By Julian Bajkowski

Victoria’s Auditor General has criticised the state’s 79 councils over a glaring lack of clarity and detail in the way they determine and reveal how more than $4 billion in rates and charges a year are levied on constituents, despite the local governments having a “common rating framework.” 

In a report issued on Thursday, Acting Auditor-General, Peter Frost found that “there is limited assurance that all councils systematically and rigorously consider the information and evidence needed to adequately understand the impact of their rating proposals on their communities.”

“This includes proper consideration of the principles of stability, equity, efficiency and transparency in their rating decisions,” the Auditor General’s Office said.

“Councils do not consistently calculate, and transparently report, key rates and charges data in a way that promotes scrutiny of decisions and comparability between councils.”

The report is a wake-up call for how councils extract revenue from ratepayers at a time when many local governments are facing severe cost pressures from issues ranging from cross-jurisdictional cost shifting, negative adjustments to the Commonwealth’s Financial Assistance Grants scheme and requirements to top-up the legacy of defined benefit superannuation schemes.

The Auditor has also fired a warning shot over the bow of Victoria’s state government for not providing adequate assistance to councils or checking that they comply with transparency obligations under the state’s Local Government Act.

“At the state government level the Department of Planning and Community Development, through Local Government Victoria, does not provide proactive support to councils on their rating practices, or monitor and report on their performance in this area, including their compliance with the Act,” the Auditor General’s office said.

The report said that council reporting of rates and charges data needed to be improved “so that ratepayers and the general community can easily understand and compare the information within their own and other municipalities.”

“It is also timely to review the Local Government Cost Index to ensure there is a valid and accepted sector benchmark for rates and charges,” the Auditor General’s office said.

Rates accounted for around half of the $8.18 billion in total operating revenue generated by Victoria’s councils.