Hume council will ask the state government to implement a Local Government Cost Index to calculate the rate cap, which could result in rates rising.
Council’s submission to the state government’s Local Government Rate Cap Mechanism Statutory Review was heavily debated at the September 8 council meeting, and only passed by the mayor’s casting vote.
The submission outlines council’s experience with the current rate capping system, which is measured by the Consumer Price Index and set by the local government minister. This system came into effect in 2016 under the Fair Go Rate System.
The submission states that the CPI measure for guiding the rate cap is not reflective of the actual costs of delivering services for local governments, especially for growth councils like Hume.
Council has recommended the government scrap the CPI measure in favour of a Local Government Cost Index, which would be developed to reflect the actual cost base of councils.
It would take into account wage growth in line with enterprise agreement, cost inflation of construction and materials, asset maintenance and renewal costs, compliance and regulatory obligations, and the cost shifting from other levels of government, the submission stated.
Council has also called for an additional rate cap allowance that reflects population and household growth, recognising that growth places significant pressure on operating and capital budgets, as well as recommend reform of the higher cap application process to reduce administrative burden, align with budget cycles, and address political and community pressures.
Councillors were in a five-five split on whether the submission to the review should proceed.
Cr Karen Sherry said Hume needed to “show a bit of leadership for all councils”.
“We all operate in vastly different contexts – urban, rural and growth areas – and a uniformed rate cap does not account for variations in service demand, infrastructure needs or revenue capacity,” she said.
Cr Sam Misho instead suggested council should look to cut its costs.
“Let’s cut our costs before we ask residents to cut into theirs,” he said.
“There are other options on the table. We could outsource certain functions, we could look at offshoring staff for back office roles if that delivers savings.”
Cr Steve Gagen was not in support of Cr Misho’s idea, saying money should be kept within the city.
With the vote tied, mayor Jarrod Bell used his casting vote to pass the submission.
