The City of Greater Bendigo has given a forceful critique of the state government’s rate cap, arguing the policy undermines the independence and integrity of local democracy.
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In a recent submission to a crossbench inquiry examining the “fair go” rates system, city CEO Craig Niemann said the state government’s “cost and responsibility shifting” had grown over time, with councils being asked to do more without “adequate” financial support.
“There is no doubt that the rate capping regime has implications for the ability of councils to operate independently on behalf of their local communities,” the letter to the legislative council committee reads.
A democratically-elected council’s ability to independently establish its own strategic plan for the community was “undermined” by rate capping, according to Mr Niemann.
The city chief also urged minister for local government Marlene Kairouz to set different rate caps for different councils to “help meet the growth funding needs of regional cities in the future”.
“As the rate capping regime evolves, effort should be put into developing a realistic and meaningful cost escalation measure for service and project delivery in the local government context,” it reads.
The state government introduced an indefinite rate cap in December 2015, which it said was in response to uncontrollable rate rises from local governments.
A two per cent cap is in place for the 2017-18 financial year, while the limit was at 2.5 per cent in 2015-16.
Since 2008-09, council’s annual rate rises before the cap averaged 5.2 per cent.
The city’s chief executive also questioned the value of applying for a rate cap variation.
Mr Niemann said the current rate cap model, which was based on the consumer price index, was a measure of “cost growth only”, and didn’t account for service delivery.
Bendigo council has not applied for a rate cap variation in the two years of rate capping, however Mr Niemann states in his submission that variations are only approved in exceptional circumstances.
“Asking councils to engage with their communities to agree on what infrastructure and services are needed and then making it virtually impossible to deliver on these if a rate cap variation is required cannot be considered fair or balanced, much less logical or efficient,” his submission read.
Mr Niemann was critical of “rising administrative and reporting burdens” on local government imposed by the state, which “directed resources away from service and project delivery”.
The city chief hinted at asset renewal difficulties going forward, suggesting council would struggle to effectively maintain it assets, valued at $1.3 billion, in the current rate-capping climate.
A council executive recently told the Bendigo Advertiser it could lose more than $25 million over seven years in the current rate-capping climate, with jobs and services potentially at risk.
The ongoing inquiry into rate capping held regional hearings across Victoria last year and has received submissions from a variety of organisations.
A spokesperson for local government minister Marlene Kairouz said: “Our fair go rates system is about protecting Victorian households from unfair hikes.”
“Councils can make a case for why their rates should be higher than CPI – but they need to have the support of their community and back it with evidence that a higher rate is justified.”