Local Government Act 1989

The Act primarily binds councils (defined in s.3(1) to include the City of Melbourne and City of Geelong) and their councillors and Council staff (defined in s.3(1) as persons employed by the Chief Executive Officer, including the CEO per s.94(2)). Councillors are subject to conduct principles (historically in ss 76B–76BA, now largely in the 2020 Act but with surviving definitions of "bullying", "gross misconduct", "misconduct" and "serious misconduct" in s.3(1)), codes of conduct (s.76C), internal resolution procedures (s.81AA), and potential VCAT or panel sanctions.

Ratepayers and owners of rateable land (s.3(1), s.154) bear the primary liability for rates and charges (s.156(1)). Occupiers or mortgagees in possession become liable if the owner cannot be found (s.156(2)). Special rules apply to caravan parks (s.156(3A)), Crown land licensees (s.156(4)–(5A)), and purchasers (s.175). Owners of land subject to environmental upgrade or cladding rectification agreements (ss 181A, 185I) or their occupiers (if they have agreed in writing: ss 181C(2A)–(2B), 185M) must pay the levied charges, with councils acting as collection agents (ss 181E, 185N).

Residents and the local community (defined broadly in s.1A(4) to include residents, ratepayers and those conducting activities in the district) are affected through service delivery, consultation rights under s.223, and the ability to object to differential rates (s.161(3)), special rates (s.163A–163B), or apply for rebates, concessions, deferrals or waivers on hardship grounds (ss 169–171A, with Ministerial guidelines under s.181AA). Voters (s.3(1)) participate in elections, though Part 3 is largely repealed.

Public authorities, the Crown, and bodies holding non-rateable land (s.154(2)) are exempt from general rates but may pay service charges (s.221) or special charges. Lenders under environmental or cladding agreements (definitions in s.3(1)) recover funds via council-levied charges. The Essential Services Commission, Minister, VCAT, County Court and Registrar of Titles exercise oversight, review or registration functions (ss 185D–185G, 183–185AB, 181, 207D–207E).

Authorised officers (s.224) and police (s.224A) enforce local laws. The Act indirectly affects businesses through rates on commercial land, road management (Schs 10–11), film permits (definition in s.3(1) cross-referencing the Filming Approval Act 2014), and waste services (s.162(1)(b) cross-referencing the Circular Economy (Waste Reduction and Recycling) Act 2021).

Councils have duties to declare rates by 30 June (s.158(1)), use Valuer-General valuations (s.157(3)), levy charges on each separate occupancy (s.158A), and comply with rate caps (s.185F). They must give public notice before special rates/charges (s.163(1A)), consider submissions under s.223 (which applies to differential rates, special charges, drainage works, etc.), and maintain accounts per AAS (definitions in s.3(1)). For environmental upgrade agreements, councils must satisfy conditions in s.181B (including mortgage and rates disclosure), declare charges (s.181C), use best endeavours to recover them (s.181E), and report quarterly (s.181G). Similar duties apply to cladding rectification (ss 185J–185N). Road powers in Sch. 10 require notice for deviations, discontinuances, alignments and material extraction (cll 2–4, 7–8); traffic powers in Sch. 11 are subject to the Road Safety Act 1986 and Road Management Act 2004 (s.208).

Ratepayers have rights to rebates/concessions for public benefit or heritage (s.169, with community benefit statement required by s.169(1A)–(1B)), deferral on hardship (s.170), waiver (ss 171, 171A), payment plans (s.171B), and interest caps (s.172A, set by Minister after Essential Services Commission advice considering hardship). Objections to special rates where the council seeks more than two-thirds cost recovery are available under s.163B; majority objections block the declaration. VCAT review of differential rating is available within 60 days of the first rate notice (s.183(2)); appeals on special rates/charges lie on grounds of no special benefit, unreasonable distribution, or inconsistency with planning schemes (s.185(2)).

Owners and occupiers must pay rates (s.156) but can require notices to be sent to third parties (s.158(3A)) or continue instalments on land transfer (s.175(1A)–(1B)). Occupiers paying rates can deduct from rent (s.178). Mortgagees and purchasers take subject to arrears (s.175(1), (1AA)).

The community has submission rights under s.223 (public notice, 28-day minimum, hearing if requested, written reasons for decision). Councillors and staff are protected by conduct principles but subject to internal resolution (s.81AA) and external oversight (historically via Councillor Conduct Panels, now under the 2020 Act).

The Minister may issue rate cap Orders (s.185D), guidelines on differential rates (s.161(2B)), hardship (s.181AA), and environmental upgrades (s.181I via the Victorian Energy Efficiency Target Minister). The Essential Services Commission advises on caps and higher cap applications (ss 185D(3)–(4), 185E).

