The Victorian Government has established the Fair Go Rates System (FGRS), which is a framework limiting the maximum amount councils may increase rates in a year without seeking additional approvals.
Rate capping has been introduced ‘to promote the long term interests of ratepayers and the community in relation to sustainable outcomes in the delivery of services and critical infrastructure’ and ‘to ensure that a Council has the financial capacity to perform its duties and functions and exercise its powers’.
Each year the Minister for Local Government (the Minister) will set the rate cap that will specify the maximum increase in councils’ rates and charges for the forthcoming financial year. The Minister has the capacity to set a cap that applies to all councils, a group of councils or a single council.
In circumstances where the rate cap is insufficient for a specific council’s needs, it can apply to the Essential Services Commission for a higher cap.
Under the FGRS, the Commission is responsible for:
- providing advice to the Minister on the annual rate cap
- assessing council applications for a higher cap
- accepting or rejecting council applications for a higher cap
- monitoring and reporting annually on councils’ compliance with the cap or approved higher cap
- monitoring and reporting biennially on the overall outcomes in the sector arising from the FGRS, and
- issuing guidance materials and guidelines on the implementation and administration of the FGRS