What is Rate Capping?
In 2015, the Victorian Government introduced rate capping legislation in the form of its “Fair Go Rates System” (FGRS). The FGRS or rate capping introduces an annual rate cap set by the Minister for Local Government which controls general rate increases for all councils during that financial year.
What will the new “Fair Go Rates System” do?
Previously, councils had the power to increase rates according to the priorities and needs of local communities. The new framework will require any council which seeks to increase rates at a level greater than the rate cap to go through an independently verifiable review process. The framework will be overseen by the Essential Service Commission (ESC).
What does the Rate Cap not apply to?
The rate cap only applies to general rates and municipal charges. As a result, the rate cap does not apply to State Landfill Levy Charge, the Waste Service Provision Charge or the Garbage/Recycling/Organics delivery charge. These charges will increase or decrease based on the cost of providing the service. In addition to this, local government is required to collect the Fire Services Property Levy on behalf of the State Government via council rate notices. The rate cap does not apply to the FSPL and any changes to this levy is approved by the State Government.
When will Rate Capping commence?
The rate cap and variation framework will be introduced for the 2016-17 financial year – effective from 1 July 2016 the rate cap will be set at 2.5%. For future years, the rate cap will be set at a rate determined by the Minister for Local Government. It is expected that the rate cap will be announced by December 31 or 6 months prior to the start of the rate capped year.
Does this mean that my overall rates will only increase by 2.5%?
With a rate cap set at 2.5% it only means that the total rate revenue generated by council will increase by 2.5%. However, as 2016/17 is a revaluation year for all properties, the allocation of rates throughout the municipality will depend on how property values change. Therefore, some properties may experience a rate increase of over 2.5%, whilst others may experience a rate increase of less than 2.5%.
Where can I find more information?
Council has complied with the Victorian Government's rates cap of 2.5 per cent. The cap applies to the average annual increase of rates and charges.
The rates and charges for your property may have increased or decreased by a different percentage amount for the following reasons—
i. the valuation of your property relative to the valuation of other properties in the municipal district;
ii. the application of any differential rate by Council;
iii. the inclusion of other rates and charges not covered by the Victorian Government's rates cap.