Rates cap could put shire in red

Hepburn Shire Council’s mayor Kate Redwood said she was concerned the Victorian State Government’s pledge to to cap the annual increase in local government rates would place significant strain on small councils like Hepburn.

The estimated rate increase caps have been calculate at 3.05 per cent from 2016-17; 2.85 per cent for 2017-18; and 2.80 per cent for 2018-19.

The caps represent approximately one per cent when compared to council’s long term financial plan.

Cr Redwood said 80 per cent of 220 council owned buildings in the shire needed work. The proposed rate cap would significantly hinder council’s ability to conduct that work.

“We are facing a bit of an uncertain future at the moment,” Ms Redwood said.

“We are assessing very carefully our ability to manage our assets and the asset gap.” 

Cr Redwood said council had factored in a 4 per cent increase for 10 years – a reduction to 3.5 per cent would put pressure on council.

Cr Redwood said other similar councils were concerned and they were working with the peak body to come to an agreement. 

“In principle I agree with rate capping because we don’t want to households to have increased expenses but if we have a reduction it will impact the services that we can deliver,” Cr Redwood said. 

Rates make up 57 per cent of councils income, with the remainder coming from grants.

Cr Redwood said the Victorian Governments plans to cap spending could see a vast reduction in the number of grants available.

A council report said the rate capping would have a cumulative impact and see the shire have more than $2.7 million less income in a decade.Council will make a submission to the Essential Services Commission.

The Victorian Local Governance association released a statement stating it held “serious reservations about the draft rate capping framework as it currently stands”.