The Shopping Centre Council of Australia (SCCA) is calling for changes to be made at Government level to prevent local authorities from abusing the current rental framework.
The SCCA has lodged a submission on the NSW Government's Destination 2036 reform program, which provides a forum for local government to explore and develop structures that will allow the sector to meet the needs and expectations of communities of the future.
The SCCA's executive director, Milton Cockburn, said the group's submission primarily addresses the issue of council ratings for shopping centres, which have continued to increase 'well above any reasonable measure'.
“The current rating framework is too easily abused and enables gouging by local councils, requiring no demonstrable link to the provision or cost of council services, and is often based on dubious reasoning such as 'capacity to pay',” Cockburn said. “This blatant discrimination and gouging must be addressed in the reform process.”
Cockburn said the 'capacity to pay' approach, which is prohibited in Queensland, enables a council to simply decide that an owner can afford a rate increase.
He said there is no standard test that needs to be applied to this approach, nor does any test need to be applied consistently.
“This is poor public policy and poor taxation policy. The 'capacity to pay' argument also demonstrates that some councils don't understand, or don't care, that much of the council rates for shopping centres are paid by retail tenants, either directly in outgoings or indirectly in rents,” Cockburn said.
The SCCA's submission cites examples where council rates are 'outstripping land tax', with council rate increases ranging up to 70 per cent.
The SCCA represents Australia's major shopping centre owners and managers and 20 of its members collectively own more than 150 shopping centres.