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Rate capping

Read video transcript: How does rate capping work? (Word - 21.4KB)

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Rate Cap Flyer (PDF - 2.92MB)

Campaign objective

The current State-imposed rate cap is in its third year. Councils have implemented numerous business efficiency reforms, such as internal restructures, asset sales, collaborative procurement and a reduction in fleet vehicles.

However, evidence is emerging of a worrying under-investment in capital infrastructure, and councils choosing to opt out of discretionary community services due to budget constraints.

Under a State rate cap regime, we seek:

  • clear flexibility within the model to reflect different revenue raising capacities of councils so that no community is left behind
  • an appropriate rate cap indexation model that incorporates both CPI and council input costs to deliver community services.

About rate capping

Victorian local government unanimously opposed Victorian Labor's rate capping policy, which requires councils to apply to the Essential Services Commission if they want to raise rates above CPI.

Councils are a distinct tier of government with democratically elected councillors to make decisions on behalf of the community. The autonomy of councils must be respected and councils must retain the flexibility to set appropriate budgets that meet local community priorities and needs. A legislated process already provides that councils make budget decisions in an open, transparent and accountable way that involves community input.

Rate capping in Victoria in the 1990s resulted in councils deferring spending on capital programs such as roads maintenance and renewal. This led to faster deterioration of roads and other assets, and has consequently imposed higher costs on future generations of ratepayers to renew and upgrade under-maintained community infrastructure.

The $225 million asset renewal gap identified by the Auditor General in 2012 is due to council-owned assets deteriorating faster than councils can fund their maintenance, renewal and replacement. This is projected to grow to $2.6 billion by 2026, and under a rate cap, will result in a long-term devastating impact on the quality and availability of local roads and community facilities across Victoria.

Our advocacy

Further information