Rate capping not working


Tara Murray

A new report has found that the Victorian government’s rate capping policy has cost thousands of jobs and reduced the scope and quality of local government services.

The Putting a Cap on Community report by the Australia Institute’s Centre for Future Work found setting rates was blunt instrument and caused damages to local workforces, with detrimental effects on essential community services.

The report was commissioned by the Australian Services Union.

Victorian ASU secretary Lisa Darmanin said Victorians are seeing fewer services provided by local government, with more ‘user pays’ to cover the funding shortfalls as well as the casualisation of council workforces, creating employment insecurity.

She said the report findings showed that rate capping caused greater harm to the overall economy and quality of life of residents than was justified by potential savings.

Melton and Moorabool rates increased this year by on average 1.5 per cent the highest amount possible under the rate cap.

“Australians are counting on all levels of government to help our communities recover in the aftermath of the pandemic, but rate capping shackles local government’s ability to do that by gutting local workforces and services,” she said.

“Local governments are best placed to manage their means of revenue in line with the diverse and unique needs of their communities. Rate capping imposes a top-down, one-size-fits-all approach at the expense of democratic decision-making and local jobs and services.”

The report finds that despite Victoria recording population growth of over 20 per cent in the past decade, there were about 3,000 fewer local government workers in 2019-20 than eight years prior, and rate capping has cost up to 7,425 jobs.

Ms Darmanin said the report warns that capping property rates drastically limits local government revenue with a negative impact on jobs and services.

“Local governments have been pushed to replace foregone rates with more costly and less fair revenue sources, with revenue from other sources including user fees and fines growing by over six percent per year since the rate cap policy came into effect in 2016-17.”

The economic analysis conducted by the Centre for Future Work shows without caps, between 1,500 and 4,900 additional local government jobs could be generated in this financial year.