A COLAC district councillor says the State Government needs to intervene and help local government to reverse rising municipal rates.

Colac Otway Shire councillor Frank Buchanan said the government should form a working party to investigate new municipal funding models because the valuation-based system was unsustainable and unfair.

Cr Buchanan’s working party would include the Municipal Association of Victoria, state Liberal and Labor parties, Victorian Farmers Federation and a business council.

Colac Otway Shire Council rates will rise by an average of 6.33 per cent this financial year.

Cr Buchanan said farmers and homeowners struggled to pay rates and the problem would only become worse.

“I know farmers that are paying $15,000,” he said.

“The percentage rise is what is going to kill them, it’s only going to continue to go up.”

Cr Buchanan said the gap between the services councils had to provide and the rates they could “reasonably” collect was widening.

“To attack and say ‘cut costs’ is not the way – we are looking right down the barrel of local government not being able to work,” he said.

“At least a working party will address the issue and we can have a starting point.”

VFF president Peter Tuohey said the group would be happy to lobby for a working party.

“We’ve certainly pushed the government to do a review into rates and they’ve already progressed that to a certain stage, but a working party would certainly be helpful,” he said.

Mr Tuohey said the government was looking into differential rates, where people on farming, residential or industrial land pay different rates.

“All that does is probably shift the rates from one ratepayer to another, but it still doesn’t solve the overall funding of local shires,” he said.

“A working party would be much more beneficial.”

Corangamite Shire mayor Matt Makin said funding councils was a complex issue.

“The way we rate has been based on property values, which doesn’t give any weight to a person’s capacity to pay their rates,” Cr Makin said.

“In the past we’ve had discussions about getting a fixed percentage of the GST from a federal level,” he said.

“So that’s one potential solution and there might be others.”