Rate capping must go

Will rate capping affect Council's community consultation?

Local democracy will be undermined and accountability to the community will diminish

Rate Capping was introduced by the Kennett Government in 1996. The Labor Shadow Minister for Local Government at that time, Pat Power MP said that the decision to cap rates is

evidence of a complete lack of faith in the capacity of local government as an industry or in municipalities as sectors to manage their business. It is in absolute conflict with the notion of an elected tier of government having the right and the responsibility to structure its revenue base in a responsible and proper manner.

Removing the decision about rate increases from Councils removes the impetus for Councils to undertake proper community consultation.

  • Rate capping prevents democratically elected Councillors from representing their constituents. Councillors are elected by and are accountable to the community. It should be the community who decides if rate increases are excessive or not, in return for the programs and services that they expect Council to deliver.
  • Communities who wish their Councils to deliver better services should be able to do so without being hamstrung by another level of government.
  • Reports from NSW suggest that “rate pegging” (as it is known in NSW) results in Councils being less accountable to their communities.


Will our existing services and programs be safe?

No. Services and programs will be axed

When Council costs exceed revenue something has to give. Many Councils will be forced to cut services. The types of services that are particularly vulnerable are those outside Councils’ traditional focus on ‘roads, rates and rubbish.’

They include:

  • Home and Community Care
  • Childcare including:
    • Long Day Care
    • Occasional Care
    • Out of School Hours Care
    • School Holiday Programs.
  • Youth Services
  • Environmental Programs
  • Community Events and Social Inclusion Programs

Other services will be contracted out. The only way a contractor can provide a service cheaper is by:      

  • cutting service levels
  • cutting staff
  • cutting wages and conditions; or
  • all of the above.

Contractors are in it to make a profit. If a service can be delivered with a profit then that profit should be put back into the community not into the pockets of private individuals.

What about maintenance of our footpaths, buildings and roads?

New infrastructure and infrastructure maintenance will decline

With less money to spend, Councils will have little choice but to delay repairing some assets – these include roads, footpaths, buildings, swimming pools and so on. Where once timely intervention could prolong the lifespan of an asset, rate capping will see assets deteriorate to the point where it will have to be replaced entirely.

And all this will do is increase the infrastructure repair bill for the future. Far from saving ratepayers money, rate capping will only increase the asset renewal backlog incurring greater future costs. 

Read what others have to say:

Rate capping is a poor solution

Rate Capping: Lessons from history

How badly will rate capping affect local jobs and our local economy?

Jobs will be cut and local economies will suffer

Although Rate Capping is not coming into effect until the 2015/16 financial year we are already seeing the fall out. The Minister for Local Government has written to all Councils and cautioned them against increases above CPI in the next budget.

A number of Councils are using this as an excuse to restructure and outsource:

  • Baw Baw Shire Council are making 33 positions redundant. They have also flagged that another 111 positions will be considered for outsourcing or shared service arrangements. This includes 55 positions in Home and Community Care. READ MORE
  • Mornington Peninsula Shire Council have announced a major restructure. There have been around 15 staff depart the organisation this year. To date those positions have not been replaced. The CEO is reviewing the entire organisation and has advised staff that he is predisposed to contracting out and that he wants to make Mornington Peninsula Shire Council a template for the whole state. READ MORE

So what does this mean for council workers pay and conditions?

Pay will be cut and it's worse news if you're female - the Gender Pay Gap will increase

Rate capping will affect our capacity to negotiate decent pay increases for our members. Over recent years we have seen pay increases fall well below 4% per annum, which used to be the norm.  Most Councils in this round of bargaining are already using rate capping as an excuse to keep pay increases down.

Some Councils want to peg pay increases to CPI which will result in a pay cut in real terms.

Rate capping will widen the Gender Pay Gap. When Councils are struggling to make ends meet the services which are most vulnerable include Child Care and Home & Community Care. Both Child Care Workers and Home & Community Care Workers are paid significantly higher in Local Government than they are in the private or not-for-profit sectors. They also provide a superior standard of care.

Rate capping will result in Councils getting out of the provision of theses services. They will be picked up by private and not-for-profit providers who pay significantly less, often the award rate. This will contribute to the increasing Gender Pay Gap. READ MORE

The ASU won an historic equal pay case for Child Care Workers in 2001. The Andrews Labor Government claims to support Gender Pay Equity.  The ASU welcomed the recent announcement by the Government that all appointments to Government Boards would be at least 50% women. We call on the Government to support Gender Pay Equity in Local Government and not let the women of our state down.