Vic councils must cap rates under ALP plan

Victorian councils will be forced to cap their rates at the consumer price index and justify any rises if Labor wins the November election.

Labor leader Daniel Andrews says councils which hike rates will be accountable for how they spend ratepayer funds.

"Under Labor, councils will be forced to limit rate rises and detail where every dollar will be spent, because ratepayers deserve a fair go," he said.

"The days of ratepayers footing the bill for Arnold Schwarzenegger impersonators are over."

Councils wanting to lift rates above CPI would have to appeal to the independent Essential Services Commission (ESC) and justify why.

The ESC would decide whether the rises are fair, taking into account extraordinary events such as natural disasters, other income sources and the council's financial state as well as the continued maintenance of essential council services.

If the ESC thinks the rise is unreasonable, it will recommend the Local Government Minister block the increase.

Mr Andrews said the policy sent a clear message that councils should keep their rates in line with CPI, with any rises beyond that to provide a clear benefit to ratepayers.