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MAV response to ESC rate cap variation decisions

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The ESC has just released its decision on rate cap variations sought by nine municipalities.

Five rural shires have been granted full exemptions - Pyrenees, Moorabool, Buloke, Horsham and Towong, while Murrindindi has received a partial exemption to increase its rates 1.8 per cent above the cap. Casey, Wyndham and Ballarat councils have had their variation applications rejected, with a variety of ESC reasons cited including a view that they have

‘...adequate overall financial flexibility to manage their identified short-term needs’.

The MAV is disappointed with the ESC’s reasons for rejecting variations sought by Casey, Wyndham and Ballarat. We believe it is a short-sighted, economically rationalist approach to address complex and sophisticated issues facing these municipalities. It is also concerning that State funding of $2.5 million provided to Casey through the Interface Growth Fund has been used, in part, to justify the rejected variation with absurd reasoning that the funding effectively …‘frees up funds equivalent to $2.5 million’. Even the State Government clearly recognises the need to inject funding into our metropolitan growth areas, where services and infrastructure are unable to keep pace with population growth, and high-value short-term projects are necessary to provide long-term services to these communities. Ballarat, Wyndham and Casey councils also undertook extensive community consultation, and the democratic decision-making which informed their variation applications has not been given sufficient weight by the ESC.

Councils have had to navigate through unchartered waters. There was little practical guidance and councils were largely operating in the dark about whether it would be simple or onerous to meet ESC expectations. Similarly, the ESC’s variation process was untested, and has proven costly and time consuming for councils. It proved to be more convoluted and onerous than councils or the MAV had anticipated, including extensive additional information requests made by the ESC.

With the first year now complete, and the ESC’s decisions made, we call on the Minister to support a review of the ESC variation process including the rationale underpinning their decision-making. The MAV will reconvene our Rate Capping Taskforce to review the ESC decisions and inform our next actions. We believe a review of the ESC variation process is needed so that improvements to their approach can be implemented before March 2017. Any review conducted should include the MAV and councils who sought variations so their insights and experience can inform a better, more transparent system going forward.