The Hepburn Shire Council has this week received confirmation from the Essential Services Commission that its application for a 7 per cent rate cap variation has been approved. 

On average, the one off 7 per cent rate increase equates to an extra $2.20 per property per week for ratepayers.

The increase reflects an uplift adjustment in rates, resulting in a total rate rise of 10 per cent for the 2025/26 period, which includes the 3 per cent set by the Victorian Government. The council intends to increase rates in line with the Governments rate cap in future financial years. 

Mayor, Cr Don Henderson, said that this decision will enable the council to generate an additional $1.36 million in revenue, which will be invested directly into necessary services and infrastructure. 

“Combined with $2.53 million in operational savings identified through Council’s work on the 2025/26 draft Budget, this revenue will support the delivery of core services for our community. Without this approval, additional service cuts would have been required.” said Cr Don Henderson.

“Maintaining financial sustainability is challenging for most councils, especially rural councils like ours. Our current financial position has been impacted by a range of factors including very limited alternative revenue streams to rates, a relatively small and dispersed population and responding to natural disasters.

“We are a low rates council compared to Victorian averages and have sustained a rate cap well below cost increases and CPI,” said Cr Don Henderson.

“We understand that no one likes paying rates or taxes, however this outcome supports our commitment to maintaining the services and infrastructure our community needs, while ensuring our financial sustainability,” said Cr Henderson.

The council carried out community consultation on a proposed rate cap variation during the development of the Financial Vision in September 2024 before submitting the variation request.  

“The application to the Essential Services Commission was not made lightly, and Council has carefully considered all financial levers available, including operational efficiencies, asset rationalisation, and revenue diversification,” said Cr Don Henderson.

With the successful application, the council will double the current additional Hepburn Shire rebate on rate charges for pensioners who qualify under the State Government’s Pensioner Rate Remission Scheme. This initiative will increase Council’s rebate from $21 to $42 to assist pensioners in their rate payments.  

The draft Budget, Council Plan and other strategic documents were considered for community consultation at a Special Council Meeting of the council on Tuesday 13 May.

The new rates will be reflected in the 2025/26 budget and rates notices issued for the upcoming financial year, due for release in July.

The Essential Services Commission stated in its decision:

“Hepburn’s decision to apply for a higher cap of 10 per cent for the 2025–26 financial year is consistent with its long-term planning outlined in its Financial Vision. 

“By developing its Financial Vision ahead of the planning cycle currently underway, Hepburn has been transparent with its community about its financial situation and been able to have important conversations to ensure the next tranche of plans is principally concerned with financial sustainability, and focuses on the services that are most important to the community.”

Council rate increases in the state of Victoria will again be capped at the forecast Consumer Price Index for 2025, continuing the state government’s drive to reduce pressures on household budgets.

The three per cent rate cap for the next financial year is part of the government’s Fair Go Rates System.

The rate cap limits the amount Victorian councils can increase their total revenue from general rates and municipal charges.

Councils may apply to the Essential Services Commission for a higher rate cap if they can demonstrate a critical need for spending on services or projects that would require a rate rise above the capped amount.

Contending with financial pressures, the Hepburn Shire Council last year, prior to the election of the current council, decided to apply to the Essential Services Commission for a 10 percent rate cap variation, including the applicable rate cap for the 2025/26 financial year.

The council, in September, issued a statement confirming that it will begin the process of making an application to the Essential Services Commission, with the application required to be submitted between February 1 to March 31 this year.

The ESC must then notify the council of their findings within two months of receipt of the application.

As it grapples to gain financial sustainability, the Hepburn Shire Council has decided to apply to the Essential Services Commission for a 10 percent rate cap variation, including the applicable rate cap for the 2025/26 financial year.

Councillors endorsed the significant decision at their recent special financial vision meeting, just days before entering caretaker mode (September 17-October 26) ahead of next month’s council elections that will see a new council elected into the controversial new wardless council structure.

The newly adopted Financial Vision aspires to support the council’s obligations towards financial sustainability and outlines, for the next councillor group, the parameters for development of the Council Plan 2025-2029 and accompanying Financial Plan.

The council issued a statement confirming that it will begin the process of making an application to the Essential Services Commission, with the application required to be submitted between February 1 to March 31.

The ESC must then notify the council of their findings within two months of receipt of the application.

Mayor, Cr Brian Hood, said that for many years and especially throughout this term, the council has grappled with financial difficulties due to a sharp increase in costs of service delivery and construction, the small and dispersed population base, very limited range of additional revenue options, low-rate base and recovery from numerous costly natural disasters.

“Our Shire has been adversely impacted by rising inflation affecting the delivery of services and infrastructure, cost shifting from other levels of government, and extraordinary costs associated with the recovery from recent flooding and storm events,” Cr Hood said.

“As a rural council we have limited opportunities for alternate income streams, and the financial sustainability of all Councils is of concern to many.”

This year the council submitted to two major inquiries initiated by Federal and State governments to assess the financial sustainability and service delivery standards of local governments. These inquiries are expected to release findings in late 2024/early 2025.

In its 2024/25 budget, the council determined to implement reductions to operational budgets by $1.50 million, while seeking to minimise the impact on service delivery.

 The budget also identified that an annual cash shortfall of approximately $4 million is projected from 2025/26 onward.

Councillors and officers have conducted a number of workshops over the last 12 months to review available means to improving the council’s beleaguered “financial sustainability”. 

The council hosted an online survey inviting ratepayers, residents and visitors to provide feedback and share their priorities regarding service delivery, community infrastructure renewal or upgrades, and the potential for a rate increase – providing vital feedback to the input of the Financial Vision.

The community engagement identified that 61.6% of the community were open to a rate variation above the rate cap (at various percentages), and 38.44% of community were not open to a rate variation. 

“The difficult task facing councillors and staff over the last few months was to find $4 million in savings for the 2025/26 financial year, and ensuring they were permanent savings or increased revenue,” Cr Hood said.

“We considered many options, avoiding the need for additional borrowings. We have determined to generate $1.56 million of additional revenue from rates and $2.44 million from operational and service delivery savings.

“To ensure our financial sustainability, we have made the difficult decision to make an application to the Essential Services Commission for a rate cap variation of 10% including the applicable rate cap for the 2025/26 financial year.”

“We appreciate that this will not be a popular decision with all, and there will be concerns from many in the community about their ability to pay.

“To support some of the most vulnerable in our community, we will increase Council’s rebate to assist pensioners from $21 to $42. Ratepayers continue to have the ability to apply for special payment arrangements based on financial hardship.”

“The detail of the operational and service delivery changes earmarked to generate $2.44 million in savings will be determined over the coming months, as Council creates a Council Plan 2025-29,” Cr Hood said.

“We will continue to advocate to the State Government for a review of its funding of Local Government, along with the rating and revenue system in Victoria that leaves rural councils at a significant disadvantage,” said Cr Hood.

The full resolution adopted by the council can be found on its website.