SOUTH-WEST councils about to start preparing their budgets for next financial year will be nervously aware of a state government warning not to ramp up rates ahead of a cap for the 2016-17 financial year.
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Local Government Minister Natalie Hutchins, in a letter to all municipalities, cautioned that “unnecessary” rates rises for 2015-16 may affect eligibility for future cap exemptions.
“This should not be seen as an opportunity to raise rates above inflation prior to implementation of the cap,” she said.
Moyne Shire mayor and chairman of the Great South Coast group Colin Ryan said he presumed the government would provide an effective mechanism to consider exemptions.
“If they refuse, I presume they will come forward with extra money to help councils out,” Cr Ryan said.
“It’s not as simple as the CPI. Rural councils have different demands to metropolitan councils, particularly roads.
“In the south-west we are $220 million behind in road maintenance and upgrades.
“The cap will work as long as it does not impinge on council operations.
“Our responsibility is to provide certain services.”
Warrnambool City mayor Michael Neoh said there were unanswered questions on the government cap. “When do we apply for an exemption and how long will it take to get an answer,” he asked.
“That will have a major bearing on when we can implement the budget and make service adjustments.
“The consumer price index does not reflect the cost pressures of councils.
“Municipalities have differing capacity for income and rural and regional councils are responsible for roads and drainage, which I think does not apply to metropolitan councils.”
Cr Neoh said restriction to a CPI cap would not account for enterprise bargaining agreements which could be as high as 4 per cent.
He also predicted the cap could force the government to realise how much councils were subsidising some community services.
