Ombudsman Deborah Glass found revenue raised through the levy, which is additional to a rubbish disposal charge, wast mostly used for waste-related services but 30 per cent was spent on “maintenance of parks, gardens and other council activities”.

She found “Council levies a waste management charge at levels substantially above the fair cost of providing waste management services.”

“While the council argues it has been transparent, did the average ratepayer in Wodonga really know they were paying extra in waste charges to subsidise other council services?” Ms Glass wrote. 

“While not set up with the intention of doing so, the arrangement has allowed the council to avoid general rate increases”.

Her report, sparked by a complaint made about council in 2016, shows surplus generated since 2006 fluctuated between $1.6 and $1.9 million until 2012, and steadily increased from there.

For the 2015-16 year, a $3.37 million surplus was reinvested in things such as Lake Hume Reserves, environmental lands and children’s fairs.

When Ms Glass asked for more details on those projects, council listed items including security services, fire planning, soccer nets, fishing jetties and drainage installation.

Cr Speedie said those items were among the “other waste services we need to provide for our community”. 

“We need to make sure after events we can get in and clean up; along the Hume Reserves, when it’s peak season we have to get out there and empty rubbish bins,” she said.

“It is very clear what we spend those waste charges on, exactly that, waste disposal for our community.

“Those are part of the total revenue that is collected on behalf of all ratepayers and used to pay for essential services provided to every single one of our ratepayers.

“If you look in our strategic resource plan, there’s nearly a whole page on what we raise as those revenues and what we spend them on,” she said.

Ms Glass noted that “there is no express reference in the Local Government Act’s wording about the extent to which this charge must reflect the cost of providing the service” unlike in News South Wales where the act requires income generated not exceed the cost of providing waste management.

Cr Speedie also referenced the flaw numerous times while addressing the media on Tuesday.

“We worked with our community committees in 2010 and 2015 to make sure we put that definition in there, that it was about waste services right across a multitude of things – it’s not just our household waste,” she said.

“In this budget process we’re going to better inform people on our rate notices.”

Ms Glass reviewed council’s past actions, and noted a review of the ratings strategy in 2010 “noted the surplus was in effect subsidising general rate revenue”.

Further, internal council notes from 2008 show council was reviewing their waste management charges but councillors were recommended to leave them ‘as they are’ for reasons including no objections had been received by the public and a change would cause a negative public reaction, as general rates would need to increase by about 7 per cent.

Asked whether council would get rid of the levy, Cr Speedie said the Ombudsman report “doesn’t ask for that”. 

“But what it does call for is more clarity around the definition from the government,” she said.

Ms Glass accepted “that the legislation does not explicitly require the council to recover only its reasonable costs” but the intent of Wodonga Council was “clear”.

“The council said it acted in good faith, believing the practice to be compliant with the Local Government Act, and that they consulted the community,” she said. 

“I accept that the legislation does not explicitly require the council to recover only its reasonable costs.

“However, the intent is clear.”

Cr Speedie said she “absolutely disagrees” her council was getting around rate-capping by raising revenue through their waste charges.

But Local Government Minister Marlene Kairouz, responding to the Victorian Ombudsman’s report, said “What Wodonga City Council did was wrong”.

“Waste management charges are there to pay for the disposal of waste, not as a way to slug higher rates,” she said. 

“We brought in rate capping to stop Victorian ratepayers from being taken for a ride and we’ll do everything we can to ensure that continues.”

Ms Glass has recommended that the Local Government Act be amended to require that charges for the collection and disposal of refuse reflect the reasonable cost of providing that service, and this will be considered by the state government in their current review of the act.

She welcomed Wodonga Council’s commitment to reduce its waste charge within the next three years.

Of the 79 Victorian councils, 72 of them have an additional waste service charge, and a Municipal Association of Victoria survey put Wodonga Council’s as the second-highest of them all in the 2015-16 year.