COUNCILS across Victoria have been warned not to gouge ratepayers next financial year ahead of a state government edict aimed at capping rates rises at the consumer price index rate.
Premier Daniel Andrews made a pre-election pledge that councils would be forced to cap their rates at CPI to ensure “a fair go for ratepayers”.
Now Labor has won government, it has emerged its policy will not kick in until the 2016-17 financial year, potentially leaving the door open for some councils to ramp up rate rises in 2015-16 to offset the future limitations.
Any council wishing to raise rates by more than the CPI will have to justify the rise to the independent Essential Services Commission.
If the ESC rules a rate rise is “unreasonable” the state government can block it.
The CPI rose by 3 per cent in 2013-14, according to Australian Bureau of Statistics data. Frankston Council’s rates rose by an above inflation 5.9 per cent for the same period.
Local Government Minister Natalie Hutchins has written to councils to warn: “unnecessary rate rises in 2015-16 may affect your eligibility for future rate cap exemptions as previous years’ rate rises may form part of the ESC’s considerations of rate cap exemption applications”.
“We want to see councils more accountable, more transparent and more responsible with how they spend ratepayer funds,” Ms Hutchins told The Times.
“Any increase above inflation needs to be justified and needs to provide a clear benefit to ratepayers.
“This will come into effect 2016-17, however I want to be very clear that councils will not get away with jacking up rates this financial year.”
The Municipal Association of Victoria has criticised the Andrews government’s “populist but destructive” policy.
“Rate rise restrictions leave councils with two main choices – reduce services relied on by communities or reduce capital spending to maintain assets,” MAV president Bill McArthur said.
Late last year, some Frankston councillors expressed concern about Labor’s rates capping policy at a council meeting, saying services may have to be cut and residents would demand to know why.
Council analysis has found capping rate rises could blow a $22 million hole in Frankston Council’s budget over five years.
