THE Victorian Government has announced a three per cent rate cap for the 2025-'26 financial year, for the Rural City of Wangaratta and all other 78 councils in Victoria.
The government accepted the recommendation of the Essential Services Commission regarding the cap, which is equal to the forecast Consumer Price Index for 2025-'26.
The cap limits the amount councils can increase their total revenue from general rates and municipal charges, which is used to fund services and facilities like local parks, libraries, community centres, roads and footpaths, kindergartens and sporting facilities.
Councils may apply to the Essential Services Commission for a higher rate cap if they can demonstrate a critical need for spending on services or projects that would require a rate rise above the capped amount.
Victoria's peak body for councils - the Municipal Association of Victoria - has called for a review of the rate capping system.
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MAV president Jennifer Anderson said using the CPI to inform the rate cap simply doesn't work for councils.
"It's not a true reflection of the increased costs our sector faces in construction, materials, staff wages and services," she said.
"The MAV is working on a more accurate Local Government Cost Index for Victoria, and is keen to share this work with the State Government to improve how the rate cap can be reimagined in the future."
Rural City of Wangaratta Mayor Irene Grant said rates would be among the topics for discussion by the newly-elected council as 2025 kicked off.
Cr Grant said while she would support the MAV's call for a review of the Fair Go Rates System, which was introduced in 2016, she was unsure what impact such a review would have.
"Our rating strategy is one of the things we are going to be turning our minds to in the New Year - to make it equitable, and to raise money to keep the community ticking over," she said.
"We have had preliminary discussions on what we will do.
"While we are able to apply for a larger cap, you've got to justify doing that.
"While some councils have needed to, the Rural City of Wangaratta to this point hasn't ever considered applying for a higher cap."
The rural city last year adopted a 2.75 per cent rate rise, which was equal to the cap set under the Fair Go Rates System for 2024-'25.
The previous year saw council adopt a 2.9 per cent rate rise, which was lower than the State Government's 2023-'24 cap of 3.5 per cent.
The MAV said the current rate cap does not take into account Victorian councils' different needs.
"Some councils are still facing exhaustive repair bills from natural disasters, others are in desperate need of upgraded or new infrastructure," Cr Anderson said.
"Setting a single rate cap does not account for the broad variety of these challenges, let alone the role that local governments play in supporting the economy.
"Beyond a more accurately calculated rate cap, the MAV is committed to working with both state and federal governments to ensure the financial sustainability of councils in 2025."