Councils given green light to raise rates by up to 1.75 per cent

Victorian councils have been given the green light for a bigger rate increase than last year, sparking criticism that ratepayers are being treated like “personal banks for council CEOs”.

Local Government Minister Shaun Leane. Picture: Andrew Henshaw

Victorian households could be hit with higher rates over the next financial year, with councils given the green light to increase their rates.

A new rate cap of 1.75 per cent has been set for all Victorian councils during the 2022/23 financial year.

Rates are currently capped at 1.5 per cent, which is the lowest it has been since the Fair Go Rates system was introduced in 2016. Prior to that, residents often faced an average yearly rate increase of up to six per cent.

Increases were capped at 2.5 per cent in 2019-20 before they were dropped to 2.0 per cent in 2020-21.

Councils collect rates from residents annually to fund and deliver essential community services and infrastructure including waste collection, maintaining local parks and roads, libraries, community centres, kindergartens and sports grounds.

Despite next year’s rate rise, local government Minister Shaun Leane said the 1.75 per cent cap would still help ease the cost of living for Victorians.

“We introduced the Fair Go Rates system to help reduce cost-of-living pressures for Victorians by preventing uncontrolled rate hikes from local councils,” he said.

The relevant Minister sets the cap each year with advice from the Essential Services Commission, who released a report in May this year, which found that Victorians had paid lower fees during the first four years of the scheme than they normally would have.

But Commission Chair Kate Symons’ report also noted that only 40 per cent of ratepayers actually experienced a decrease in their rates, while 44 per cent were hit with increased rates that were higher than the cap. Sixteen per cent of households noticed a rise, but it fell lower than the cap.

Shadow Treasurer David Davis said: “The government’s rate cap has not kept the costs down sufficiently for homeowners when many have done it so tough.”

Ratepayers Victoria spokeswoman Verity Webb said the rate capping system was a “confusing farce that will no longer be tolerated”.

“It is unjust and unjustifiable to keep charging taxes based on the value of our homes and council spending wishlists, which ratepayers have absolutely no control over,” Ms Webb said.

“As we look toward this new election year, ratepayers in Victoria are demanding more respect, less rhetoric and lower rates, and we will vote accordingly in November.”

Ms Webb urged Mr Leane to put pressure on the local government sector to clearly state that ratepayers experiencing financial hardship could apply to have their rates reduced or excused.

“After two years of being told that we are all in this together and we all have to help each other, it’s sad that ratepayers are just treated like an endless supply of money,” she added.

“These are our homes. We’re sick of being treated like personal banks for council CEOs.”