By Laura Michell
Restrictions on revenue sources, rising costs and population growth are creating ongoing challenges, according to the Outer Melbourne Councils (OMC) group.
The group, previously known as the Inferface Councils Group, comprises 10 councils that form a ring around metropolitan Melbourne, including Whittlesea, Hume, Wyndham and Melton.
The commissioned KordaMentha to prepare a report on the funding interface between local and state governments.
The report found that while councils were managing their finances well, they were facing revenue challenges in the form of the state government’s rates cap, rising costs and population growth.
It found that the state government’s rates cap – introduced in 2016 under the Fair Go Rates System to limit rate increases – was impacting councils’ ability to deliver infrastructure and services, as was rising.
OMC representative and Whittlesea council chair administrator, Lydia Wilson said that the group was calling on the state government, and federal government where applicable, to enter into a new partnerships with local government to address growth challenges.
“This is the great public policy challenge of our time – how do we do growth better?
“We need to meet the needs of today’s communities, plan for tomorrow’ communities and agree on how we pay for the services and infrastructure our communities need.”
The report made a number of recommendations which the OMC believes will provide a financial platform to support further population growth.
These include cost-reflective indexation of the rate cap, exemptions from the rate cap for infrastructure programs to provide for population growth and exemption for local government from the state government’s windfall gains tax where landholdings are repurposed for community benefit.
According to the state government, councils can apply for a higher rate cap if they can demonstrate community support and a critical need for spending on services or projects that require a rate rise above the capped amount.
The government maintains that the rate cap mechanism is calculated to ensure that fast growing councils such as the Outer Melbourne Councils group are not penalised, ensuring revenue can grow to meet growing population needs.
A state government spokesperson said the Fair Go Rates system was reducing the cost of living for Victorians.
“The Victorian budget 2024-25 has increased financial support to local government by $161 million to a total of $875 million,” the spokesperson said.
