Rate rises are set to be capped at two per cent in the next financial year, with Melton and Moorabool councils announcing they won’t increase rates above the state government- imposed limit.
Rate increases will be capped at two per cent in 2017-18, in line with the consumer price index.
Melton council chief executive Kel Tori said while no services had been pared back since the rate cap regime was introduced last year, the council had been “constrained” in its ability to expand existing services.
His concerns have been echoed by local government advocates, including the Municipal Association of Victoria, a parliamentary inquiry finding, the auditor-general and independent assessments of states operating under a rate cap regime.
MAV interim president Coral Ross slammed the government for spruiking its “fair go political propaganda” while increasing property taxes by 5.2 per cent and state employee expenses by 7.8 per cent.
“Councils did well to protect communities from service cuts last year,” Cr Ross said. “But this will become harder as the cost of delivering services and meeting local infrastructure renewal needs don’t reflect the CPI, which the government had used to set its rate cap.”
Moorabool council applied to increase rates by 3.5 per cent in the past financial year, but chief executive Rob Croxford said it would not be applying to the Essential Services Commission for a variation this year.
He expects rate revenue to be down $15million in the next decade, capital expenditure down $12million and accumulated losses to top $3 million.
Victorian Local Governance Association president Sebastian Klein said this “squeeze” would be passed on to ratepayers.
He accused the state government of relying on “populist policy” rather than reforming the sector.
Mr Tori said this year’s two per cent cap would limit funds available to council to undertake infrastructure or expand services.
“Council has generally opposed the imposition of a rate cap as it’s contrary to the concept of local government as an autonomous level of government,” he said.
“Council has managed its resources and expenditure to accommodate the cap. This will continue in the medium term, but in the longer term it poses a threat to … infrastructure and services.”
The average saving to Moorabool households per year will be about $35, according to the Australian Services Union.
