Alpine Shire Council has been found to have exceeded the three per cent rate cap for 2025/26 set by the Minister for Local Government, Nick Staikos. The Essential Services Commission’s (ESC) annual Council Rate Cap Compliance Report released on 2 December shows that Alpine and Hindmarsh councils were the only two of the state's 79 councils found non compliant, and the first to exceed the cap since 2020-21. The ESC found Alpine Shire Council increased rates by 3.96 per cent, materially above the three per cent rate cap. Council attributed its non-compliance to receiving advice from a software provided that impacted its financial position, leading to it exceeding the rate cap. The ESC said council has committed to rectifying the error by lowering rates during 2026-27. ESC chairperson and commissioner Gerard Brody said councils are responsible for ensuring the information used to calculate rates and comply with the rate cape is accurate, including any advice they may receive from contractors. “It’s pleasing to see that most councils have been compliant with the rate cap," he said. "We expect the councils who have not complied to bring themselves back into order next year. “As Victorians continue to grapple with cost-of-living pressures, it’s important councils continue to deliver services to residents and businesses while keeping their budgeted rate increases within the cap.” Alpine Shire Council has published the following release in response to the breach. Council taking steps to rectify 2025/26 rate cap breach Alpine Shire Council will rectify an error that resulted in a breach of the 2025/26 rate cap by adjusting the rating assessment calculation for the 2026/27 financial year. Council was identified through the Essential Services Commission annual rate cap reconciliation that it was non-compliant to the rate cap for 2025/26. The Fair Go Rates system limits the maximum amount a council can increase its average rates in a year without seeking approval for a higher cap, with the rate cap set at 3% for 2025/26. Along with General Rates and Service Charges, Council had previously – until this financial year – raised a Special Rate for Dinner Plain properties, with special rate funding not considered a part of the Essential Services Commission calculated rate cap. Council made the decision this year to no longer raise the Dinner Plain Special Rate, resulting in a reduction in income of approximately $167,000, and a small rate reduction over the rate base overall. Council's chief executive officer, Will Jeremy, explained that the breach of the rate cap occurred due to a system error. "Our rating system provider tested a classification change for us and then moved it into the live system," he said. "We had been told that this change wouldn’t take effect until 1 July 2025; however, that advice was wrong, and the change went live before the end of the financial year. "This early change meant our average base rate increased earlier than planned, and when the 2025/26 rate cap was applied, it was calculated on this higher base rate by mistake." Mr Jeremy said staff checked the usual system reports on 30 June 2025 and 1 July 2025 to make sure council was within the rate cap, as required. "Because the change had actually been applied in 2024/25, however, the reports didn’t show that the cap might be exceeded," he said. "I want to reassure our ratepayers that we had absolutely no intention to go over the rate cap." The error has resulted in a 3.96% average rate increase being applied to the 2025/26 financial year, as opposed to the 3% capped increase, equating to $168,304 in total. Alpine Shire Mayor, Cr Gareth Graham, said council will consider a recommendation to rectify the breach at the upcoming December council meeting. "Although there is no statutory requirement to amend the error, and no associated penalty, council will look at setting the 2026/27 rates and charges at least $168,304 lower than what they would be if we applied the full rate cap set by the Minister for Local Government," Cr Graham said. "The ESC has also requested a ‘statement of explanation’, to explain the reason for non-compliance to the rate cap, how we may rectify it, and any actions council may take to prevent non-compliance in the future. "The response provided is published in the ESC compliance report." Cr Graham said he echoed Mr Jeremy's comment that council had no intention to exceed the rate cap. "This was an honest mistake, and we are committed to complete transparency with our ratepayers and community as we correct it." Frequently Asked Questions 1. What happened? It was identified through the Essential Services Commission’s annual reconciliation process that Alpine Shire Council breached the 2025/26 rate cap. 2. What is the rate cap? The Fair Go Rates system limits the maximum amount a council can increase its average rates in a year without seeking approval for a higher cap. For 2025/26, the cap was set at 3%. 3. How much did Council exceed the cap by? The average rate increase for 2025/26 was 3.96%, instead of the 3% cap. This equates to $168,304 above the capped amount. 4. Why did this happen? A system change was applied earlier than expected, which unintentionally increased our base rate before the end of the financial year. When the cap was applied, it was calculated on this higher base rate. 5. Was this intentional? No. This was an honest mistake caused by incorrect advice from our rating system provider. Council had no intention of exceeding the rate cap. 6. Is there a penalty or fine? No. There is no statutory requirement to amend the error and no penalty associated with this breach. 7. Will Council lower its rates in 2026/27? No, Council will not lower its rates. However, Council will look at setting the 2026/27 rates and charges at least $168,304 lower than what they would be if we applied the full rate cap set by the Minister for Local Government. 8. Will I get a refund or reduction on my current rates notice? No. There will be no refund or reduction on your current rates notice. The adjustment will apply to the 2026/27 financial year, where council will set rates and charges at least $168,304 lower than they would otherwise be under the full rate cap. 8. How will Council prevent this from happening again? Council is working closely with the Essential Services Commission and our rating system provider to ensure stronger checks and processes are in place.
