The Essential Services Commission's annual Council Rate Cap Compliance Report shows two of the state's 79 local councils exceeded the three per cent rate cap set by the Minister for Local Government. This is the first time tie cap has been exceeded since 2020-21.
The report also notes that Ballarat City Council and Bayside City Council did not increase their rates at all in 2025-26, and that Hepburn and Indigo shires had a higher rate cap approved by the commission.
The Essential Services Commission monitors and reports on Victorian councils' compliance with the rate cap under the Fair Go Rates system.
Under the system, the Minister for Local Government sets the average rate cap each year. Councils must keep their rate increases within the cap or seek approval to increase average rates above the cap. Hindmarsh Shire Council and Alpine Shire Council did not comply with the rate cap set in 2025-26.
Alpine Shire Council
Alpine Shire Council increased rates by 3.96 per cent, materially above the 3 per cent rate cap set for 2025-26.
Alpine Shire Council attributed its non-compliance to receiving advice from a software provided that impacted its financial position, leading to it exceeding the rate cap. The council has committed to rectifying the error by lowering rates during 2026-27.
Councils are responsible for ensuring the information used to calculate rates and comply with the rate cape is accurate, including any advice they may receive from contractors.
Hindmarsh Shire Council
Hindmarsh Shire Council increased rates by 3.05 per cent. It attributed its non-compliance to unintentionally using an early set of estimates rather than the final estimates when determining their 2025-26 rates.
Hindmarsh investigated the error and will take a number of steps to prevent this issue occurring again, including reviewing its procedures and resource allocation.
While waste services and charges are not included in the rate cap, the commission monitors and reports on councils that change the structure of their service rates and charges. Eight councils introduced new service charges to recover costs for waste management services.
Quotes attributable to Essential Services Commission Chairperson and Commissioner Gerard Brody
"It's pleasing to see that most councils have been compliant with the rate cap. We expect the councils who have not complied to bring themselves back into order next year."
"As Victorians continue to grapple with cost-of-living pressures, it's important councils continue to deliver services to residents and businesses while keeping their budgeted rate increases within the cap."
