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Rates cap will bear no resemblance to the CPI

Minister for Local Government, Natalie Hutchins is having a lend of Victorians when she said in a media release today: “The Local Government Act Amendment Bill … will stop councils raising their rates above a cap, based on the Melbourne Consumer Price Index.”

 

The one thing that the cap will not be based on is the CPI.  The CPI, as measured and published by the Australian Bureau of Statistics, is a measure of changes, over time, in retail prices of a constant basket of goods and services representative of consumption expenditure by resident households in Australian metropolitan areas.

 

Importantly, the CPI is a measure of changes to prices that have actually occurred.  What Ms Hutchins intends to do is have bureaucrats with crystal balls guess future movements in prices and then adjust that figure by whatever takes her fancy.

 

There is no mechanism for ratepayers to get a refund if the actual CPI is lower – so any claim that rate rises are to be linked to the CPI is utterly fallacious.

 

Quotes attributable to Shadow Minister for Local Government, David Davis MP:

 

“The increase in the CPI in the year to 30 June 2015 was 1.1%.  Ratepayers who believed Daniel Andrews when he said he would cap council rates at the CPI face an average rate hike this year of 3.8%, and some much higher.

 

“I predict Natalie’s bogus index will continue to far outstrip the actual CPI, something Victorian ratepayers will be able to calculate with each new rates notice.  They will know Daniel Andrews and Natalie Hutchins have tried to con them.

 

“Victorians have every right to feel very let down by the Andrews Labor Government’s utterly discredited rate capping promise which bears no resemblance to their new reality.”