Bendigo Council rate rise caps and service cuts: what ratepayers will pay

Bendigo City Council will freeze discretionary spending and defer several community projects after state legislation capped annual rate rises at 2 per cent from the 2024-25 financial year. The cap, set by the Victorian government through amendments to the Local Government Act, restricts councils' ability to lift rates in line with inflation and wage costs, forcing local authorities across the state to find savings elsewhere.

The timing puts pressure on Bendigo ratepayers and service users now. Cost of living pressures on households across the region are already acute: the Australian Bureau of Statistics recorded inflation at 3.2 per cent in the June 2024 quarter, well above the 2 per cent rate cap councils must observe. Local government unions argue the mismatch means councils cannot sustain services without cutting staff or deferring maintenance. Bendigo's residential rates, averaging around $1,800 annually for a median-value property, face uncertainty as the council tries to balance community expectations with shrinking financial room.

What the cap means for Bendigo residents

The council's 2025-26 budget, adopted in June, shows the practical effect. Infrastructure maintenance budgets for roads and footpaths have been deferred by 12 months on a rolling basis. Grants to community groups and arts organisations have been reduced by 5 per cent. Three vacant positions in the planning and compliance teams remain unfilled. The council's budget papers note that annual indexation of staff costs sits at 3.5 per cent to 4 per cent, significantly above the 2 per cent revenue growth the rate cap allows.

For households, this translates to slower pothole repairs, reduced hours at community centres, and less council funding for local sports clubs and neighbourhood events. The Bendigo Sustainability Office had its staffing reduced from 2.5 to 1.5 full-time equivalent positions. Programs supporting youth employment through council-run apprenticeships will contract by one placement. Older residents using council aged care transport services may see longer wait times after the council reduced the contractor budget by 3 per cent.

The state policy and broader context

The rate cap was introduced by the Victorian government in response to public anger over rising council fees in 2022-23, when some councils proposed increases of 7 to 10 per cent. The policy aims to protect household budgets during inflation, but critics including the Local Government Association of Victoria argue it shifts the cost burden to residents through reduced services rather than lower rates. Councils say they're caught between legislated rate limits and rising operational costs, leaving no flexibility.

Bendigo's situation reflects a broader state issue. The Victoria Auditor-General's Office reported in 2024 that 28 councils across the state reported forecast deficits within 10 years if the rate cap remained in place without additional state funding. Bendigo is not currently in deficit, but the council's five-year financial plan assumes that without intervention, the gap between revenue and costs will widen to $8.3 million by 2029-30.

The council does not expect to raise rates faster than the 2 per cent cap next financial year. Residents on fixed incomes or facing other cost pressures should see their council rates stay below inflation, at least in the short term. However, the council's deferred maintenance strategy means some local assets-roads, buildings, parks-will age faster and eventually require more expensive repairs, potentially creating budget crises down the track.

The state government says councils can apply for exemptions to the cap in exceptional circumstances, though few have been granted. Bendigo has not pursued an exemption. The council's next full budget cycle runs until June 2026, when the outcome of these spending cuts on service quality will become clearer to residents.