Annual Report 2019-20

We administer higher council rate caps, produce council compliance reports and conduct inquiries and reviews that promote sustainable outcomes for councils and the community.

Our year in review

We published our annual council compliance report

We monitor councils’ compliance with rate caps, based on data they provide each year.

We reported in 2019–20 that all 79 councils had complied with the cap set for them. 75 councils complied with the cap of 2.5 per cent, limiting the increase for the average ratepayer. These included four councils who set their rates below the cap this year, to correct for setting rates above that the cap the year before.

A further four councils showed they complied with individual higher caps that were approved in previous years.

We reviewed options to strengthen compliance reporting

We reviewed supporting data councils provided with their compliance submissions in past years and identified possible improvements. We considered findings that auditors had made in recent years on councils’ IT and accounting controls.

We reviewed legal advice on compliance questions, and guidance we had given councils. We discussed relevant points with staff of the Victorian Auditor-General’s Office and the Valuer-General Victoria.

We then invited all councils to participate in an online survey and visited 12 of them, to learn about the processes and systems they use for budgeting and reporting compliance.

We are finalising a report on steps we can take to ensure that councils’ processes – and our own – are reliable enough to support our published reports of their compliance.

We outlined options for improved waste management

In October 2019, at the government’s request, we provided initial, confidential, advice on regulating the waste and recycling sector to ensure competition, service quality and transparency. The government then asked for more detailed advice, on legislative options and governance arrangements.

We are now undertaking targeted consultation with stakeholders, to provide this advice by August 2020.

Progress report, 2019–20

Objective: Higher cap applications – Status: Ongoing

Ensure our 2020–21 higher cap decisions are consistent with the long-term interests of ratepayers and the financial sustainability of councils.

Provide relevant guidance to councils on what is required in a higher cap application.

Promote best practice community engagement in the local government sector.

Outputs

• Program of workshops and webinars for councils considering higher caps.
• Updated our higher cap guidance.
• Met with councils to explain the higher cap process.

Outcomes

• No councils applied for higher caps.

Objective: Monitoring council compliance

Undertake random audit activities and assess annual compliance with caps to minimise incentives for councils to circumvent the cap.

Outputs

• Council Rate Cap Compliance 2019–20: Compliance Report November 2019.

Outcomes – Status: Complete

• Based on data the councils provided, we confirmed all had complied with the average rate cap or previously approved higher cap.

Ensure the higher cap application process is clear and does not impose unnecessary burdens

Outputs

• Updated compliance guidance and template.
• Reporting compliance.

Outcomes – Status: Complete

• Clearer directions to councils on documenting their compliance submissions.

Outputs

• Survey (66 responses) of all councils’ processes for budgeting.

Outcomes – Status: On track

Clearer processes for commission staff validating councils’ compliance.

Outputs

• Workshop review of 12 councils’ systems and IT controls for compliance reports.

Outcomes – Status: On track

• Recommendations to councils for improved processing and controls for compliance.

Objective: advising Victorian Government stakeholders

Provide timely and robust advice to the Minister for Local Government on rate caps, waste charges or any other requested topic.

Outputs

• Advice to the minister as requested, including advice on setting the average rate cap for 2020–21, and confidential advice on the waste and resource recovery sector.

Outcomes – Status: Ongoing

• Provided the Minister for Local Government with relevant, timely and high-quality advice.

Liaise with Local Government Victoria on any changes to the framework as a result of the proposed new Local Government Act.

Outputs

• Meetings continue as needed.

Outcomes – Status: Ongoing

• While amendments to the Local Government Act are pending, we continue to liaise with Local Government Victoria on any changes to the framework.

Proactively identify emerging issues relating to the rate capping framework and engage with Local Government Victoria where appropriate.

Outputs – Status: Ongoing

• Matters arising out of review of compliance process.

Measuring our success in 2020–21

Strategy objective	Objective	What outputs do we intend to produce?	What outcomes do we intend to achieve?
Objective 1	Higher cap applications Ensure our 2021–22 higher cap decisions are consistent with the long-term interests of ratepayers and the financial sustainability of councils Provide relevant guidance to councils on what is required in a higher cap application.	Publish updated guidance for councils on our rate cap regulatory framework Publish decisions on higher cap applications received for 2021–22 Publish special orders of approved higher caps.	Higher cap applications outline all legislative matters and reflect councils’ consideration of the long-term interests of ratepayers and the community Higher cap applications we receive from councils show they are improving their community engagement practices.
Objective 1	Monitoring the outcomes of the rate capping framework	Publish our second outcomes report, including analysis of trends in financial position, services, and infrastructure asset renewal and maintenance in the first two years of rate capping.	Communities, councils and the Victorian Government are informed about the impacts of the rate capping framework on councils and communities.
Objective 2	Advising Victorian Government stakeholders Provide timely and robust advice to the Minister for Local Government on rate caps and any other requested topic Provide advice to the Assistant Treasurer and the Minister for Energy, Environment and Climate Change on waste issues Liaise with Local Government Victoria on any changes to the framework resulting from the review into the local government rating system Identify emerging issues relating to the rate capping framework and engage with Local Government Victoria where appropriate.	Provide advice to the minister, as requested, including advice on setting the average rate cap for 2021–22 Provide advice on legislative options and governance for waste and resource recovery sector.	Minister receives relevant, timely and high-quality advice Local Government Victoria is made aware of emerging issues and their impact on rate cap regulation Local Government Victoria understands how any changes arising from the review into the local government rating system might affect our role in rate cap regulation.