The Victorian government has announced council rate rises of up to 3.5 per cent will be allowed for the 2023-24 financial year, which could lead to increases of hundreds of dollars for some ratepayers.
Key points:
- Councils will be allowed to raise rates and charges by 3.5 per cent in the 2023/24 financial year
- The local government minister says councils are facing financial pressure from inflation
- A ratepayers organization says councils should be more prudent with their spending
The amount councils will be able to increase their residential rates and charges will double, from the 2022-23 rate of 1.75 per cent.
The Reserve Bank of Australia’s latest economic outlook predicts inflation will be tapering off by June 2023 at 6.25 per cent, before falling to 4.25 per cent by June 2024.
Local Government Minister Melissa Horne said the increase was a middle road that protected ratepayers but acknowledged financial pressures on councils.
“The rate cap for the next financial year takes into account higher inflation and the need to protect Victorians from uncontrolled rate hikes, while ensuring councils can continue to deliver vital community services,” she said.
“Community members have the chance to engage with their local councils as they make decisions about rate rises through their budget process each year.”
Councils protected from inflation: report
Rate capping was introduced in 2016 as a mechanism to give the state government power over council revenues.
A government-commissioned report into the effectiveness of the policy found it was successful in its aims of alleviating expenses to ratepayers and forcing councils to manage their finances more appropriately.
The report, completed in December 2021 but only tabled in Parliament in the week before Christmas, noted that inflation was not a major pressure for local governments.
“Councils reported that the Consumer Price Index (CPI) did not represent their cost drivers,” the report said.
Ratepayers Victoria vice president Dean Hurlston says councils shouldn’t rely on rate rises to shore up their budgets.
“Councils need to be a little more prudent in their forward spending,” he said.
“The existing spending is on fixed-price contracts, so the raw increases in raw materials will be borne by contractors, not councils.”
Other think tanks including the Australia Institute have suggested the rate-capping mechanism be abolished to return rate-setting to councils.
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