Rate cap hurts shires

October 11, 2017

City of Greater Shepparton chief executive Peter Harriott.

City of Greater Shepparton chief executive Peter Harriott hopes council can work within the state-imposed rate cap for another year.

Victoria’s peak body for local government recently argued rate capping and cost shifting measures were severely impacting the ability of regional and rural councils to deliver basic services.

The Municipal Association of Victoria last month told a Parliamentary inquiry into rate capping that a reduction in state and federal government funding and the state-imposed two per cent rate cap, ‘‘has left small rural councils struggling to maintain local services and assets’’.

MAV president Mary Lalios said financial projections indicated capital spending in small rural shires would decline by 30per cent from 2016 to 2020.

‘‘In the next two or three years, we are going to see serious impacts on councils’ ability to meet their community service and asset renewal obligations, particularly in smaller councils,’’ Cr Lalios said.

She cited significant losses from the Federal Government’s three-year freeze of Financial Assistance Grants indexation and when the state government did not renew a country roads and bridges program.

‘‘Under the two per cent rate cap, we are starting to see small councils really struggling to deliver services and capital works programs,’’ Cr Lalios said.

In addressing the president’s comments, Mr Harriott said Greater Shepparton had an advantage being a larger regional council.

But he reinforced if income was held below expenses, the same impact would be incurred on services, regardless of a council’s size.

It would be then the quality of service would be compromised, he said.

‘‘Our size protects us a little bit.’’

‘‘We might have a small buffer, but ultimately we’ll have to deal with the same matters.’’

Mr Harriott would recommend council did not apply for an exemption to next year’s rate cap, at this stage, but said council would continue to lobby to inquiries under way.

‘‘We’ll continue to work within the rate-capping environment,’’ he said.

‘‘If we want to be sustainable, we need an income stream that allows us to be sustainable.’’

The council has in the past two years worked within the cap on rate increases enforced under the state government’s Fair Go rates policy.

But council’s finance department said this year’s budget had been more challenging within the parameters.

Last year, Mr Harriott said the 2016-17 2.5 per cent cap had a ‘‘significant’’ and cumulative impact on councils and it was well below the 4.95 per cent increase projected in the council’s long-term financial planning.

At the time, he anticipated it would leave the council $1million worse off in the first year alone.

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