Local Government Minister Shaun Leane announced the cap under the Andrews Labor Government’s Fair Go Rates system.
The Fair Go Rates system began in 2016 to limit uncontrolled rate hikes and to provide councils with a clear framework to guide their budgeting while ensuring essential services continue to be delivered.
The cap is set each year by the Local Government Minister with advice from the Essential Services Commission, guided by the Consumer Price Index.
“We introduced the Fair Go Rates system to help reduce cost-of-living pressures for Victorians by preventing uncontrolled rate hikes from local councils across Victoria,” Mr Leane said.
Before the Fair Go Rates system was introduced residents faced an average rate increase of six per cent every year. The current rate cap of 1.5 per cent is the lowest since the system was first introduced.
Greater Shepparton City Council has remained within the cap since its introduction and did not increase rates in the 2021-22 budget.
Councils collect rates from residents annually to fund and deliver essential community infrastructure and services such as local parks, libraries, community centres, roads, kindergartens, waste collection and sports grounds.
Councils individually set rates for their municipalities every year through their budget process and must consult with their communities on decisions relating to budgets, rates, and other charges.
Councils are able to apply to exceed the cap in certain circumstances.
In order to deliver essential projects and services, they must demonstrate to the Essential Services Commission that an increase is warranted and that they have engaged and listened to ratepayer and community views.
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