Victorian government rate hike cap pushes local councils to cut services, cut jobs, report says

“It’s fewer workers, it’s lower wages overall,” Nahum said. “There is a shift towards part-time and casual work. Basically, we’re talking about a heavier workload for every… local government employee.

The union reports that the municipal services most affected are daycares and home and senior care.

Mr Nahum said the situation would worsen year on year if the policy was continued.

The report also argues that the rate cap will hamper the recovery of COVID-19 at a time when stimulus projects are being used to stimulate the economy.

“The rate caps tie the growth in rate income to economic indices that contract when the economy contracts,” Nahum said.

“Local governments under the current tariff policy are actually more constrained in times of economic crisis than they are in normal times.

Educator Carol Wockner says she saw the impact of the rate cap after one of the council-run centers she worked at closed in 2017.

Childcare Carol Wockner fears losing her job as boards are forced to cut services due to the Victorian government’s tariff cap.Credit:Justine mcmanus

“The board, because of the price caps, felt they had to cut services,” she said.

“I have the impression that my job is under threat. It is not necessarily because my council wants to close our centers, but they feel that they have to rationalize everything.

“Their hands are tied behind their backs because at the same time they are under this pressure to be a business rather than a public service.

Ms Wockner, who has been a child educator for 20 years, the last 10 in council-run centers, said childcare was a target as the councils could instead rely on private centers.

The council she works for, which Age chose not to name to protect Ms Wockner, closed three departments in a decade.

Victoria Municipal Association president David Clark said the cap limited the ability of councils to fund critical local infrastructure and community services.

Year-over-year, the cap places significant limits on the flexibility of boards to fund large asset renewal projects, especially when capital may need to be consolidated to take advantage of grant programs of different levels. government, ”he said.


Victoria taxpayers declined to comment before the report’s release.

The association has previously argued that councils should prioritize freezing or reducing rates over non-essential capital works projects as the state recovers from the pandemic.

“We live in a time of serious financial hardship for many businesses and residents who simply don’t know how they will pay their rates,” said former President Dean Hurlston.

The Port Phillip Council recently attributed some of the responsibility for shutting down its major independent arts organizations, including Red Stitch and Theater Works, to financial pressures caused by price caps.

Meanwhile, Moonee Valley’s draft 10-year financial plan predicts the board will be insolvent in two years due to the rate cap.

The Kennett government capped rates in 1995 after cutting the number of boards from 210 to 78 and forcing rates down 20 percent. The cap was lifted in 1997 to allow increases of up to 3 percent – with ministerial approval – and in 1999 the Bracks government removed the cap altogether.

A spokesperson for the Department of Employment, Constituencies and Regions said the capped rate system was designed to reduce cost-of-living pressures.

“It was introduced to limit uncontrolled rate hikes and in 2021-2022 the rate cap was the lowest since its introduction in 2016,” the spokesperson said in a statement.

The councils individually set the rates for their municipalities each year as part of their annual budget process. These are based on property values, as set by the state government under the supervision of the Victorian Valuations General.

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