The Fair Go Rates system gives ratepayers transparency and confidence in their council's rating system. It provides an assurance that ratepayers are receiving maximum value for money.

For 2016/17, The Minister for Local Government set a cap on rate increases at 2.5%, in line with that period’s Consumer Price Index (CPI), after a decade of uncontrolled rate rises.

Victorian council rate rises in 2017/18 are capped at that period’s forecast CPI of 2%, under advice from the Essential Services Commission (ESC).

For the 2018-19 financial year, council rate rises are capped at 2.25% in line with the period's CPI forecast and advice from the Essential Services Commission.

Essential Services Commission's advice to the Minister for Local Government (PDF, 825.2 KB)

Placing a cap on rates eases cost of living pressures on Victorians, delivering a fairer system of council rates. The cap delivers on a key election promise to ensure fair and effective policies and processes for Victorian ratepayers.

Councils can apply for a higher cap if they can demonstrate community support and a critical need for spending on services or projects that requires a rate rise above 2%.

The Victorian Government’s commitment to a fairer rates system

Council rates in Victoria have been growing too quickly, on average 6% a year. With the introduction of a rate cap, we now have a fairer rates system.

The Fair Go Rates system provides Victorian councils with a clear framework to guide their budget planning and decision making. The framework ensures essential services continue to be delivered and that councils invest in necessary local infrastructure to meet community needs.

Only the general rate and municipal charges part of a rates bill have been capped. All other parts, such as waste charges and other fees and levies, remain uncapped.

The Fair Go Rates System also encourages councils to engage in ongoing consultation with their communities to understand their needs, expectations and priorities.

In some cases, rates bills have increased by more than the capped rise. This may happen because:

  • the value of their property has changed in relation to the value of other properties in the municipality.
  • other charges and levies in rates bill that are not subject to the cap, such as the waste charge, have risen. The capped increases apply to the general rates and municipal charges only.
  • the rate cap is applied differently depending on whether your property is classed residential, commercial or rural. These types of rates are classified as differential rates.

All of Victoria's 79 councils have been operating under rate caps since 1 July 2016. Six councils were given Essential Services Commission (ESC) approval to adopt rate caps higher than.2.5% in that first year (2016-17). Four were given approval for higher caps for 2017-18.

Visit the ESC website

The government is committed to striking the right balance with the rate capping policy. Ratepayers should not be asked to contribute more than is necessary, and councils should be allowed to raise enough revenue to provide the services and infrastructure needed for strong, healthy and resilient communities.

Average rate increases and rate caps by council

Calculating rates

Understanding Fair Go Rates

To address concern over increasing rates and the need to alleviate cost of living pressures to deliver value for all Victorians, the State Government commissioned a review by the Essential Services Commission (ESC) into a 'rates cap'.

The Fair Go Rates system limits the amount of rates that a council can levy each year.

Councils are advised of the cap in December each year to ensure they have time to account for it in their budget considerations.

Looking for the best value

The Fair Go Rates system does not stop councils improving or providing new services or infrastructure projects.

If a council needs to raise rates over the cap to deliver essential projects and services, they must to demonstrate to the ESC that an increase is warranted and that they have engaged and listened to ratepayer and community views.

When budgeting for projects and services, councils are encouraged to be innovative and look for the best value. This might involve projects or services jointly delivered with other councils, the private sector, not-for-profit sector or by using different service delivery models.

Other levels of government or non-government funders can also be approached for financial support for specific projects.

What Fair Go Rates does not cover

The Fair Go Rates system affects only the council's general rate and municipal charge components of rates.

Your rate notice may include other uncapped council charges, such service or special rates, or special charges.

The revenue from fees, fines and other charges will not be capped.

Councils collect the Fire Services Levy on behalf of the Victorian Government. This is subject to a separate transparent process based on the needs of our emergency fire services.

How can councils meet their financial requirements to deliver quality services and infrastructure?

Councils are accountable for establishing priorities for service provision and expenditure in their municipal areas, in consultation with their local communities.

Councils are encouraged to explore funding options and adjust their costs if needed.

If a council is in a position of having to cut a service or not proceed with a highly valued or necessary project, it can make a case to the ESC for a higher cap to cover the required expenditure.

Find your council and more about your individual rates bill or how projects are funded in your area on the Know your council website

Essential Services Commission (ESC)

As required by the Local Government Act 1989, the Minister for Local Government’s decision was informed by advice from the Essential Services Commission.

Visit the ESC’s Council rate caps page