Municipal councils across the country are owed about $71 million in unpaid rates, with Local Government Ministry officials admitting that long-standing arrears remain a major challenge despite recent reforms aimed at improving collections.

Permanent Secretary for Local Government Seema Sharma revealed the figure during a parliamentary committee hearing on the Ministry’s 2019-2020 Annual Report.

Responding to questions from committee members on municipal arrears, Sharma said the total outstanding amount for all councils, including current and overdue payments, currently stands at around $71 million.

“As of today, for all councils, which includes current plus arrears, is around $71 million”

When questioned whether there had been improvements in collections following amendments to the Local Government Act, Sharma said recent efforts had shown progress, particularly after changes were made to interest calculations on unpaid rates.

The Ministry previously amended the law to reduce interest charges from a compounded 11 per cent rate to a simple 5 per cent interest rate.

Sharma said the reform had encouraged more ratepayers to come forward and settle outstanding bills.

She explained that the previous compounded interest system created “interest on interest,” making it increasingly difficult for residents to clear their debts.

The Ministry has also introduced amnesties and waivers in an effort to improve collections.

However, Sharma acknowledged that arrears dating back more than eight to 10 years remain a significant issue for councils.

“In terms of arrears over the past few years, we’ve seen improvement. In terms of arrears that are dating more than 10 years, that is a bit of a problem for us”

Sharma said while current rate collections have improved, councils are still dealing with financial pressures stemming from the COVID-19 pandemic period, when many residents and businesses struggled financially and were unable to pay rates.