LGA South Australia has expressed opposition to the introduction of rate capping, warning it could undermine councils’ financial sustainability and long-term planning.
LGA President, Heather Holmes-Ross, said evidence from other states showed rate caps restricted councils’ ability to respond to community needs.
“Rate capping has not been shown to improve efficiency and has limited councils’ capacity to invest in infrastructure and services,” Mayor Holmes-Ross said.
She said independent research from New South Wales and Victoria indicated that rate capping had contributed to growing infrastructure backlogs, increased reliance on user-pays charges, and reduced financial flexibility.
“In 2018, LGASA examined the experience of these states and found that rate caps reduce financial flexibility, do not improve efficiency, and undermine local decision-making,” she said.
Mayor Holmes-Ross said councils required stable funding and autonomy to make investment decisions based on local priorities.
“What councils need is the responsibility to determine their own rates so they can deliver the services their communities expect,” she said.
She also said rate capping weakened local democratic processes.
“Councils are the only level of government that sets budgets in direct consultation with their communities. Limiting their ability to invest in essential services undermines that relationship,” Mayor Holmes-Ross said.
The comments followed the release of recent advice from the Essential Services Commission of South Australia, which outlined pathways to strengthen councils’ financial sustainability.
“ESCOSA has completed a four-year assessment cycle and provided practical recommendations to support long-term financial management,” Mayor Holmes-Ross said.
“We should focus on implementing this evidence-based guidance rather than adopting a one-size-fits-all approach.”
LGASA also highlighted growing national attention on council finances, including a current inquiry by the Federal Government into local government sustainability.
“The inquiry is examining funding arrangements and fiscal sustainability across the sector,” Mayor Holmes-Ross said.
“Councils need access to appropriate funding and financing tools to remain accountable while continuing to deliver infrastructure and services.”
Mayor Holmes-Ross also referred to previous comments by Sam Telfer, who has raised concerns about the effectiveness of rate capping in improving council performance.
LGASA will continue working with councils across the state to advocate for policies that support strong, sustainable local government.
“We want a trusted local government sector that works in partnership with state and federal governments to deliver positive outcomes for communities,” Mayor Holmes-Ross said.
