Victorian councils have welcomed a recent rate rise, but their lobby says a rate cap review is needed. 

A modest increase in the rate cap announced in the final days of 2022 will at least avert the financial stress of the previous few years on Victorian councils, according to the Municipal Association of Victoria (MAV). 

But MAV President Cr David Clark says the increase is just the start of what is needed to help councils feeling the financial pain of the current inflationary environment, combined with staff shortages, and cost shifting from the State Government.

Key service areas like Maternal and Child Health (no funding increase since 2015), School Crossing Supervisors (modest increase for one year after no increase since 2016), and early years infrastructure (where the State Government has provided only 40 percent of the funding required for its proposed expansion) are key areas the local government sector will now pursue in the lead up to the 2023 state budget.

“Each year councils spend between 20-40 percent of their budgets on new infrastructure, be that roads, aquatic facilities, streetscapes, or playgrounds and parks,” Cr Clark said.

“In the current year costs for these works have escalated in the order of 35 percent, something the rate cap doesn’t deal with, hence the need for the review.

“Further, the rate cap system treats all council’s as homogeneous organisations, whether they have significant non-rate funding streams or not. For many councils, service delivery is tied almost exclusively to its rate income capacity,” Cr Clark said.

“This also requires review and flexibility to be applied.

“Councils are not complex, they raise funds from the community and spend it all back in the community.  Less money over time means less services that we can provide,” Cr Clark concluded.