At the beginning of the pandemic last year, the former council opted not to imposed an extra rate rise above the cap even though they had special permission from the Essential Services Commission to do so for two years.

The decision to increase rates above the cap to cover a massive backlog in asset renewal projects sparked major backlash from ratepayers.

While ratepayers were spared in 2020-21, and again in 2021-22, forward planning documents had earmarked for rates to go up in the 2022-23 year - effectively deferring the hike for two years.

But deputy mayor Debbie Arnott said she would be very reluctant for an increase above the cap.

Cr Arnott said the issue had not yet been discussed by the new council who would turn their attention to the budget when they returned in January.

"I would hope we wouldn't have to invoke a greater increase. I would be very reluctant to have any increase above the cap," she said.

Any move by the council would likely mean that it would have to reapply to the Essential Services Commission again for approval, but only if councillors voted for that to happen.

Despite calls by some councillors for a rates freeze in this year's budget, the majority of councillors voted to raise rates in line with the government's cap with some councillors at budget time highlighting the "dire" financial position the city faced.

The state government approved a slightly higher rate cap for 2022-23 than this year's 1.5 per cent which was the lowest since the capping system was introduced in 2016.

Before the Fair Go Rates system was introduced residents faced an average rate increase of six per cent every year, it said.

Minister for Local Government Shaun Leane said the new rate cap of 1.75 per cent had been set for all Victorian councils to help ease cost of living pressures for Victorians.

The Fair Go Rates system was brought in to limit uncontrolled rate hikes and to provide councils with a clear framework to guide their budgeting while ensuring essential services continue to be delivered.

The cap is set each year by the Minister for Local Government with advice from the Essential Services Commission, guided by the Consumer Price Index.

Mr Leane said it had introduced the Fair Go Rates system to help reduce cost-of-living pressures for Victorians by preventing "uncontrolled rate hikes" from local councils across Victoria.

"Community members have the chance to engage with their local councils as they make decisions about rate rises through their budget process each year," he said.

IN OTHER NEWS:

Now just one tap with our new app: Digital subscribers now have the convenience of faster news, right at your fingertips with The Standard:

Our journalists work hard to provide local, up-to-date news to the community. This is how you can access our trusted content:

Have you signed up to The Standard's daily newsletter and breaking news emails? You can register below and make sure you are up to date with everything that's happening in the south-west.