Local Government is seeking a commitment not to introduce any cap on rates.

The concept of ‘capping’ Local Government rate increases has gained some attention in recent months.
New South Wales has had a rate capping regime for many years and rate capping is a recent addition to
the Local Government landscape in Victoria.
State Council adopted a rate setting statement that outlines the rationale against rate capping:
  1. Local Government is a legitimate and essential sphere of Government with the democratically enshrined mandate to raise revenue through rates to fund infrastructure and services for the benefit of their community.
  2. Councils’ deliberative rate setting processes reference their Integrated Planning Framework – a thorough strategic, financial and asset management planning process – and draw upon the community’s willingness and capacity to pay.
  3. Rate-capping prejudices Local Government’s long-term financial management and can, as experienced in other jurisdictions, have detrimental long-term effects on Local Government asset management, with chronic under-rating leading to significant infrastructure maintenance and renewal backlogs.
  4. Rate capping places undue pressure on sound financial management at a time when Local Governments are subjected to increasing costs beyond their control, often imposed by other spheres of Government.
  5. Local Government rates have remained steady for many years at approximately 3.7 percent of GDP in Australia; meaningful tax reform would require thorough investigation of the total taxation burden, not an external cap on Local Government rates.
No Funding is required.

Benefit to the State:
Local Government is seeking a commitment not to introduce any cap on rates. A commitment to not implement rate capping would provide certainty for Local Government in its ability to raise revenue to fund services and infrastructure on behalf of its community. In the longer term, a rate capping regime would have significant negative impacts on the community and the State as the Local Government infrastructure backlog worsened, ultimately hampering productivity. Further, rate capping would
increase demands on the State to fund services and infrastructure that could not be supported by a restricted rating regime.

Responses WALGA has received from political parties:

WA Labor:
WA Labor has no plans to introduce a cap on rates.

The Greens WA:
The Greens WA are very supportive of all of the ten priority areas with the focus on improving the quality of life of citizens. This is akin to our principle that Local Government has a valuable role as the third tier of government and in local governance and the representation of local issues and delivery of essential community services.

Liberal Party of WA:
WALGA has yet to receive a response.

The National Party of WA:
The Nationals understand rates are a significant revenue source for local councils to enable the
continuation of key services and to fund infrastructure to the benefit of the community. However,
unreasonable and unwarranted rate increases are not in the interest of constituents. While The
Nationals do not support capping of rates, there still needs to be some level of oversight in place that
eliminates the concern over excessive and unreasonable increases in rates.