The West Australian Government says something needs to be done about council rates, but the Local Government Association does not want a cap.

The WA Government flagged a cap on rates as one option to be considered in a discussion on council finances, which have increased dramatically in several local government areas.

But the WA Local Government Association (WALGA) has labelled any inquiry into rate setting as a “joke” that would deprive many regions of vital public infrastructure.

“You don't need to hold an inquiry to understand the effect that rate capping would have on a community,” WALGA president Lynne Craigie told reporters.

“Go to NSW and ask the people over there, inquiries in that state have revealed that rate capping really has had a devastating impact on public infrastructure and asset preservation.”

Local Government Minister Tony Simpson told the recent WALGA annual general meeting in Perth that the issue of rates would be the subject of a discussion, not an inquiry.

He suggested rates should be kept in line with CPI.

“I think that's what we'd like to get to, but it has to be also in line with local governments,” Mr Simpson said.

“I've got variations of local governments. I've got variations in services. But I need to get some transparency around these rate increases to try and bring some framework around it.”

While the national CPI is forecast to be about 2.5 per cent this year, several Perth councils have imposed rate increases of at least 5 per cent, while some have gone as high as 7 and 8 per cent.

The Government will consider getting a third party, such as the Economic Regulation Authority, to oversee rate setting.

Ms Craigie said the Premier could be accused of hypocrisy.

“If you look at State Government's own cost increases ... they've gone through the roof,” she said.

“Is this about capping rates or is this about failed reform?

“It tried to work out the sector and it failed at a local level, is that what this is about ... seeking retribution?

“There's no point in forcing rate capping... that's not going to achieve anything, deteriorating infrastructure will just put lives at risk, I don't know why the State Government would want to even consider this.

“Local government are getting squeezed from every angle, we're losing money from state, we're losing money from federal, our only way of raising money is through rates, and our communities want and deserve bigger and better facilities all the time,” she said.