Services, jobs at risk through rate capping: Council

“Effectively it will impact on our ability to do most things given the increasing expectations of a growing community,” said Kerryn Ellis, City of Greater Bendigo’s director of corporate performance. 

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 2.5 per cent cap was in place in 2016-17 – in line with the Consumer Price Index (CPI) – while local government minister Natalie Hutchins announced a 2 per cent cap for the 2017-18 financial year in December.

The $25 million is a cumulative, projected figure from council based on a comparison with pre rate-capping estimates.  

Councils can apply to the Essential Services Commission for a rate cap variation, however Bendigo has not done so over the past two years.

Ms Ellis said the timing to apply for a rate cap variation in the current financial year was challenging given the basis for an application would be a council’s strategic plan or a budget – both of which had not been completed until recently. 

“We'll have a further conversation with councillors to see if they have an appetite for a rate cap variation,” she said. 

Since 2008-09, council’s annual rate rises before the cap was introduced have averaged 5.2 per cent.

Asked whether councils across Victoria had forced the government to cap annual rates because of excessive increases, Ms Ellis said Bendigo’s increases were “not anywhere near as significant as some”. 

“We've set responsible budgets in line with meeting the needs of our community in the past,” said Ms Ellis, adding that capping rates at CPI did not account for population increases, which the city was experiencing. 

“With regards to infrastructure work, it will become more and more difficult to fund projects from our own income. We will have to look more aggressively for grants from (state and federal) government, but they also require a contribution from local government.”

The added strain on service provision could also affect jobs within the City of Greater Bendigo, Ms Ellis said. 

“If there are services we can no longer deliver, then yes potentially it could (impact jobs) over time,” she said.

Council will likely be in $50 million of debt this financial year, after recently tendering for a $17 million loan to fund infrastructure projects. 

However council, through its chief executive officer, stated in a sub committee inquiry into the state government’s rate capping policy last year that it was opposed to increasing debt to provide recurrent services. 

2008-09 – 5.0%

2009-10 – 4.0%

2010-11 – 4.5%

2011-12 – 5.9%

2012-13 – 5.5%

2013-14 – 6.0%

2014-15 – 6.0%

2015-16 – 4.75%

2016-17 – 2.5% - Rate Capping introduced, no application for variation lodged

2017-18 – 2% (proposed budget)