Glen Eira Council votes to increase rates above state cap
Updated ,first published
The City of Glen Eira has moved to sell the last council-run aged care home in Victoria and will seek a rare rate cap exemption to avoid a cash crunch.
In a 6-1 vote on Tuesday night, councilors approved an application for Essential Services Committee approval to increase rates by 5 per cent in the next financial year; this rate was almost double the 2.75 per cent limit set by the state government in December.
On Wednesday afternoon the council announced it had also voted by secret ballot to transfer ownership of Warrawee Community, a 90-bed aged care facility in Bentleigh East, to a registered aged care provider.
Mayor Simone Zmood said that the house would not be closed, but in the statement made by the municipality, it was stated that local people will be asked who should manage the house before the decision to be made in June.
Glen Eira said the facility was operating at a $5.5 million annual deficit and national aged care reforms in November had further increased regulatory requirements.
“Households are feeling the pressure of rising costs, and so is the local government,” Zmood said. “No decision has been made yet, but we need to make a decision soon,” he said.
The debate and vote on the sale of the Warrawee aged care center was held behind closed doors because council officers considered the product to be commercially sensitive.
Glen Eira officials have warned that unless action is taken, cash reserves are forecast to fall from $67.4 million to $10.9 million by 2034-35 as rising costs and debt repayments will outpace revenues.
“At this level, we will not have sufficient short-term funding to cover day-to-day costs or maintain essential services and infrastructure,” a council report said.
The City of Glen Eira covers suburbs in Melbourne’s south-east including Caulfield, Bentleigh and Glen Huntly.
Deputy Mayor Li Zhang introduced the motion to change the interest rate cap to 2.25 percent and said the council was trying to cut costs elsewhere, including closing early learning centres. leaving home elder care.
“But there comes a point where you can’t keep cutting until you get to the basics,” he said.
If Glen Eira’s request for a higher rate cap is approved by June and implemented later this year, the council will become the first metropolitan council to benefit from the exemption.
Glen Eira has historically had some of the lowest rates in Melbourne, which was locked in when the Andrews government introduced the cap in 2016.
The rate increase cap is linked to forecasts for the consumer price index (CPI) to stop excessive increases, but the Municipal Association of Victoria says it does not accurately reflect faster-growing council spending from sectors such as construction.
Inflation has also greatly exceeded forecasts in the wake of the pandemic, causing a $55 million impact on Glen Eira and creating a “structural hole” in its finances.
During Tuesday night’s debate, councilors also blamed the transfer of costs from the state government and a $75 million budget blowout. Carnegie swimming pool redevelopment for their plight.
A 5 percent interest rate increase in the 2026-27 fiscal year would create about $3 million a year in extra revenue, officials said.
This works out to an excess of approximately $37 per year for the average rated property; but the most valuable properties can be charged hundreds of dollars more.
Councilman Sam Parasol voted against the extra interest rate increase, citing cost-of-living concerns.
“I feel like the community as a whole is really hurting and hurting,” he said. “I think we need to find other ways to increase our income somehow.”
Seventeen Victorian councils have applied for higher rates since the system was introduced, but most of these were smaller rural councils tasked with maintaining a large area of infrastructure and services.
The City of Monash is the only metropolitan council to have won the rate cap exemption so far, but ultimately did not take advantage of it in 2018-19.
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