No variation to rate capping in Cardinia Shire in 2016–17

The Victorian Government has implemented a cap on the level of rate increases all councils across Victoria can adopt as part of the 2016–17 budget. This cap is set at 2.5 per cent for 2016–17. Council was required to notify the Essential Services Commission of its intention to seek a variation to this cap by 31 January 2016.

Council will not seek a variation due to some unique factors that occurred in 2015–16. These include:

• Negotiations to carry out a significant asset sale which will off-set the impact of the rate cap in 2016–17.
• Due to strong financial planning, Council had projected a surplus of more than $1 million for 2016–17. This surplus was to be invested into asset renewal and will enable Council to report a balanced budget despite the impacts of rate capping.

It is important for ratepayers to note that the rate cap for 2016–17 will not simply mean a rates increase of 2.5 per cent on 2015–16 rates charges. This is due to rate capping being introduced in a year that properties are revalued. Instead, ratepayers will see a change in their rates based on how property values change, and the total rate revenue collected by Council will increase by 2.5 per cent.

Council will continue to advocate against using CPI to cap rates under the Victorian Government’s Fair Go Rates system as it is an unsuitable measure for capping rates. CPI is an indicator of price inflation affecting households by measuring the overall price levels for goods and services purchased by Australian households.

Therefore while CPI is set based on the cost of purchases made by households, Council’s cost is driven mainly by other factors which do not align with CPI. This includes wage inflation, price and usage of utilities (for example gas, electricity, and water), price and usage of raw materials (for example road materials), growth within the shire and demand for services.