Instead of the 2.5 per cent increase set for other central Victorian councils, none of which applied for an exemption, Buloke residents’ rates will increase by 3.05 per cent in 2016-17.

Chief executive officer John Hicks said the increase would allow the council to maintain its current level of service delivery, as outlined in its budget.

“We’ve gone through enormous change over the past two years where we’ve brought in a range of efficiencies and cost-cutting and we certainly didn't want to see any of our services reduced further,” he said.

“As part of that we’ve taken out a loan which we need to repay in 2019 and so the money raised by the rate cap [increase] will go towards the repayment of that loan.”

But Mr Hicks said the process of applying for the exemption had not been straight forward, and rate capping itself was not suited to smaller municipalities.

“I think the process really wasn’t developed with small rural shires in mind, I think it was developed more in line with large metropolitan councils,” he said.

“And I think rate capping’s been brought in with those metropolitan councils in mind as well, rather than the rural shires so it was not easy to provide the information.”

Buloke was among six rural councils to be granted approval for rate increases greater than 2.5 per cent, while applications from the cities of Ballarat, Casey and Wyndham were rejected.

The City of Greater Geelong had also applied for an exemption before its council was stood down by the state government last month.

In approving the successful applications, Essential Services Commission chairman, Ron Ben-David, said the commission was satisfied that higher rates were consistent with the long-term interests of the municipalities’ communities.

“We approved applications where the councils could clearly demonstrate a long-term financial need, supported by well-developed long-term plans,” he said.

Buloke’s rate increase was the smallest in the state of those to receive exemptions, while the highest was in the Towong Shire which received approval for a 6.34 per cent increase.