What is rate capping?
The Fair Go Rates system caps the increase to Council’s total revenue from general rates and the municipal charge to a figure based on the Consumer Price Index.
Each year the Minister for Local Government will set the rate cap for the next financial year.
A rate cap of 2.5 per cent for the 2016/2017 financial year was announced in December 2015, and applies to all Victorian Councils.
In circumstances where the rate cap is insufficient to fund the provision of services and infrastructure to the community Council can apply to the Essential Services Commission for an increase higher than the cap. Greater Shepparton City Council has not applied for a variation to the rate cap for 2016/17.
What does rate capping apply to?
The cap applies to Council’s total income received from General Rates and the Municipal Charge; it does not apply to waste charges or the Fire Services Property Levy.
Are my individual property rates capped?
Applying the rate cap is not this simple. Whilst the total revenue collected by Council from general rates and the municipal charge will only increase by 2.5 per cent, rate increases on individual rate notices will vary. As 2016 is a property revaluation year the allocation of rates will depend on how property values change. Further, the cap does not apply to waste charges or the Victorian Fire Services Property Levy. Therefore some properties will experience a rate increase of over 2.5 per cent, whilst others may see an increase less than 2.5 per cent.
How will rate capping impact Greater Shepparton City Council?
A cap to rates revenue limits Council’s total income. Compared to previous Strategic Resource Plan projections, in the first year the financial impact to Council is predicted to be approximately $1.2 million. Over four years, this figure is expected to be closer to $17 million in lower rates revenue.
In response to a reduced income, Council may need to reduce expenditure, for example, by reviewing and reducing some services or the level of service that we currently provide. We may also need to identify alternative sources of income, review the amount we borrow or look at further alliances with other councils to share some costs.
In the future, we may look at variations to the rate cap with the support of our community. If we need to do this you will have the opportunity to be a part of the discussion.