THE south east suburbs could face a “jobs crisis” if a Labor state government pledge to cap rates goes ahead, according to Frankston councillors.
At last week’s public council meeting, councillors were unanimous in their criticism of the Andrews government’s pre-election promise to limit future rates increases to consumer price index (CPI) rises.
“I don’t think my time as a councillor has seen me so concerned at a proposal that a government has put up at an election,” Cr Colin Hampton said.
“This is a very populist point for a government or an opposition to take. It doesn’t take into account – in my opinion – the effects it will have today and into the future on the management and planning of local government.”
The Labor state government plans to bring in the rates capping policy for the 2016-17 financial year onwards.
The most recent CPI figure available was 1.7 per cent for the year to December 2014. Frankston Council’s long-term financial plan is based on annual rates rise of 5.5 per cent.
A council officer’s report stated Frankston Council faces a $22 million shortfall in funding over four years if the Andrews government’s policy comes into force.
Cr Hampton said most council costs, such as bitumen for roads and concrete for building upgrades, rise faster than the CPI rate.
“Capital works will nearly draw to a close … it has a kick-on effect. This is a very short-sighted thing to do. People should understand it will cost services to this community and eventually it will cost jobs.”
Local Government Minister Natalie Hutchins met with Frankston councillors last month to hear concerns about the state government’s rates capping policy.
Cr Glenn Aitken “found the minister very approachable and she was very easy to talk to about this”.
“We did emphasise through our officers and the CEO particularly and councillors the impact that the rates cap would have Victoria wide,” he said.
“There is no doubt whatsoever that rates cap will impact on the services councils throughout the state deliver to their communities.
“Frankston is not exactly awash with money. We have to hold a very tight budget to do what we want to do.”
Councillors agreed to write to Ms Hutchins to express their ongoing concerns about the government’s rate capping policy.
The Municipal Association of Victoria has noted ratings agency Standard & Poor’s predicted “a cap could lead to a mismatch between councils’ ability to raise revenue and spending, leading to financial problems”.
The Andrews government last week announced the Essential Services Commission will conduct an inquiry into the rate capping proposal and will report back to government.
Councils will be consulted as part of the inquiry.
A spokesperson for Local Government Minister Natalie Hutchins said the minister’s meeting with Frankston Council “was centred on the Andrews Labor Government’s plan to stop massive rate rises.”
“This included how the policy will help Frankston ratepayers, how the consultation process will work and how councils who are seeking an exemption will need to be able to justify their spending.”
Councils who wish to increase rates by more than the CPI rate will have the option to apply to the Essential Services Commission and justify the reason for the rate rise.
