Moorabool Council’s financial stability will be ‘jeopardised’ of it can’t raise rates beyond the state government-imposed cap, a meeting heard last week.
The council expects to lose almost $20 million over the next 10 years as a result of the state government’s decision to cap rates at the consumer price index (CPI), which is projected to be 2.5 per cent for the 2016-17 financial year.
If its application to go beyond the cap is not approved by the Essential Services Commission, there will be a “high” risk that council experiences “some form of financial distress in the medium to long term”, a report prepared by council officers and presented to last week’s meeting stated.
“For the past four years, officers have been working towards a decreased reliance on rate income as the effects of compounding general rate rises become more difficult for household budgets,” the report added.
“This needs to be balanced with the need for council to provide enhanced service levels and facilities for a growing population across the shire, and to plug the gap as state and federal governments continue to tighten the purse strings.”
Cr Paul Tatchell said there needed to be a “transitional period” for capping rates and, ultimately, reducing council’s revenue.
“We [need to] know exactly where we sit,” Cr Tatchell said. “There needs to be a transitional period so we don’t make a mammoth change in the shire.
“The state government, the Essential Services Commission … what do they know about running a shire?” he asked.
Cr Pat Toohey was the only councillor to oppose a motion that included applying for a rate cap variation and presenting a draft community consultation plan and budget timetable to a council meeting next month.
Cr Toohey said while he believed rate capping had been “imposed upon us without too much thought process from our present government”, he was concerned about the timing of a community consultation plan.
“It’s not about the council; this is about the community. The community are going to have to cop it and have serious cuts to services,” Cr Toohey added. “For a state government to say, you shall close off your books and this is all you’re going to have, is nonsense.”
The report did not identify how great a variation on the CPI cap the council would need.
