Despite popular belief, local government rates are not determined by a simple 'my property value' x 'general rate' = 'my bill' equation.
To make rates as fair as possible, all local governments apply more considered equations to their rate notices, in accordance with the Local Government Regulation.
The first step is to determine how much rates revenue must be generated in order to deliver the wants and needs of the community.
A reduction or increase in a community's property values does not necessarily result in an equal reduction or increase in the costs of providing services to that community.
The required rates revenue is therefore spread across a community according to the distribution of its properties' values.
This distribution of property values across a community typically fluctuates from year to year. Some years a drop or rise in value can be evenly spread across all properties. Other years a pocket of properties will experience a dip or rise in value that is steeper than other properties in the region.
The relatively fixed cost of providing adequate services, combined with uneven levels of property value changes, explains why a drop or rise in a property's value doesn't necessarily result in an associated drop or rise in its rates.
Therefore, an individual property's rates bill is governed by its value compared to other properties in the region and the fixed costs of its Council.
A rate cap is also applied to reduce the impact of large valuation increases on residential, rural, small businesses and light industrial properties.