March 27th, 2025Rate cap variation or council no longer viable
The Hepburn Shire Council is seeking approval for a higher rate cap for the 2025/26 financial year in a bid to secure long-term financial stability.
The council is applying for a total rate increase of 10 per cent for 2025/26 which includes a 7 per cent increase to the existing 3 per cent rate cap announced in December by the Local Government minister.
An additional 7 per cent rate rise would be on average equal to $2.20 per property per week but will generate $1.36 million to invest in programs and services. The proposal has now been submitted to the Essential Services Commission and aligns with the council’s financial vision 2024-2027 that was endorsed at last September’s Special Council Meeting.
The move is being made in a bid to ensure financial viability and long-term sustainability, the council said in a media statement.
Mayor Cr Don Henderson says the council is committed to ensuring it can continue to provide essential services for the community in the years ahead.
“General rates and charges are council’s biggest revenue stream, making up 66 per cent in the financial year 2024/25,” Cr Henderson said.
“Operating in a financially sustainable way can be challenging when we have a smaller population size than the average council and when we are working from a historically low rate base.
“This proposed rate cap adjustment will form part of ensuring we meet our regulatory requirements and help guarantee the financial stability of council, which is crucial to delivering services and infrastructure for our residents.
“Councils, and especially rural councils, do not have enough revenue sources, and this has been acknowledged by both state and federal governments.
“We understand that there are many in the community struggling under cost-of living pressures and this decision is not being made lightly.
“Rest assured, we are continuously seeking efficiencies to minimise the financial burden on ratepayers to ensure that we improve our financial position to support our community.”
An increase of $2.20 per week would mean an extra $114.40 for someone now paying $1144. However the rates for a modest home in Glenlyon would be $3907.
Hepburn Shire Council is no longer financially sustainable, Cr Brian Hood has told a meeting of concerned residents at Trentham last week.
Cr Hood said it was time the state government looked at merging Hepburn Shire into other local government areas because it no longer had the ability to continue to provide services at their current levels – even with a 10 per cent rise in rates.
About 90 people attended the town meeting with the majority from Trentham. After talking about the town structure plans, Cr Hood moved to the four-year council plan and the “overly ambitious” previous four-year plan.
“It strayed away from core business. It had five focus areas, I think 23 priority statements and 116 strategies. And while there were some successes along the way and lots of good stuff got done, it was just trying to do too much all over the place.
“On the capital side of things, we built the Mechanics at Trentham and the sports ground rooms, we did Creswick Town Hall, Creswick Trails, Bullarto Station, all those sort of things, no qualms about that.
“But I showed them (the meeting) a slide on the operating performance with all the day-to-day activities and services and that was a bit of an eye-opener to everybody.
“The deficits incurred over the past four years were sizable each and every year and were getting bigger. And it just said, look, the plan wasn’t affordable. Yes, there were successes in it, but we’ve got to stop doing what we’re doing there and get back to whatever we determine to be basics.”
Cr Hood said the projected $4 million a year cash gap was largely caused by escalating costs and also the cumulative effect of rate capping.
“We started from a very low position, unfortunately, when they brought in capping, and that then got entrenched into it. And each year whenever we’ve had a rate cap increase, it’s always been below CPI. So that’s really put the squeeze on.
“We’re small. And of course, the other geographic factor is we’ve got four or five centres, so there’s a lot of inefficiency or duplication where, unlike, say, Mount Alexander Shire where everything’s in Castlemaine, we’ve got Clunes and Creswick and Daylesford and so on. So it’s not an excuse, it’s just a reality.”
Cr Hood said that while The Rex was a financial and governance disaster, if it had never happened the council would still be facing a $4 million gap going forward.
“We have looked long and hard at selling surplus land and buildings, but to be frank, we really don’t have anything that’s not being used.
“The other thing that we’ve done with the capital works program is we’re now only doing renewal work. We’re not building any new assets, there’s no cash for it.
“If we get the rate increase of 10 per cent it would give us $1.36 million. The other $2.64 million is coming from service changes, cost reductions, that sort of thing, which is going to be pretty challenging.
“We’re looking at what are we going to leave the same? What are we going to give a minor cut to? What are we going to give a big cut to? What are we going to stop?
“And the best case outcome is if we get the 10 per cent rate increase then we’d be left with a council that has completely shrunk and can’t deliver all of its services. But people are paying 10 per cent more in their rates.
“But worse still, from a risk point of view, there’s absolutely no cash sitting there for the next storm or flood or bushfire, any emergency. We’re running on empty. (And) if we happen to get grants from other levels of government, we can’t accept them because we’d have no cash for co-contributions.
“We’d just maintain what we’ve got. If you live on an unmade road today, it’s still going to be unmade in 10 years’ time.”
Cr Hood said those at the meeting then asked if Plan B was carving up Hepburn Shire to merge with other local governments.
“And I said, yes, we have been (talking about that). Several of us have reached this conclusion. We’ll advocate, particularly to the new minister, who we’re seeing very soon, that this sort of review needs to be done.
“So it’s now up to the state government. Would they send Creswick to Ballarat? Would they send Clunes to Central Goldfields or Pyrenees? Would they send Daylesford to Mt Alexander? Would they send Trentham to Macedon Ranges or Moorabool. Who knows?
“I’ve only got as far as saying if we cut all these services and costs and get a rate increase, that’s not a great outcome for the community at all. There needs to be something better. And we need to convince the state government to look at the bigger picture, that we’re just too small to be viable.”
Before December 31 each year, the Minister for Local Government sets the council rate cap for the next financial year.
If the cap does not meet a council’s needs, the council can submit a higher cap application for up to four years of higher caps at a time.
Rate caps started in 2016-2017 at 2.5 per cent. They dropped to a low of 1.5 per cent in 2022-23, reached a high of 3.5 per cent in 2023-2024 and in 2025-2026 are set at 3 per cent.
Words: Donna Kelly
