Rates inquiry timing queried

"When NSW examined the impact of rate capping on local governments in that State, there was clear evidence of a massive run-down of council infrastructure as funding shifted away from asset replacement and maintenance to underwrite operating costs," Mrs Craigie said.

In 2013, the NSW Independent Local Government Review Panel found rate pegging had created a $7 billion backlog of council infrastructure spending, community expectations of indefinite low rates and councils fearing to borrow in case they could not raise enough rates for repayments.

Mrs Craigie compared WA councils' 5 per cent rates rises with the debt-laden State Government increasing its Emergency Services Levy by 10.6 per cent, street lighting 7.5 per cent and water charges 6 per cent, before the rises were passed on to ratepayers this year.

She questioned the inquiry's timing six months after Premier Colin Barnett shut down merger talks.

"This approach begs the question of what the State's true agenda might be, and whether the questions are about local government," she said. "I’m absolutely certain that rate capping doesn't hold the answers."

Last month, residents calling for financial stringency made Mosman Park Council cut its rate rise from 4.7 per cent to 2.53 per cent, causing Mayor Ron Norris to warn that councils may sell assets or cut services if rates are capped.

"Apparently, increased charges are only allowed if you are the State Government, and in the case of Mosman Park about 25 per cent of our rate increase this year was needed to cover increased Government charges," he said.

Local Government Minister Tony Simpson said dialogue was needed after councils had increased rates more than 8 per cent on average in the past decade.