The state government has tightened the reins on council rate rises for next year, but it will be up to Warrnambool's new councillors to decide whether ratepayers will be spared an extra hit.
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Local Government Minister Sean Leane announced a 1.5 per cent cap for next year - the lowest since rate capping was introduced in 2016.
The council's decision to charge ratepayers an extra two per cent above the state government-imposed rate cap last year sparked major community backlash.
City ratepayers were in line to be hit with the extra rate hike again this year but in the wake of the COVID-19 pandemic, councillors voted in May not to impose the extra rate rise above the cap that it had got special permission from the Essential Services Commission to do.
However, the council had flagged that it still intended to slug ratepayers the extra rate rise in 2022/23 to help clear a multi-million-dollar backlog of asset renewal projects.
At the time the city council said it would seek to defer that two per cent rate increase above the state government-imposed cap for two years as the backlog of asset renewal projects was only set to grow.
But it said it was likely that the council would have to apply to the commission again for approval, but only if councillors voted for that to happen.
Many of the new councillors campaigned during the local government elections on a platform of not raising rates above the cap.
The council's corporate strategies director Peter Utri said the council had yet to make a decision on rates for the 2021/22 budget and it would be done after a community engagement process in the first half of 2021.
This year's two per cent CPI rate increase came with a fall in waste charges meaning rates effectively only rose by only 1.2 per cent - or $23 - for the average ratepayer to $2053.
The state government also this week introduced reforms to improve the local government rates system in response to a major review.
Mr Leane backed the comprehensive examination delivered by the three-member panel, which concluded the rating system aligned with many of the principles that underpinned sound revenue management and highlighted more could be done to help people who were struggling.
In response, the government said it would support ratepayers in financial hardship, improve transparency and consistent decision-making across councils, and build a fairer system.
The government will adopt 36 of the review's 56 recommendations in full, in part or in principle.
Among the most significant measures, the government said it would improve how the system could better support ratepayers who were struggling to pay their rates and would examine the merits of a valuation averaging mechanism to lessen the impact of sudden property value movements that particularly affect farmers.
The government said it would also pursue reforms to system administration and give councils improved tools for waste charges, special rate and charge schemes and more flexible rate concessions.
Enhanced transparency and community engagement requirements in the Local Government Act 2020 would also support the implementation of the reforms, it said.
As Victoria's focus shifts to economic recovery from the pandemic, the government said it would not support substantial change to how general rates, exemptions and alternative rating arrangements work, which would risk creating financial uncertainty during the recovery period.
The rate cap mechanism was excluded from the rating system review and will be separately reviewed by the end of 2021, after its first five years of operation.
Minister for Local Government Shaun Leane said the review had produced the first in-depth look for many years at how rates work in Victoria.
"Our response prioritises reforms that support ratepayers in financial hardship, enhance transparency and consistent decision-making and lay the foundations for greater equity and fairness in the rating system," he said.
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