MGV – A Detailed History

In an act of 1853, the Victorian Parliament established a Central Roads Board to construct and repair Victoria’s main roads and bridges. The act also authorised district boards – the forerunners of today’s local governments. Owners and occupiers of land in a district could elect their own road boards to manage the minor roads and to press their claims for main roads before the central authority. These district boards had power to raise money by erecting turnpikes on the roads and by levying rates on property. These early rates generally took the form of acreage levies on rural lands and a tax based upon the actual rental or valued annual rental on other properties. The district boards appointed officers to determine these rental values. This was the forerunner for the person now known as the municipal valuer.

This practice marks an essential difference between Victoria and the other Australian states in the administration of valuations for rating purposes. As an alternative to the state sponsored central valuation authority, Victoria has always placed the responsibility on the employment of valuers with the municipalities. Each local government area employs its own valuers, either on a staff or contract basis. In some instances a number of municipalities have joined together to form a valuation group jointly employing a valuer. The result of this system has been greater local knowledge for the valuer, greater valuer access for the ratepayer and availability of other valuation services for local government.

Initially the discretion of the boards and the council that succeeded them was wide, both as to the person to be appointed as valuer and matters relating to the valuation itself. There was no maximum period for which a valuation could be used, no provision for supplementary valuations to take account of changes to property and no indication as to the appropriate date of valuation to be adopted.

Amendments to the law in 1903 and 1921 introduced firstly, provisions for supplementary valuations and secondly, a requirement for a general valuation at least every six years. It was finally left to the Valuation of Land Act ion 1960 to introduce a degree of uniformity of valuation date to the rating system.

The early 1900’s also saw the formation of the Melbourne and Metropolitan Board of Works, which not only used the municipal valuations but often employed the Council valuer/rate collector to write up its rate book. Other water and sewerage authorities also used the municipal valuation.

Following the popularisation of the ideas of Henry George around the turn of the century, Victorian rating legislation was amended in 1920 to permit municipalities the choice of rating on either net Annual Values or Unimproved Capital Values. (In 1968 the Local Government Act was further amended to enable rating on a combination of both valuation bases). Those municipalities rating on the land value base required the valuer to return both valuations.

This, combined with the more uniform approach to valuation dates brought about by the Valuation of Land Act forty years later, enabled the State Government to eventually use municipal valuations for land tax purposes. By 1931 the background of changing legislative requirements and the increasing significance of municipal rates saw a number of practising municipal valuers joining together to form the Victorian Institute of Municipal Valuers. The Institute commenced with approximately 18 members under the inaugural President Mr F Phillips, then valuer at Heidelberg Council.

The mood and interest of the fledgling Institute were aptly described by WS Lang – one of the founding members and valuer to Port Melbourne.

“By about 1930, there appeared to be a spontaneous desire for consultation among Municipal Valuers and this resulted in the formation of the Victorian Institute of Municipal Valuers. The members were all conscientiously concerned for the standard of their work and met regularly to mutual advantage.

Some of the problems which brought members together were the valuation of hotels, Licensed Grocers and Special Utility properties. There were also problems regarding legal decisions as to determining a rental for a lease of one year, as opposed to one year in a lease for a period of years. Another problem was the matter of defining Tenant’s Chattels and what constituted the Rateable Hereditament. Also, consideration was given to high-level expenditure of a property, which could not command an adequate return on the expenditure.

One of the great difficulties which arose during my term, was the valuation of the then Metropolitan Gas Company’s undertaking. This affected every municipality and was handled by a barrister on an accountancy basis in conference with the valuers. It was an exceedingly complicated procedure and the calculations were made to determine the residual value of the gas mains in each municipality. It followed many legal decisions, many of them English. A Standing Committee to oversee the problem continuously was mooted by was not proceeded with, as eventually the whole set-up of the undertaking was changed”.

During the 1930’s and early 1940’s the Victorian Institute of Municipal Valuers co-existed with the Commonwealth Institute of Valuers which had its inaugural Victorian meeting in October 1931. A number of valuers were members of both Institutes. Towards the latter part of 1957 the Commonwealth Institute of Valuers approached the Municipal Institute with a view to effecting a merger. By September 1958 the Municipal Valuers Institute was wound up and its funds transferred to the CIV. Twenty-six members transferred to the CIV, twenty-one as fellows and five as associates. These members formed a committee of their own to deal with matters of domestic interest under the control of the State Board of the Victorian Division of the CIV.

By this time the VIMV and its successor, the Municipal Valuers Group, were meeting of an evening on the first Friday of each month at various venues usually at one or other Town hall. Meetings at St Kilda Town Hall and Melbourne Town Hall figure prominently as venues.

