The plight of many councils has been raised by the VFF which has gathered 3300 signatures on a petition calling for a Victorian government inquiry into rates and the sustainability of rural and regional councils.

“This is not an attack on local government,” VFF president Peter Tuohey said.

“It’s a petition calling for action to find a long-term solution to funding for many rural and regional councils.”

He said rural council viability was hit earlier this year when the federal government froze the indexation on its local government grants scheme, which created a $134 million black hole in council budgets.

“It’s rural councils who were most reliant on these grants, so they’ll be the hardest hit,” he said.

Towong mayor Mary Fraser said the freeze would cost her council $600,000 over three years.

“It’s a serious impost on the local communities,” she said.

“We would not try to make it up with a rate rise because people cannot afford it.”

Cr Fraser said a 1 per cent rate rise would gain only $48,000.

She said the council had been working on saving money, but it needed to raise money.

Mr Tuohey listed 18 councils, including Towong, Ararat, West Wimmera and Yarriambiack, battling to maintain their infrastructure.

He said each year Yarriambiack Shire got $393 of federal government grants funding for each kilometre of local road it maintains.

But the Melbourne City Council gets $3232 for each kilometre.

“Tell me how that’s fair,” Mr Tuohey said.

Since launching the petition, the VFF has widened the terms of inquiry to examine the whole issue of council sustainability.

The petition points out the present rating system is based on the valuation of land and its improvements.

“This means there is an assumption those who own higher valued assets have a greater capacity to pay,” it says.

“Currently Victoria’s farmers shoulder 46 per cent of the business rates burden in regional Victoria, but only make up around 12 per cent of the regional economy.