Liam McNally
A state government decision to set the local government rate cap at 3.5 per cent for next financial year “makes sense” given current inflation, according to Moorabool council’s chief executive.
Last month, the state government announced that the 2023-24 rate cap would be 3.5 per cent, which is double the 2022-23 cap of 1.75 per cent.
The cap is the highest since rate capping was introduced by the government in 2016.
The 2023-24 rate cap was set 0.5 per cent lower than the Essential Services Commission’s (ESC) recommendation of 4 per cent. The ESC provides the government with independent advice in line with the Consumer Price Index.
A government spokesperson said the decision to set the rate cap lower than the ESC advice was to take into account the cost of living pressures facing ratepayers.
Moorabool council chief executive Derek Madden said council acknowledges the rate cap “makes sense” given inflation is running at about 7 per cent.
“In setting a rate cap, the Victorian government needs to balance the broader financial challenges faced by Victorian ratepayers with the need to ensure local government remains financially sustainable in the long term,” he said.
“It is important to note that in the last three financial years, the rate cap has increased at less than a third of the rate of inflation. This does present challenges for councils recovering from the pandemic and impacted by recent weather and storm events while catering to the needs of a fast-growing community.
“Council is currently preparing its budget and will be considering the amount rates will need to increase in order for council to maintain the level of services expected by residents.”
Melton council chief financial officer Peter Leersen said council hasn’t met since the rate cap announcement, but it will be discussed in preparation of the 2023-24 budget.
“The rate cap has introduced long-term financial sustainability challenges for local government. Council continues to budget and plan its services and capital program with a focus on financial sustainability,” he said.
“Council faces many financial challenges in delivering increased services and much needed community facilities to keep pace with population growth. Over the past year council has experienced significantly higher operational costs including gas and electricity and increases ranging from 20-40 per cent for construction projects such as park upgrades and new community buildings and sporting facilities.”
