Just before Parliament was dissolved for the election, the Government introduced the Local Government (Rates Capping) Amendment Bill. There was just enough time to call for submissions before MPs headed off on campaign.
 
Under the legislation, councils would not be able to increase their rates by more than a set percentage (four percent as drafted in the Bill) without central Government permission. That much is clear from the Bill's name.
 
The name does not make it clear that the legislation would also set a floor. A council holding its average rates increase below two percent would need the Government's permission too. It would have to prove it was funding depreciation and maintaining its assets. If it simply set low rates anyway, central government could direct it to revise the decision.
 
So, Parliament is contemplating creating a statutory power to order an elected council to raise its rates. It would be more honest to call it the 'Rates Range Bill'.
 
The two-to-four percent range seems reverse-engineered. At consultation, officials derived it from inflation and GDP growth. They later abandoned that formula and now explain the range with a retrospective fifteen-year average of council costs. Neither is appropriate for a forward-looking mechanism.
 
Do not get me wrong. The pain that motivated the Bill is real. Rates rose by roughly a third in the three years to September 2025 and were still rising at 6.2 percent in September 2026, against consumer inflation of 3.7 percent.
 
Undoubtedly, some council spending is wasteful, just as it is for central government. But mostly councils are catching up on decades of underinvestment while construction costs surged and central government kept adding unfunded responsibilities.
 
A cap addresses none of those factors. It forces decisions about which spending will give way. The Australian evidence shows that infrastructure is often the first to suffer.
 
A better approach would be to ask communities what they are prepared to pay for. The Initiative's submission proposes binding referendums for major discretionary projects.
 
Ratepayer-approved projects should be funded by targeted rates, with standardised reporting so ratepayers can compare councils. Any mandates the centre imposes on councils should be funded by the centre.
 
Fiscal discipline should come from transparent information on spending and rates. Increases to fund projects should only be imposed with the consent of ratepayers.
 
This Bill offers neither transparency nor choice. When Parliament reassembles after the election, it should be ditched.
 
The Initiative's submission on the Local Government (Rates Capping) Amendment Bill is available here.