, and Ministerial Guidelines to assist ratepayers experiencing financial hardship will be developed for Councils to follow,” Mr Leane said.
“Councils will also be limited in using Magistrate’s Court orders for recovering unpaid rates in situations where rates or charges have not been paid for two years or more,” the Minister said.
