COUNCILS that had been prudent in the past with their rate rises should not be treated the same under the forthcoming rate capping system as those that had not, Moyne Shire Council says.
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In its submission to the state Essential Services Commission (ESC) about how rate capping should be imposed, Moyne pointed out its average rate per assessment in 2013-2014 was $1538, lower than the $1692 average for large rural councils.
The council’s submission tied in with a report by its acting community and corporate support director and former chief executive officer Graham Shiell, who said the rate cap to be implemented by the state government next year would put at risk the council’s ability to fund its current level of works and services. While the framework for rate capping is yet to be finalised, it is expected to be linked to the consumer price index (CPI), commonly known as the inflation rate.
Mr Shiell said if rate capping reduced the council’s rate income by 2.5 per cent, it would cut the council’s revenue by $15.3 million over the next eight years.
Moyne has proposed a rate rise of 5.75 per cent for the next financial year, the last year before rate capping comes into effect.
The CPI for the 12 months to the end of this year’s March quarter, was 1.3 per cent.
If rate capping was to be introduced this year, it would cut the council’s proposed rate rise by 4.25 per cent, nearly doubling the losses to revenue in the projections given by Mr Shiell.
The council’s CEO David Madden told its May meeting the council would have to decide what level of services it would be able to provide under rate capping.
In the council’s submission to the ESC, it said a more appropriate method of capping local government rates needed to be found than linking rate rises to CPI increases.
Restricting rate rises to CPI increases did not allow councils to cover rises in employee costs, the council said.
It said its existing employee costs were expected to rise by 3.74 per cent from 2016-2017.
The council suggested the Municipal Association of Victoria (MAV) index should be used as the rates cap instead of the CPI because a rates cap should be able to include movements in employee costs, cost shifting from other levels of government as well as CPI.