Enforcement is primarily civil. Unpaid rates and charges (including interest under s.172, capped by s.172A) are a first charge on land (s.156(6)) recoverable in the Magistrates' Court or as a debt (s.180(1)), subject to 24-month notice and hardship prerequisites (s.180A). Councils cannot sue while a payment plan is on foot or within 24 months of its cancellation (s.180A(3)–(4)). Interest continues post-judgment (s.172(2A)). Land may be sold after three years' arrears, court order, and notice (s.181(1)–(5)), with proceeds applied to costs, arrears, other charges, mortgages and then owners (s.181(7)–(10)); the Registrar of Titles must register transfers (s.181(11)–(12)).

Offences carry 10 penalty units for false/misleading information or failure to notify changed circumstances in waiver applications (s.171(6), s.171A(4)), or for obstructing authorised officers or refusing name/address (s.224(8)). Authorised officers (s.224(1), (6)–(6A)) may enter land (s.224(7)) and demand names. Police may enforce alcohol-related local laws (s.224A); Great Ocean Road Coast and Parks Authority officers may enforce local laws in relevant areas (s.224B).

Special rate schemes can be discontinued (s.164) with refunds of excess (s.165). Invalid rates are not a defence unless quashed (s.179(1)); late declarations do not invalidate (s.179(2)). Environmental and cladding charges are recovered as service charges (s.181C(6), s.185L(3)), with councils not liable for owner/occupier default (ss 181E(2)–(3), 185N(2)–(3)).

The Act is expressly linked to the Local Government Act 2020 (s.1B). It cross-references the Valuation of Land Act 1960 for definitions (capital improved value, farm land, residential use land, urban farm land in s.3(1)), valuations (s.157(3)), and objections (s.183(3)). Road powers are subordinate to the Road Management Act 2004, Transport Integration Act 2010, Road Safety Act 1986 and Heavy Vehicle National Law (ss 208–208AA; Sch. 10 cl. 4(2), Sch. 11 cll 9–10). Drainage interacts with the Water Act 1989 (s.201).

Financial management principles (s.3(1)) reference AAS. Rate capping involves the Essential Services Commission and Essential Services Commission Act 2001 (ss 185D–185G). Environmental upgrades reference the Victorian Energy Efficiency Target Act 2007 and Climate Action Act 2017 (ss 181A(1A), 181I). Cladding works are tied to the Building Act 1993 and Owners Corporations Act 2006 (ss 185H–185K). Submissions under s.223 interact with planning schemes (Planning and Environment Act 1987). Livestock information sharing occurs under the Livestock Disease Control Act 1994 (s.237A). Film permits must align with film friendly principles (Filming Approval Act 2014; s.243(8A)).

Public interest disclosures, IBAC and confidentiality notices interact with the Public Interest Disclosures Act 2012 and Independent Broad-based Anti-corruption Commission Act 2011 (definitions in s.3(1)). Transitional provisions preserve earlier regimes (Part 12).

The version is No. 168 as at 20 August 2025. Key recent amendments reflected in the text include:

• CPI definition (s.3(1)) amended by No. 30/2025 s. 25 to reference forecast Melbourne CPI from budget updates under the Financial Management Act 1994, ensuring rate caps (Part 8A) track accurate inflation.

• Maximum interest rate (s.172A, inserted by No. 30/2022 s. 17) requires Ministerial fixing after Essential Services Commission advice considering hardship, financing costs and commercial rates. This responded to concerns about high penalty interest on rates during cost-of-living pressures.

• Payment plans (s.171B, inserted by No. 30/2022 s. 9) and restrictions on recovery proceedings (s.180A, inserted by No. 30/2022 s. 13) mandate councils to offer plans for arrears (including interest) and prohibit court action for 24 months after notice or plan cancellation. These changes promote hardship relief (see also s.181AA Ministerial guidelines).

• Waste services updates (ss 3(1), 162(1)(b), 221(1)(b)) align with the Circular Economy (Waste Reduction and Recycling) Act 2021 (No. 30/2022 ss 3–5).

• Environmental and cladding provisions (Divisions 2A and 8B of Part 8) were added in 2015 and 2018 to facilitate third-party funded sustainability and building safety works, with councils acting as collection agents without bearing default risk (ss 181E, 185N).

• Rate cap regime (Part 8A, substituted 2015) and Ministerial guidelines on hardship (s.181AA, inserted 2022) reflect ongoing cost-of-living and housing affordability concerns.

These changes respond to community pressure for rate relief, environmental goals, building safety post-cladding scandals, and alignment with the 2020 Act's governance focus. Transitional rules (s.253) preserve pre-2022 special charge declarations and interest calculations until the Minister fixes a rate under s.172A.

The Act channels disputes into specific forums rather than general judicial review. VCAT reviews differential rating classifications (s.183(1)–(2), applying Valuation of Land Act 1960 Part III with modifications) and special rates/charges (s.185(1)–(3)), with powers to vary, set aside or confirm (s.185(3)). Declarations on validity are available (s.185AA, exercisable only by a presidential member). County Court appeals on rates (s.184) are limited to grounds such as non-rateable land, incorrect calculation or wrong person levied (s.184(2)), with a 60-day limit (s.184(1B)).

