A move to prevent local council rate increases and cap spending was presented to Latrobe Valley residents on Monday night.
In January, the State Government asked the Essential Services Commission to design a proposal to meet the government’s commitment to cap annual council rate increases, which formed the draft Rates Capping and Variation Framework.
Essential Services Commission chair Ron Ben-David said there were two main objectives.
“We seek to contain the cost of living for rate payers and also ensure the sustainability of local councils,” Dr Ben-David said.
“The trick is to get a balance between the two.”
The framework has three main components: the rate cap – the maximum annual rate of increase that councils can apply to their rate revenue; the variation process – a mechanism for councils to seek increases in revenue above the rate cap; and monitoring. Under the proposal, one rate cap would apply equally to all councils in Victoria, encompassing general rates and municipal charges.
Dr Ben-David acknowledged the rate caps, based on the rates and charges paid by the average rate payer, would exclude some members of the public.
“There’s no perfect one size fits all,” he said.
In special circumstances, councils would need to apply for rate variations to the ESC on an individual basis, who would have the power to accept or reject an application for variation.
“There are no particular circumstances where an application would automatically be approved or rejected and each application would be assessed on its merits,” Dr Ben-David said.
Initially, variations for only one year would be permitted, although this would gradually change so that by 2019, variations of up to four years would be permissible.
“We won’t have control to tell councils what their business is, the commission can only accept or reject applications for variations,” Dr Ben-David said.
He said the commission hoped the rate caps would encourage wiser spending of council funds.
Latrobe City Mayor Dale Harriman told The Express council was conscious of the effects of rate increases on the community.
“Especially in the light of the rising costs of gas, electricity and water,” Cr Harriman said.
“When council set rates last year it took these factors into account and delivered the lowest rate rise in nine years, 3.15 per cent.”
Cr Harriman said the rate cap would make it difficult for council to provide a quality service.
The Rates Capping and Variation Framework is open to formal submissions until 28 August.
For more information visit www.esc.vic.gov.au/Local-government/Local-Government-Rates-Capping-Framework-Review