Rate Capping - What does this mean?
What is rate capping?
In 2015, the
Victorian Government introduced rate capping legislation in the form of its
“Fair Go Rates System” (FGRS). The FGRS or rate capping introduces an annual
rate cap set by the Minister for Local Government which controls general rate
increases for all councils during that financial year.
On 22 December 2015, the Minister for Local Government, the Hon Natalie Hutchins MP, advised an annual rate for the 2016/17 financial year of 2.5 per cent. Councils can seek approval to raise an increase above this figure through a variation with the Essential Services Commission (ESC).
On 22 December 2015, the Minister for Local Government, the Hon Natalie Hutchins MP, advised an annual rate for the 2016/17 financial year of 2.5 per cent. Councils can seek approval to raise an increase above this figure through a variation with the Essential Services Commission (ESC).
How will rate capping impact local
government?
Rate capping
inhibits local government’s ability to deliver services to local communities
and seeks to control democratically-elected councillors.
Similar policies carried out in the 1990s by the Kennett Government resulted in a significant cut in spending, especially for infrastructure maintenance and renewal. The current Government’s rate capping policy would likely see a widening of Victorian local government’s asset renewal gap, a focus of a recent Victorian Auditor-General report, and force local government to reconsider its role in the delivery of many community services.
Similar policies carried out in the 1990s by the Kennett Government resulted in a significant cut in spending, especially for infrastructure maintenance and renewal. The current Government’s rate capping policy would likely see a widening of Victorian local government’s asset renewal gap, a focus of a recent Victorian Auditor-General report, and force local government to reconsider its role in the delivery of many community services.
What is a variation to the rate cap?
A large number of
councillors have expressed a concern at their ability to manage community
infrastructure and service delivery under rate capping; and question how to
support growth which is better aligned to community expectation and their
agreed Community Plan.Councils have the option to seek a variation above the annual rate cap, through the ESC, to support vital community services and infrastructure.
There are many reasons councils may choose to seek a variation:
• Funding vital infrastructure
• Supporting community services
• Asset and infrastructure renewal
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