The Northern Midlands Council will likely never see the estimated $1.3 million it believes it is owed by the Launceston Airport.
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The airport has only paid a portion of rates charged by the council since 2012.
Northern Midlands mayor David Downie on Thursday called for Infrastructure Minister and Deputy Prime Minister Michael McCormack to resolve the issue, as the land is owned by the federal government and leased to Australia Pacific Airports Corporation.
However, a Department of Infrastructure spokesman said neither the airport nor the federal government has an obligation to pay rates and considered the matter settled.
He said the lease agreement mandated the airport would make an “ex-gratia payment in lieu of rates” to the council.
The amount of the ex-gratia payment remains unpublished.
“In 2016, the Department of Infrastructure engaged an independent expert to conduct valuations and assess the appropriate amounts payable to resolve the dispute...an independent ex-gratia rates valuation and determination methodology was provided to both parties,” he said.
“The department has advised both Launceston Airport and Northern Midlands Council that payments made in accordance with the independent ex-gratia rates valuation...will be considered to be compliant with the lease obligation.”
Cr Downie said the council had started writing off some of the unpaid sum as bad debt and that the issue was one of several reasons for increasing rates in 2018-19.
In 2017, the council unsuccessfully tried to bring the issue to Australia’s peak intergovernmental body – The Council of Australian Governments.
“We send out what we believe they should pay every year and they pay us what they think they should pay and the difference goes down as a bad debt and after so many years we write it off,” Cr Downie said.
“The Infrastructure Minister [Mr McCormack] should be sorting [the dispute] out.”
Launceston Airport general manager Paul Hodgen said the agreed upon ex-gratia payment is all the airport would pay to the council annually.
“We are keen to progress a memorandum of understanding, which has been drafted to inform and provide clarity around the process and expectations going forward between both parties,” he said.