COUNCIL rates rises will be capped at 2 per cent for the 2017/18 financial year as part of the state government’s policy to limit any rises to the rate of inflation.
The Consumer Price Index was forecast to be 2 per cent by the Victorian Department of Treasury and Finance.
State Local Government Minister Natalie Hutchins decided not to accept advice from the Essential Services Commission recommending a cap of 2.15 per cent for councils across Victoria.
The Labor state government pledged to cap rates before Premier Daniel Andrews won office at the 2014 state election in a policy it dubbed “Fair Go Rates”.
“In the decade before we introduced Fair Go Rates, council rates increased by an average of 6 per cent per annum. This has now stopped, making things fairer for ratepayers,” Ms Hutchins said in a statement.
“Victorians have told us they want more of a say in council decision-making, and now is the time for councils to speak with their communities about their budgets for next year.”
Frankston mayor Cr Brian Cunial said council will begin preparing its draft budget for 2017/18 knowing the state government decided on a 2 per cent cap.
“The 2017/2018 draft budget process is the most appropriate away for the council to address the rate cap and the continuing decline in its revenue as a result of the imposed cap,” Cr Cunial said.
Council estimates a $43 million downturn in rates revenue over five years due to the rates cap policy and Cr Cunial said this fall in revenue is likely to deepen since the rate cap has been reduced from 2.5 per cent in 2016/17, its first year in place.
“Budget processes allow the council to review all parts of its operation and this will again occur for the forthcoming 2017/2018 budget,” Cr Cunial said.
The mayor said council will also investigate if a 1.5 per cent rate cap is feasible after councillors voted 7-2 in November to have council officers prepare a report instigated by Cr Lillian O’Connor on any impact on services provided by council.
Councils across Victoria can apply to the Essential Services Commission for exemptions from the rate cap if it can be proven rate rises above inflation are needed for specific circumstances.
