The Local Government Association (LGA) of South Australia has expressed its strong opposition to the SA Liberal Party’s election commitment to introduce rate capping, warning it would undermine councils’ ability to deliver essential services and infrastructure to communities across the state.
LGA President and City of Mitcham Mayor, Heather Holmes-Ross said the proposal ignores clear evidence from interstate and risks repeating mistakes already seen in NSW and Victoria.
“Rate capping is a smoke and mirrors policy that is proven not to create efficiency. Outcomes we’ve seen interstate have been deeply damaging for councils who have taken this route,” President Holmes-Ross said.
“Independent research shows the introduction of rate capping in New South Wales has generated significant infrastructure backlogs, pushed councils toward higher user-pays charges to recover lost revenue, and restricted their ability to deliver services.
“Similarly in Victoria, rate capping has contributed to a significant infrastructure backlog, and it is communities – and future generations – that end up paying the price because of poor policy.”
In 2018, the LGA examined NSW and Victoria and found the same – rate caps reduce financial flexibility, do not improve efficiency, and undermine local decision-making, she said.
“What we don’t need is more intervention from the state government. What we need is more funding to deliver services locally and responsibility to determine our own rates, so we can make investment decisions that are right for our own local communities.”
President Holmes-Ross said the policy also undermines local democracy.
“Councils are the only level of government that sets budgets in direct consultation with their communities. Placing a cap on how much councils can invest in infrastructure and essential services is an attack on local decision-making.”
It comes just days after the Essential Services Commission of South Australia released its latest advice to councils, providing a clear, evidence-based pathway to strengthen financial sustainability across the sector.
“ESCOSA has just completed an independent, four-year assessment cycle of councils and provided practical recommendations to support long-term financial sustainability,” President Holmes-Ross said.
“We don’t need a blunt, one-size-fits-all intervention like rate capping. We need to get on with implementing the clear advice already in front of us.”
The LGA also points out the growing national recognition of the financial pressures facing local government, including a current inquiry by the Australian Government into local government sustainability.
“The current Federal Inquiry’s scope will examine the financial relationship between local government and other levels of government across Australia, with a particular emphasis on funding mechanisms and fiscal sustainability.”
“What councils need is more funding and more financing tools in their toolbox, that’s how you deliver accountability without compromising essential infrastructure and services – not by capping revenue while costs continue to rise.”
The LGA President also pointed to previous commentary from within the Opposition’s own ranks.
“The Shadow Minister for Local Government, Sam Telfer, has previously described rate capping as ‘bad public policy’ that creates red tape and delivers no benefit,” she said.
“This policy has nothing to do with solving problems, it’s about political convenience, and South Australian communities will pay the price.”
President Holmes-Ross said the Association will work with councils across South Australia to present a united position against rate capping in the lead-up to the state election.
“We want a strong, trusted local government sector that state and federal governments partner with, not one constrained by old policies that don’t work, and get dragged up every election cycle. Pointing fingers at local government in the hopes of scoring votes is poor policy, leading to poor outcomes for communities,” she said.
