An unexpected inflation spike in November has also called into question CPI forecasts for the coming year.
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However, a state government press release on Tuesday said the new rate cap eased cost-of-living pressures on families and still allowed councils to provide adequate services.
“The rates cap has made a real difference to household budgets,” Staikos said.
The average annual rate cap has been 2.3 per cent since the system was introduced in 2016. In the decade prior, the state government said council rates were increasing by an average of 6 per cent annually.
Councils have also received revised guidelines for waste management charges, clarifying that the rates should not exceed the costs incurred by council for kerbside services.
Staikos said this would make council waste charges more accurate and consistent across Victoria.
Rate caps in Victoria since they were introduced in 20162016-2017: 2.5 per cent2017-2018: 2 per cent2018-2019: 2.25 per cent2019-2020: 2.5 per cent2020-2021: 2 per cent2021-2022: 1.5 per cent2022-2023: 1.75 per cent2023-2024: 3.5 per cent2024-2025: 2.75 per cent2025-2026: 3 per cent2025-2026: 2.75 per cent – (announced on December 23, 2025)
Tanya Tescher, secretary of the Victorian Ratepayers and Residents Association, worried councils would likely raise rates to the maximum allowed under the 2.75 per cent cap.
She feared many would then seek extra revenue via other higher charges, such as parking fees.
“We would always like to see low increases to rates, especially at this time when people are doing it hard with the cost of living,” she said.
“However, we also understand that councils have to provide services for their ratepayers. It is especially important that councils do not waste money on extravagant items, which we have seen done in some council areas.”
Tescher pointed to Bayside Council as evidence it was possible to freeze rates.
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