Cabinet may consider wage carve-out on 27th July 2026
Victorian councils could gain a new way to raise household bills under a proposed change to the state’s rate cap. The plan would let wage increases sit outside the cap, so councils could pass those costs straight on to ratepayers.
Local Government Minister Paul Hamer has been sounding out cabinet colleagues about the idea, according to Herald Sun reporting published on 24th July 2026. The proposal could reach cabinet as early as Monday, 27th July 2026.
Staffing costs account for 40% to 50% of council operating budgets. As a result, any wage carve-out could flow quickly into annual rates notices.
Victoria introduced the rate cap in 2016 under the Andrews government. Since then, the cap has ranged between 1.5% and 3.5%, and the government cut it to 2.75% for 2026-27 in December 2025.
Council budget pressures
More than 50 Victorian councils have still not introduced mandated glass recycling bins. Warnings put the upfront cost at between $5 million and $8 million for each council.
Councils must also collect the state’s new Emergency Services Volunteer Levy from Victorians. Meanwhile, those added duties come as councils manage wage growth, service costs and new state requirements.
Senior government sources linked the push to internal Labor politics. According to those sources, Premier Jacinta Allan wants backing from Australian Services Union-aligned MPs and union leaders amid leadership speculation.
Family First attacked the proposal on 25th July 2026. Lead candidate Jane Foreman said, “This is about her leadership, not your rates.”
Foreman argued that removing part of the cap would weaken a policy tied to inflation. Her statement on 25th July 2026 claimed Labor was putting union relationships ahead of household costs.
If ministers approve the change on 27th July 2026, councils could seek higher revenue from ratepayers to cover staff pay deals outside the existing cap. Because wages absorb 40% to 50% of council spending, even a narrow carve-out could reshape how the rate cap works in practice.
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Last updated: 28 July 2026, 8:25 am
