While most councils will now have applied to fund increased costs of recycling from the Victorian Government’s Temporary Relief Funding Arrangements (TRFA), questions are now being raised about the longer-term effect of those increased costs on rates and charges.

The Government’s application guidelines for the TRFA make it clear that councils can only apply for grants under the TRFA to cover price rises for the period 1 March 2018 to 30 June 2018. With the state election looming in November, the prospect of an extension of the TRFA in 2018 appears slim.

So, what options are available to councils to address the shortfall post-30 June, assuming the increased costs of recycling are here to stay?

The most obvious (and possibly only realistic) solution for many councils will be to introduce, or increase existing, waste service charges. Importantly, waste service charges sit outside the rate cap and increases are therefore (theoretically, at least) unlimited.

Many councils will already be well-progressed in the process of conceptualising and calculating a waste service charge for the 2018/19 financial year. That process will vary for each council, depending on factors such as existing rates and charges structures, community expectations and the status of current recyclable collection and processing contracts.

Councils will need to keep in mind that the Local Government Act 1989 only allows a service charge to be imposed for a narrow range of services. They must also ensure, when fixing the amount of the service charge, that the amount is closely linked to either the cost of providing recycling services (or the cost of making recycling services available) or the value of the recycling service provided.

Councils may also need to consider:

  • how to address green or organic waste and hard waste under a new waste service charge
  • the implications for the Budget and Council Plan if a council gives public notice of, but decides not to proceed with, a proposed charge
  • how to deal with collections from commercial and industrial properties
  • scope for the Minister to intervene in respect of particular rates and charges that are fixed
  • any effect that ‘The Fair Go Rates Systems – Guidance for Councils’ has in the new recycling environment.

How does your council propose to fund the increased costs of recycling? Has your council already started modelling for its waste service charges in this new environment?