At its December meeting Warrnambool City Council made a decision to consult with the community over seeking a variation to the rate cap.

At the same meeting Council also decided to advise the Essential Services Commission (ESC) that it intended to apply for a rate cap variation.

It is important to note that Council will make a final decision on whether to seek a rate cap variation by March 31, 2019, following the community consultation.

Should a rate cap variation be approved by the ESC the community and Council would have a further opportunity to review any changes to the rates through Council’s annual budget process.

Council flagged to the community within its 2018-2019 Strategic Resource Plan of the need for a variation above the Government rate cap in order to retain the breadth and level of services offered to the community and to remain financially sustainable.

“Council encourages all Warrnambool residents to be a part of the consultation around the rate cap variation,” Warrnambool Mayor Cr Tony Herbert said.

“The consultation will ask really important questions around whether people want to see a rate cap variation, or whether they would rather see a reduction in services provided by the Council.

“If there is a preference for reducing service levels then we need to know which services the community is prepared to forgo.”

“We’ll make sure everyone is aware of the implications of having or not having a rate variation and why we think current Council services are important to the community and worth retaining.

“Council is committed to operating more efficiently and in recent years a number of cost savings have been achieved through measures which include installation of LED lighting, changes to fleet management, the Council banking contract, road resealing and software consolidation to name a few.

“Council also contained its wages growth to less than one per cent over 2017-2018 which compares favourably to other Councils and government agencies.”
 

Background to the rate cap and the variation process

The Minister for Local Government sets local council rate caps, which is the maximum amount a council can increase general rates and municipal charges. 

Before December 31 each year the minister announces rate cap for the next financial year.

The minister can set a cap that applies to all councils, a group of councils or a single council.

If the rate cap does not meet a council’s needs, the council can submit a higher cap application for up to four years of higher caps at a time.

Councils seeking a higher cap need to apply for a higher cap by March 31 each year. The application needs to set out:

• the proposed higher cap for each specified financial year;
• the reasons why the council is seeking the higher cap;
• how the views of ratepayers and the community have been considered in proposing the higher cap;
• how the higher cap is an efficient use of council resources and represents value for money;
• whether other funding options have been considered and why those options are not adequate; and,
• that the assumptions and proposals in the application are consistent with the council’s long term strategy and financial management policies.

The Essential Services Commission requires Councils to indicate in December whether they will seek a variation.

In March Councils make a final decision as to whether they will make an application for a rate cap variation.

In the event the ESC approves a rate cap variation Councils then prepare annual budgets and give further consideration to proceeding with a rate cap variation.

In May each year the community is provided with an opportunity to comment on the Council budget.