The Victorian Government has rejected key funding reform proposals in its response to a parliamentary inquiry.
The government’s response to the Legislative Council Economy and Infrastructure Committee’s Inquiry into Local Government Funding and Services supported just five of the 48 recommendations in full.
It backed a further 32 in part or in principle, and rejected 11 outright.
Among the proposals not supported were calls to review the rating system, reinstate 50:50 cost-sharing arrangements for libraries, school crossings and maternal child health, and provide direct capital funding for local infrastructure.
The response also dismissed a return to programs like the Country Roads and Bridges initiative, and refused to stop deducting administration fees from federal grant allocations to councils.
The Victorian Local Governance Association (VLGA) welcomed the government’s renewed commitment to work with councils but expressed disappointment at the lack of financial reform.
“While it is pleasing the state government has renewed its commitment to work with councils to ensure they have the resources to deliver vital services and infrastructure to local communities, it is disappointing recommendations to assist in delivering more sustained and meaningful funds to the sector have not been supported,” the VLGA said in a statement.
The government said it remains committed to ensuring councils are “appropriately funded and resourced”, noting that councils have discretion in how they raise and manage funds, and that borrowing is a legitimate tool for financing long-lived assets.
The response highlighted existing grant programs such as Growth Areas Infrastructure Contributions and recent initiatives like the Earn and Learn workforce pilot and Regional Planning Hub. It also noted upcoming reviews of the rate cap formula and disaster recovery funding processes.
However, councils say these measures fall short of addressing systemic challenges, particularly for smaller and rural municipalities facing escalating service demands and infrastructure backlogs.
“There is no doubt that Victorian councils are facing increasing challenges to their financial sustainability,” the VLGA said.
“The focus for many councils in recent years has shifted towards their long-term financial sustainability and the need to make more fiscally responsible decisions in the best interests of their community.”
