March 7th, 2026Rate hike permanent?

A Hepburn Shire ratepayer believes last year’s rate rise of 10% means that the “one-off” 7% added to the state government’s cap of 3%, will continue to compound into future years.
The ratepayer, who asked not to be named, wrote to the Department of Local Government earlier this year:
“The ESC (Essential Services Commission) permitted a 10% increase over the 2024/5 rates (comprising the government’s 3% cap plus an extra 7%).
“As per the ESC’s website: ‘Following a request from Hepburn Shire Council, the Essential Services Commission has approved an application for a higher rate cap of 10 per cent for the 2025-26 financial year, 7 percentage points above the 3 per cent cap set by the Minister for Local Government’.
“I now write to you to inquire about the 2026/7 Hepburn Shire rates, noting that the council has gone on the record stating that it will not apply to the ESC for an increase over the (2.75%) government cap.
“Will the 2026/7 rates be the 2025/6 rates increased by the 2.75% government rate cap for 2026/7? If so this means to me that the 7% one-off increase in 2025/6 will again apply in 2026/7. In other words the said 7% will not be a one-off for the 2025-26 financial year.
“Or will the 2026/7 rates be the 2024/5 rates increased by the 2025/6 cap of 3% and then the 2026/7 cap of 2.75%? Can you please advise which of these two alternatives will apply, and if it’s alternative 1 how this is consistent with the 7% increase being for the 2025-26 financial year.”
The department wrote back that the first scenario was correct.
“That is, the approved higher cap in 2025-26 will result in a permanent increase in the council’s rate base that will continue to compound every year. It is described as a higher cap for the 2025-26 financial year because this is the amount by which the council could increase its average rates in that year. The increase in 2026-27 will be capped at the rate cap of 2.75% set by the minister, which is applied to the 2025-26 rates.”
Hepburn Shire Council Performance and Transformation director Brooke Holmes said the implementation of an Essential Services Commission approved 7% rate cap variation, in addition to the 3% approved rate cap, resulted in a 10% increase to the rates payable in 2025/2026.
“This was a permanent, one-off uplift in rates. Council has no intention nor approval for future rates payable to be calculated at a percentage greater than the rate cap.
“The rate cap announced by the ESC for the 2026/2027 financial year is 2.75%. The increase to rates in 2026/2027 will on average result in a 2.75% increase to the rates of 2025/2026.”