Victoria's ineffective system of court fines and infringement penalties exacerbates financial hardship, according to a report by the Sentencing Advisory Council.In the report released last week, the council  proposed a range of new measures to deal with the problem, including the introduction of "income-proportionate" penalties and "alternative discharge options" for the financially disadvantaged.The council found that around 40 per cent of Victorian residents and 36 per cent of companies in the state failed to pay their court fines. And of six million infringement notices issued by police and local government in the state in 2012/13, about 700,000 remained unpaid.The council's chair, Arie Freiberg, said the situation was not as bad in other states because most have established some form of centralised fine management body to process and receive fines, and to monitor compliance.The council recommends that Victoria establish such a body to improve its "fragmented" system.The report calls for stronger enforcement options for people and companies who can afford to pay. These include detention of vehicles, licence suspension, registration of a charge over assets, overseas travel restrictions and making directors personally liable for fines or infringement penalties incurred by their companies.Options for vulnerable and disadvantaged people include applying income-proportionate penalties and various alternative approaches, such as allowing eligible people to perform community service or complete education, treatment or training as a way of discharging fines.The council received submissions presenting evidence that people who can't afford to pay fines borrow money from payday lenders or accrue credit card debt to make fine payments, thus creating further financial hardship.The credit reporting agency, Veda, confirmed that an unpaid court fine or infringement penalty would be listed in a credit file if a court issued a writ or made a judgment in relation to the matter."A effective system of fines and penalties needs fairness, compliance and credibility," the council said.