Community service needs, taxes & levies hit council rates

The Municipal of Victoria (MAV) reported (29 June 2012) that:

Victorian council rates will rise an average $75 or 5 per cent this coming year to help cover growth in community service demands, hikes in Government levies and the impact of the national carbon price.

Cr Bill McArthur, President of the Municipal Association of Victoria (MAV) said that as the economy had slowed, councils were under more strain to increase community services to meet local needs.

“The Local Government Cost Index has forecast it will cost an average 3.9 per cent more this year to provide the same level and mix of services as last year. That’s around $58 per ratepayer to maintain the status quo.

“Council budgets must also address cost pressures not included in the Cost Index such as growing service demands, declining government funding and rising State levies.

“When money is tight, we tend to see a higher reliance on free and low cost council services and programs.

“Local government’s contribution to vital community program such as aged care, youth and family services continues to grow as funding from other levels of government fails to keep pace with service delivery costs.

“For example, over $120 million a year is now tipped in by Victorian ratepayers to top up under-funded Federal-State home and community care programs to meet the rising demands of our ageing population.

“Budgets also facing growing pressure on municipal waste management costs due to the start of the carbon price, stricter Environment Protection Authority standards for landfills, and rising State landfill levies.

“This year councils will redirect an average $20 from each household ($49 million) to pay the State’s landfill levy. If you’re in one of 25 metropolitan areas, an average $28 ($39 million) will also be paid from your rates towards the State’s fire services levy.

“Add to this a median increase of $22 facing ratepayers due to the carbon price impact on councils, and most of this year’s rate rise will be eaten up by external costs that councils can’t control,” he said.

Analysis released by the MAV in March estimated a median rise in council costs of 0.8 per cent due to the carbon price. Excluding any mitigation programs to reduce council emissions, if carbon price cost increases are collected through rates it would equal a median rate rise of 1.5 per cent – around $22 per ratepayer.

Cr McArthur said a common misconception was that rates should rise in line withCPI, which measures a common basket of household goods and services not construction, material and wage costs facing councils.

“Councils need staff to deliver over 100 community services and maintain $60 billion in local assets.

“It’s never easy striking a balance between keeping rates affordable and delivering everything that communities have come to expect. When councils ask what services they could reduce, communities generally want all the same services but at a lower cost.

“Councils have been successfully lowering costs using joint procurement, surplus asset sales, planning reforms, restructures and other efficiency programs. Significant savings are being realised and councils must continue to demonstrate how they’re reducing unnecessary expenses.

“We’re mindful of the tougher economic climate and payment options and deferrals are offered for those facing genuine hardship. Get in touch with your council if you need to discuss your situation,” he said.

Rates data for 70 of Victoria’s 79 councils is available at

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