Mr Simpson put councils on notice when he revealed he had asked his department to �commence dialogue� with the sector about how it could keep local government rates down.
�Part of that discussion may be whether there should be a role for an independent third party to have oversight of rate setting by councils, such as the Economic Regulation Authority,� he said.
With local governments raising more than $1.9 billion in rates in 2014/15, Mr Simpson was concerned local governments were setting rates to accommodate �desired expenditure�.
�Local governments have increased rates by, on average, more than 8 per cent annually over the last 10 years and it is a topic about which I get a lot of correspondence and calls from the community concerned about the extent of rate increases,� he said.
WALGA president Lynne Craigie said current budgeting and rating processes would stand up to scrutiny.
�Local Government is the only sphere of government that isn�t operating in a massive deficit situation,� she said
She said criticism of rates increases did not compare to swelling State charges, including the Emergency Services Levy (up 10.6 per cent), street lighting (up 7.5 per cent) and water (up 6 per cent).
�Rate capping isn�t good financial management. It creates a higher expense in the long run that the State will ultimately have to take responsibility for,� she said.