HORSHAM Rural City Council is likely to apply to raise rates one per cent above the state government cap for four years.
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This is despite the government lowering the future rates rise cap from 2.5 to two per cent on Monday.
Horsham council Mayor Pam Clarke said a two per cent cap would affect the kind of services the council could provide.
“We will cope for a little while but we will have to look at what services we can and can’t provide,” she said.
“I have a real concern about the smaller rural councils as they don’t have the capacity to absorb the new cap.
“They’ll be in dire straits.”
Impact to be felt in the Wimmera’s smaller shires
West Wimmera Shire Mayor Bruce Meyer said a two per cent rates rise next year would generate approximately an additional $130,000 for the shire.
“Given the need for road works and their high cost, it probably won’t cover it,” he said.
Cr Meyer said the shire had lost almost $1.5 million per year when the state government’s Country Roads and Bridges and Local Government Infrastructure programs were cancelled.
“When you put the rates cap up against that, it’s not so significant,” Cr Meyer said.
“We could live with rates capping if those two programs were reinstated.”
Cr Meyer said it was not likely his shire would apply for a rates cap exemption.
“The requirements are pretty onerous and the chance of success is low,” he said.
Hindmarsh Shire Mayor Debra Nelson said her shire was looking at an unsustainable situation.
“Small rural councils are generally unsustainable,” she said.
“We have a mostly elderly population and they don’t have the capacity for large rates rises.
“We need to have some sort of recurrent funding from the government to make up the balance as, at the end of the day, it’s money versus services.”
Cr Nelson said Hindmarsh Shire’s public services were operating at a low level and there was not much room for cuts.
“We’re a small shire and we don’t have the resources in terms of time and effort to apply for an exemption," she said.
“Even if we were granted an exemption, the return from an extra one per cent wouldn’t be much and our residents don’t have much capacity to pay.
“We really need recurrent funding.”
Farmers bear burden: VFF
Rates capping is applied to the whole revenue forecast for shire or council, not a percentage cap on each individual property.
Victorian Farmers Federation president and Murra Warra farmer David Jochinke said the group would monitor the last few years of rates data for inconsistencies.
The federation has run a campaign this year to collect rates notices from farmers.
“We presented our findings to Victorian Local Government Minister Natalie Hutchins about three weeks ago, and we got a very good hearing,” Mr Jochinke said.
Mr Jochinke said that farmers had contacted the federation to say they felt their land valuation had gone up too far after rates capping had bee brought in.
“We have heard stories of rates notices increasing by 100 per cent, but some have seen their notices stay the same or drop a little,” he said.
“If the rates cap is working as intended, then some places should be a little bit up and some should be a little bit down,
“What we are seeing is agriculture taking on more than its fair share is valuation. That’s definitely happened in Horsham and in other rural and regional councils.”
Mr Jochinke said the federation was also concerned about the sustainability of rural councils and that other levels of government needed to look at funding options.
No other revenue options
Rural Councils Victoria chairman and Hindmarsh Shire Councillor Rob Gersch said communities were going to suffer if state and federal government funding was not increased.
“The lower level was expected, and councillors don’t want to put up the rates but we don’t want to cut back on infrastructure or services either,” Cr Gersch said.
“Small councils don’t have other sources of revenue like in metro councils; we don’t have parking or a large rate base.
“We’ve carried the rates cap for the past 12 months but it’s the future I’m worried about.”
Cr Gersch said Rural Councils Victoria would continue to lobby for more government funding for councils.
“Councillors are happy to have rate capping as rural councils don’t have the higher income earners to pay for rates increases.
“Farmers in the Wimmera might be having a good year but they have struggled before that.
“Inflation for shires is higher than two per cent with wages and fuel costs; we need something to make up the difference.”
Horsham council vote on preliminary exemption
Horsham Rural City Council has been scheduled on Monday evening to debate an application to raise its rates above the cap.
Minister for Local Government Natalie Hutchins announced on Monday morning that the rates rise cap had been lowered from 2.5 per cent to two per cent for 2017/18.
“In the decade before we introduced Fair Go Rates, council rates increased by an average of 6 per cent per annum. This has now stopped, making things fairer for ratepayers,” Ms Hutchins said.
“Victorians have told us they want more of a say in council decision-making, and now is the time for councils to speak with their communities about their budgets for next year.”
Ms Hutchins said the lower inflation index meant the rates cap had to be reduced.
Monday evening’s Horsham council meeting agenda contained an item to consider a proposal to apply for an exemption to the rates cap from the Essential Services Commission.
Horsham council was previously successful with an application to exceed the rates cap by one per cent.
Horsham council’s main reason for seeking a 3.5 per cent rates rise was to cover an infrastructure funding gap.
The motion at Monday’s meeting is to provisionally notify the commission, by January 31, 2017, of Horsham council’s interest in applying for a rate cap variation for the financial years 2017/18 to 2020/21.
Horsham council corporate services director Graeme Harrison stated in his report to councillors that the commission had advised the council to review its infrastructure and planned projects.
“The decision as to whether to make an application for a variation or not, should not be done lightly as it will impact on the level of rates affordability for the community, council’s ability to meet its asset renewal objectives and will have repercussions for council’s budget timelines and resourcing,” Mr Harrison stated.