VCAT must consider planning schemes (s.185AB(a)) and adopted but unapproved amendments (s.185AB(b)). Controversies have arisen over the "special benefit" test in s.163(1) and benefit ratio (s.163(2B)), with objectors arguing community-wide benefits should reduce the special component. The 10% alteration limit in s.163(2BA) and majority objection threshold in s.163B(6) have been litigated where councils adjusted schemes post-submissions. Hardship waivers (ss 171, 171A) and interest (s.172) generate disputes over "financial hardship" (guided by s.181AA but not statutorily defined), with councils balancing revenue needs against equity.

Road discontinuance and vesting (s.207B, Sch. 10 cll 2–3) have produced title and compensation arguments, resolved via Registrar of Titles powers (ss 207D–207E). The interaction with the 2020 Act via s.1B has raised precedence questions in overlapping governance matters. No specific reported cases are recited in the source text, but the statutory architecture (time limits, mandatory considerations, majority objection veto) reflects legislative intent to limit broad judicial intervention while preserving accountability.

Most practitioners miss that the Local Government Act 2020 does not wholly replace the 1989 Act; s.1B requires the 1989 Act to be read as part of the 2020 Act, but the 2020 Act prevails only on inconsistency. Many 1989 Act provisions (especially rates and charges in Part 8) remain operative, creating a dual-regime trap for compliance officers who assume the 2020 Act is comprehensive.

The benefit ratio formula in s.163(2A)–(2B) is often misapplied; it caps the total special levy at the proportion of special (not community) benefit, yet councils sometimes include indirect benefits, exposing schemes to s.185(2)(b)(ii) unreasonableness challenges. The 10% alteration safe harbour in s.163(2BA) is narrow: alterations exceeding 10% or adding new liable parties require fresh public notice and s.163 procedures.

Section 180A(1)–(4) is a procedural landmine: councils cannot commence recovery for 24 months after hardship notice or payment plan cancellation, yet many overlook the written notice and options advice prerequisite. Interest under s.172 cannot compound on already-charged interest (s.172(1A)), and the Ministerial cap (s.172A) must consider hardship, creating grounds for judicial review if ignored.

Differential rating under s.161 is restricted to capital improved value systems; non-CIV councils are limited to farm/residential adjustments under s.161A, with ward-majority consent required. The 4:1 ratio (s.161(5)) is absolute. Environmental upgrade charges survive land ceasing to be rateable (s.181C(10)), and occupiers are not automatically liable (s.181C(2A)) unless they expressly agreed— a frequent lease drafting oversight.

Transitional s.253(2) preserves pre-2022 interest calculations until the first s.172A rate takes effect, which many councils miss when issuing 2023–24 notices. Finally, s.223 submissions are not mere formalities: failure to consider them or provide reasons (s.223(1)(d)) vitiates decisions, yet councils often treat them as optional.

Councils should maintain a compliance register keyed to key triggers. For rates: obtain current Valuer-General valuations before 30 June (s.157(3)), declare by that date with prescribed information and 14-day notice (s.158(4)–(4B)), publish differential rate objectives and data online (s.161(3)), and apply the 4:1 cap. Special charges require 28-day public notice with benefit ratio calculation (s.163(1A)–(2B)), copies to liable persons (s.163(1C)), and majority-objection veto awareness (s.163B(6)). Levy within 12 months or the declaration expires (s.163(4)–(4A)).

For hardship: adopt policies consistent with s.181AA guidelines, offer payment plans before recovery (s.171B, s.180A), and document 24-month waiting periods. Environmental/cladding agreements demand pre-entry mortgage/rates disclosure (ss 181B, 185J), capital improved value checks (s.181B(1)(d), s.185J(4)–(5)), written occupier consent where sought (s.181B(1A), s.185M(1)), and quarterly reporting (s.181G). Charges must be used solely for repayment (s.181C(8)–(9)).

Road works require s.223 submissions where specified (s.207A), Ministerial or Head, Transport for Victoria consents for arterial roads/freeways (Sch. 11 cll 9–10, s.208), and Gazette notices for deviations, discontinuances and alignments (Sch. 10 cll 2, 3, 7, 8). Authorised officers need identity cards (s.224(2)–(3)) and must state grounds when demanding names (s.224(6A)).

Maintain separate accounting for special charges (s.163(6)), refund excesses proportionately (s.165), and keep s.223 records (public notice, hearing opportunities, reasons). Delegate appropriately (s.181H for environmental agreements; s.185L(4) for cladding). For rate caps, apply by 31 March for higher caps with detailed efficiency and community consultation evidence (s.185E(3)). Audit transitional provisions (s.253) before issuing notices. Regular legal sign-off on declarations, notices and agreements is essential given the technicality of ss 158–181, 185A–185N and Schs 10–11.