Victoria’s Minister for Local Government, Natalie Hutchins, has announced an annual rate cap of 2.5 per cent will apply to Victorian councils for the 2016/17 financial year.

The cap is based on Melbourne CPI, as forecast by the Victorian Treasury, and applies to all Councils.

The Victorian Local Governance Association (VLGA) says it is disappointed that the Minister decided not to exercise flexibility in setting the cap.

The lobby also says she has failed to acknowledge the particular circumstances of local government and individual councils.

But councils have been allowed to seek a variation to the annual rate cap through the Essential Services Commission (ESC), but the VLGA wants the State Government to go further.

It says the government should work with those councils that seek a variation to make sure the cap will not stop them taking on new projects.

“It’s now inherent on the State Government and the ESC to deliver on that commitment and ensure that, in no way, are local communities who rely on council services and infrastructure disadvantaged in the future,” a VLGA statement reads.

“The VLGA will support any councils who seek a variation through the Essential Services Commission. Councils considering an application should contact the VLGA.”