Victorian councils count the cost of a decade of rate caps
But today, a decade after council rate caps were introduced to limit rate rises, many local governments are struggling to maintain basic services.
Local governments collect rates to fund libraries, community centres, kindergartens and parks as well as roads and footpaths.
However, with funding tight and construction costs on the rise, some regional councils are cutting services.
South-east of Melbourne, several Gippsland shire councils have recently proposed removing road surfaces and returning some sealed roads to gravel in a bid to lower maintenance costs.
In the remote township of Aberfeldy in Victoria's High Country — home to fewer than 20 permanent residents — the Baw Baw Shire Council announced plans to rip up the only sealed road in town and return it to gravel.
That plan is now on hold pending a council report on future road maintenance.
And that's happening further south, where the Bass Coast Shire was set to replace bitumen with gravel on roads in Wonthaggi and on Phillip Island but was forced to back-track after community backlash.
"We're willing to do the work, we're the ones closest to the community, and we're the ones face-to-face with them in the supermarket," deputy mayor Brett Tessari said.
"We'll stick by the rate cap, but it's getting tough to continue to provide the services and then do the extra work that the state is putting on us in the current situation.
In the state's north-east, Yarriambiack Shire Council has had to slash its capital works program by $8.5 million.
"That increases pressure on the council to maintain service levels," chief executive Tammy Smith said.
Victorian local governments must apply to the Essential Services Commission to raise annual rates beyond the gazetted rate cap.
This year, Hepburn Shire Council outraged ratepayers when it successfully applied for permission to increase rates by 10 per cent, well above the 3.5 per cent cap.
Indigo Shire Council was also given an exemption to the cap, increasing rates up by 7.54 per cent.
Analysis of the 2022-23 budgets of Victorian councils showed rates accounted for 66 per cent of total revenue in metropolitan municipalities, but less than half of total revenue in small shire councils.
Municipal Association of Victoria president Jennifer Anderson said the amount of financial support given to local governments by the state government had declined in recent years, as evidenced by a recent parliamentary inquiry.
"It's well and truly out there that over time some of the funding sources that were available to councils are either no longer available or have reduced in time," Cr Anderson said.
"Councils like to step in and provide services where there are gaps and there isn't a private provider, particularly in your smaller rural communities."
The Victorian government and federal government have both held inquiries into the sustainability of local government.
The state government's Local Government Funding and Services report, published in November last year, acknowledged councils were "extremely limited" in their ability to raise revenue to pay for the services they're expected to provide.
Recommendations included boosting funding to councils for capital expenditure.
Shadow Local Government minister Anne Webster has called on the federal government to deliver a final report.
"In my north-western Victorian electorate of Mallee, small shires consistently tell me they are struggling financially, and I am putting that mildly," Dr Webster said.
"Every one of them is struggling.
"There is not one of the 12 shires in Mallee that is waving a flag and presenting balloons because they're doing a fantastic job. They're all constrained financially.
"It makes it very hard for them to repair the roads. Everywhere you go in regional Victoria, the roads are horrendous.
"Regional councils and shires often depend on grants to deliver infrastructure, they don't have the alternate means of raising revenue that city councils do."
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