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Rate Capping Legislation

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The Local Government Amendment (Fair Go Rates) Bill 2015 provides substantial autonomy to the Minister for Local Government to establish the detailed features of the rate capping system. The Bill does not specifically require the imposition of a rate cap; rather it provides a legislative base to establish a cap.

The MAV is pleased that the Government has considered our advice in favour of greater flexibility in the cap, with the Bill providing for the Minister to adopt a different benchmark or multiple caps for different classes of councils. At this stage the Government has indicated that it intends to adopt one cap for all councils, based on the Essential Services Commission’s recommendation of a mixed Wage Price Index and Consumer Price Index.

The ESC will have responsibility for considering rate increases above the cap, and in a substantial change to the draft ESC report, the Bill contains provision for the ESC to partially accept a proposed variation. The Bill also provides a mechanism for the Minister to suspend a council that fails to comply with the rate capping regime ‘consistently and substantially’.

Much of the detail around the framework will be established by general Orders published in the Government Gazette, so significant uncertainty remains about the shape and operation of the rate cap framework for 2016-17 and beyond. These include the financial contributions councils will be required to make towards the operation of the variations system, the actual level of the cap, and whether additional caps will be introduced by the Minister.

As a next step, the MAV will be convening a meeting of our Rate Capping Taskforce to discuss the Government’s response in more detail and identify ongoing advocacy priorities to achieve a fair and sustainable model for communities.

For further information, contact Owen Harvey-Beavis.

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