In 1958 the group changed its meeting time from Friday evening to Friday afternoon – a move which proved to be something of a renaissance to membership and interest. It was also a change which even now contributes to the successful activities of the group. Eventually the group obtained a permanent meeting place in the RESI meeting rooms in East Melbourne under sponsorship of the commonwealth Institute of Valuers. The Municipal Group of Valuers moved temporarily to the Real Estate Institute of Victoria’s meeting rooms in Camberwell in 1988. A further move was made to the meeting rooms of the Australian Institute of Valuers and Land Economists in 1992.

Perhaps the most significant change in the municipal valuation area has arisen out of the Valuation of Land Act in 1960. The major problem to be overcome was a lack of consistency in valuation dates. Municipalities were required to return a new valuation at least every six years but there was no provision to prescribe a date of valuation common to all municipalities. In the metropolitan area the Board of Works (Melbourne Water) was rating on a series of valuations at various value levels. Wide disparities in valuation arose between municipalities on widely diverging valuation dates; even at council level the owners of more recently valued properties felt disadvantaged by comparison with their neighbours in other municipalities. The situation still prevailed that a council could appoint any person as valuer irrespective of experience and qualifications, although it must be said that most appointments were of people well qualified in the valuation and real estate area.

The Act required the persons appointed as valuers for municipalities to be registered – registration being dependent upon academic and experience qualifications. It was not until 1979 that the requirement for all practising valuers to be registered was instituted. A four-year metropolitan and six year country valuation cycle was introduced with a degree of control and uniformity over valuation dates.

Also established was the Valuer-General’s office with a primary role in co-ordinating and supervising municipal valuations. An earlier proposal in 1955 to establish a Valuer-General’s department was directed at establishing a central valuation authority. The proposal reached the stage of a bill before Parliament which eventually lapsed to be revived in a modified form by a later government. It is interesting to note that the Municipal Valuers Group of the day was making submissions and involved in deputations for the need for uniformity of valuations and a raising of valuation standards – aims consistent with the objects of the group. Some tribute should also be paid to the work of the late E. R. Inglis, Victoria’s first Valuer-General and later Secretary for Local Government, in the administration of he Valuer-General’s Office and the rapid establishment of good relations with the many valuers employed by Councils.

Another significant step in opening communications among municipal valuers was the commencement of publications of the “municipal Valuers Journal” in October, 1969. The journal became necessary with expanding membership and growing responsibilities; and was instituted to keep all members informed of group activities.

The year 1969 also saw the Land Tax Office, following a 1968 amendment to the land Tax Act, commence to use municipal valuations for the first time. This change co-incided with the transfer of valuers with the Land Tax Office to the jurisdiction of the Valuer-General.

If the 1960’s were characterised by the introduction of greater uniformity to valuations for rating purposes, then the 1970’s stand out in two areas: Firstly, the accentuation of a trend for municipalities to make use of their valuers in a number of areas beyond the making of valuations for rating purposes. These areas include rate structure input, legislative advice in valuation and rating areas, property management, valuation advice on property sales and purchases, asset and insurance valuations, valuations for public open space contributions, valuation advice related to town planning matters, and the valuers as a negotiator in local government property transactions.

The second area is technological – the increasing use of electronic data processing. Initially in the fields of rate accounting and maintenance of property statistics, and more recently moving to use as a valuation tool, municipal valuers have been required to familiarise themselves with computerisation. Already advances have been made in the production of valuation field cards and the recording and retrieval of sales and rental data by computerised methods. Trials have been carried our on the production of valuations by multiple regression analysis, although more recently the prospect of indexation or equalisation of valuations has become prominent.

Much of the early research into computer produce valuations was carried our by the Valuer-General. However, the 1990’s have seen a rapid advancement in the computerisation of the Municipal Valuer’s Office. During 1993 municipal valuers were introduced to several computerised valuation packages and the next general valuation return will no doubt utilise many of these innovations.

To balance the situation it should be recorded that many municipal valuers, which recognising the potential for the computer as a valuation tool, have not been convinced that multiple regression and indexation can produce a technically accurate and cost efficient rating valuation.

Changes in rating legislation, valuation standards and the valuer’s areas of responsibility have been significant over the past fifty years and can be expected to continue into the future. The municipal valuer has proved to be adaptable and, through the Municipal Valuers Group, has not only been able to move with the times, but also to exert some influence on the direction and nature of change.

Some major legislative changes were implemented in October 1992 with the introduction of the Local Government Act 1989 and the majority of the Valuation provisions being transferred from the Local Government Act 1958 to the Valuation of Land Act.