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Rate Capping

Get the facts on rate capping...

On the surface, rate capping may sound like a good idea that’s designed to save your household money.

This simply isn’t the case.

Rate Capping Pool

That’s why the Local Government Association of SA (LGA of SA) has developed these resources to help you to get the facts on rate capping, and show you how this policy will cause long-term harm to you and your community as well as unfairly impact those who can least afford to pay.

We invite you to dig a little deeper to see how it will affect ratepayers and residents, more than 11,000 council jobs across the State, and thousands of volunteers and community clubs, and result in increased fees and charges.

Rate capping. It just doesn’t make community sense. Take action to stop it.

To find out how South Australian councils are part of your every day and what other services could be at risk click here.

On the surface, rate capping may sound like a good idea. But dig a little deeper and you'll find that it will cost you more than it saves.

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On the surface rate capping may sound like a good idea. But dig a little deeper and it soon becomes apparent that it this policy will cost communities more than it will save them.

Rate capping refers to a percentage limit being placed on the amount that councils can increase their total revenue from council rates each year.

Rate capping limits councils’ ability to provide local services and puts discretionary services at risk.

It’s an empty promise – rate capping will cost you more than it saves.

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Click here to download this as a printable fact sheet.

The sector’s opposition to rate capping is supported by compelling evidence from interstate and overseas that demonstrates the negative impact it has had on communities where it has been introduced. Councils invest tens of millions of dollars each year in community infrastructure and services.

Rate capping places undue pressure on councils and has been shown to affect the maintenance of public infrastructure such as roads, footpaths, sports club facilities, parks and playgrounds – shifting the burden of repair or replacement to future generations.

It has meant the discontinuation of services that contribute to building strong, vibrant communities.

It has resulted in increased council fees and charges to offset the loss of income, meaning that promised cost-of-living savings are inaccurate.

Council rates are only a fraction of the total taxes paid by Australians – less than 4% in fact.  (The federal government collects approximately 80% of the taxes, while state governments collect about 16%.)

ABS figures from 2014/15 show that South Australian councils raise the lowest revenue per capita of any state in Australia.

While rates per capita are higher in South Australia, council fees and charges are much lower here than they are interstate.

A cap on rates would put pressure on councils to raise additional revenue through increasing fees and charges – impacting disproportionately on those who can least afford to pay.

As the closest government to communities, councils understand many South Australians are doing it tough, and offer support to households struggling to make ends meet through mandatory and discretionary rebates, remissions and postponement of rates.

In contrast to both state and federal governments, councils are required under legislation to collect and consider feedback from ratepayers before deciding what they will include in their annual business plan, and what the associated rate increase will be.

There are examples where this process has led to postponement of planned programs and therefore a revised (lower) rate increase. There are also examples where communities have elected to increase rates to receive higher service levels or undertake major local infrastructure projects.

The introduction of rate capping will negate the purpose of consultation, putting decision making power in the hands of a state government entity that is not accountable to local communities.

In 2015 the South Australian Economic and Finance Committee undertook an Inquiry into Local Government Rate Capping Policies. It concluded that rate capping should not be introduced in South Australia, and recommended that local councils retain full authority to set their own rates.

Local government in South Australia is supportive of sensible local government reform that will drive efficiencies without hurting communities.

Most people are surprised to learn that the vast majority of services provided by councils are discretionary, with very few services mandated under legislation.

Rate capping would squeeze budgets to the point where all services that are not mandatory under legislation would be at risk of being cut, reduced, or not maintained.

There is no legal requirement for councils to fund libraries, provide recreation and sporting facilities, maintain jetties, or look after parks and gardens.

They don’t have to collect hard waste, undertake street cleaning, plant or maintain street trees, facilitate community events and festivals, or protect the public through food inspections.

Councils provide services in close consultation with their communities.  Under rate capping, the conversation will change from what councils and communities can do together, to what councils will stop doing because of forced budget cuts.