The introduction of rate capping will cost Brimbank council almost $30 million over the next five years.
In its submission to the Essential Services Commissions’s draft Blueprint for Change, the council said rate capping would have a negative cash impact of $29 million by 2020-21, requiring “service-level changes”.
The state government will introduce a cap in the next financial year, bringing council rate rises into line with the rate of inflation (otherwise know as the consumer price index).
“[Council] is now at the point that the rate cap proposed … will have significant impacts on council’s financial position. The calculation will be challenging to explain to residents.”
Star Weekly revealed in June that the council had trimmed $1.9 million from its 2015-16 budget, including money for community festivals and tree plantings, in preparation for rate capping.
Brimbank’s chairman of administrators, John Watson, said capping would “present challenges for all councils, including Brimbank”.
His own council’s submission confirmed some programs had been reduced or were no longer delivered so that the council could justify its 4.8 per cent rate increase this year. “Rather than removing services, we are looking at delivering cost-savings and efficiencies in the way they are delivered,” Mr Watson said.
“Rate capping and the reduction of grants from state and federal governments means that council needs to further review spending.”
The council also baulked at the ESC’s “broad assumption” that wages are about 40 per cent of council’s expenses. Mr Watson said wages varied considerably between councils and, at Brimbank, constituted 56 per cent of its budget.
