Councils would be required to limit rate increases to 3.05 per cent next financial year under a draft proposal to the state government.
The Essential Services Commission (ESC) has released its draft recommendations on the government plan to cap council rates from next year, suggesting rate rises be linked to the consumer price index (CPI) and to wages.
The cap, an election promise by Labor, has failed to gain the support of Wyndham council amid concerns it would struggle to provide the services and infrastructure the community needs if it’s unable to decide its own rates increase each year.
Wyndham rates rose by 5.5 per cent in the current financial year. But under the ESC’s proposal, the rise cap will be set at 3.05 per cent in 2016-17, dropping to 2.85 per cent in 2017-18 and 2.8 per cent in 2018-19.
The cap will apply to the year-to-year increases in rates paid by the average ratepayer and will relate only to general rates and municipal charges levied by councils. It will not apply to garbage rates and charges.
“We recognise there will be some, or many, ratepayers who experience higher or lower rates changes than this notional ratepayer,” the draft report s.
In addition to the cap, the review calls for a new “efficiency” deduction to be introduced from 2017-18, when councils would need to reduce their rates bill by 0.05 per cent because of efficiencies (increasing by 0.05 percentage points a year thereafter).
The commission has also recommended that councils be able to apply for a variation to the cap.
But it said it was unlikely to look favourably on applications for higher rates due to unbudgeted increases in controllable costs.
The commission said a council seeking a variation should need to explain the reason for the increase and show it had considered the views of ratepayers.
It also wants councils seeking to raise rates above the cap to demonstrate that doing so would be good value for money and that other funding options had been considered.
Wyndham council has lodged submissions against the proposed cap, claiming it would lose more than $1.3 million from its budget for every one per cent it is unable to lift its rates beyond CPI.
It predicts that within four years it will have lost $57 million.
Cr Gautam Gupta, who spoke on the issue at council’s July 27 meeting on behalf of the absent Cr Adele Hegedich, said the council would find it difficult to balance increasing demand for services and decreasing financial support.
Ratepayers can have their say on the ESC’s report until August 28.
Details: www.esc.vic.gov.au
