Council rate increases will again be capped at the forecast Consumer Price Index for the 2026/2027 financial year, as part of the Victorian government's ongoing efforts to reduce pressures on household budgets.

Minister for Local Government Nick Staikos has confirmed a rate cap of 2.75 per cent for the next financial year, under the government’s Fair Go Rates System.

He said the rate cap decision accepted the recommendation of the Essential Services Commission (ESC) and it limits the amount the Rural City of Wangaratta and Victoria's other 78 councils can increase their total revenue from general rates and municipal charges.

Minister Staikos said councils across Victoria had also received revised guidelines for their use of waste management charges to combat rising levies across the state.

He said the guidelines clarify that waste service rates and charges issued to residents should not be higher than the costs incurred by council for providing the kerbside service – including collection, transport, storage, processing and disposal of waste and recycling.

Minister Staikos said this year’s rate cap aims to ease cost of living pressures for families, while still allowing councils to continue providing services to local communities.

He said in the decade before the introduction of the Fair Go Rates system in 2016 council rates were increasing by an average of six per cent each year, whereas in the past decade under the system, the average rate cap has been just 2.3 per cent.

Minister Staikos said councils may apply to the ESC for a higher rate cap if they can demonstrate a critical need for spending on services or projects that would require a rate rise above the capped amount.

Shadow Minister for Local Government, Bev McArthur said the government's latest rate capping announcement fails to address ongoing state government cost shifting and tax hikes.

“Rate capping is an important protection for ratepayers and should drive discipline and reduce waste, not serve as cover for continued cost-shifting onto local councils," she said.

“Unfunded state mandates undermine rate capping and make local government financially unsustainable.

“Protecting ratepayers means more than setting a cap - it requires the government to establish appropriate funding arrangements for shared services and to stop imposing more and larger taxes and levies on Victorian taxpayers."

Council plan calls for maximum 2.75% increase

The Rural City of Wangaratta is likely to impose the full 2.75 per cent increase to its total revenue from general rates and municipal charges in 2026/27.

Under its 10-year 2025-2035 Fiinancial Plan, council has a long-term assumption that the annual rate cap will be two per cent.

"Council expects a 1.25 per cent growth in its rating base due to new residential development, subdivisions or capital improvements across the local economy," the plan reads.

It also states that given council's financial position and the projected cash balances over the life of the financial plan "it is not feasible to foresee a scenario where council would not increase rates by the maximum rate cap set by the Victorian government".

Under the Financial Plan, council's priority is to generate savings and transform services to mitigate the need for a higher rate cap.

"A rate cap variation is an option we may need to consider in the future; however, it is not a feature of our Financial Plan at this time," the plan reads.