Local Government (Rate Increases) Amendment Bill

Introduction and First Reading

Mr GRIFFITHS (Goyder) (11:03): Obtained leave and introduced a bill for an act to amend the Local Government Act 1999. Read a first time.

Second Reading

Mr GRIFFITHS (Goyder) (11:03): I move:

That this bill be now read a second time.

I am grateful for the opportunity to present this bill to the parliament today. For those who are not aware, I worked in local government for 27 years prior to coming to this place 10 years and six days ago, so I certainly do understand it. I know lots of people who work within it and lots of people who are elected members within it. It is fair to say that, since the release of the policy position that the Liberal Party took one month before the 2014 election, it has not been a nice discussion to have with all members within local government.

I present this bill on the basis that I, the Leader of the Opposition, the Liberal Party and, we believe, the community see it as a key opportunity for cost-of-living pressures in this state to be addressed, and that is the key for us. The policy direction that the Liberal Party has taken and the policy direction that will come from and is already part of policies that exist within the 2036 manifesto released by the Liberal leader quite recently are focused on cost of living pressures, improving the economy of our state and ensuring that we have a vibrant future. We present this bill to the parliament on the basis that we want to ensure that discussion takes place in a rational way, that consideration is given to it, and that we look at what occurs within a key sector of South Australia.

Remember, nearly $1 billion per year in council rates is received. There are over 9,000 full-time employees, and there are 700 elected members who represent 68 local government areas plus the unincorporated areas through the association. They provide services to nearly 1.6 million people. It is important that in doing so we ensure that the level of dialogue that occurs results in issues that are beneficial for the community.

It is fair to say that a lot of the contact that I receive is about local government, by virtue of the shadow portfolio that I hold. Depending on the time of the year, a lot of that is about the level of rate increases. Can I put on the record that I do respect those councils that I know are very good at the budgeting process and have a reasonably moderate level of increase, which is based very closely around what the local government cost indices increase is per year.

For example, I know the City of Unley is 2.5 per cent for the 2015-16 financial year. Having a conversation with them only a month or so ago about the provisions as I intended the bill to reflect, I allowed them to have a greater understanding of the intention of the Liberal Party. They recognised that, by virtue of their own constraints that they put on their budgetary process and the increases that they have had in recent years, for them it is not an issue.

I do recognise that the intent of this legislation will not impact upon those councils that have shown restraint and ensured that they budget within the limitations of the community to pay, and try to put in place an absolute best quality, efficient delivery of services and infrastructure. There are other councils that have not shown that same restraint. As one would expect, since public notice was given of the intention to introduce this bill in this place, I have received one message, for example, from a councillor who says that they do not want it because of bad decisions made by previous councils and the inability to rein in their costs.

I do not accept that as an answer, and I do not accept it from a local government perspective, or from a state government perspective, because in submitting this bill to the parliament I do so on the basis that I and my Liberal colleagues believe that all levels of government in Australia—local, state and federal—should exhibit controls in place to ensure that they are efficient. That is why in the 10 years that I have been here I have become so frustrated by the announcements of efficiency dividends, for which a figure magically appears as to what has to be created. I do not believe there is any follow-on investigation to ensure that it occurs.

We get a continuing escalation in taxation and expenditure costs within departments and an increased number in staff appointed to the Public Service, and indeed without ministerial authority for that to occur within the budgetary controls. I see this bill as an extension within an area that the parliament controls, because the Local Government Act 1999 ensures that local government exists by virtue of being a statute and it operates under that process, and that is why we have done it.

While the February 2014 announcement allowed very little feedback to occur, none of the councils said anything in a positive way to me, but we had lots of feedback to the Liberal Party about support from the community. Since that time, in the 2014 estimates period I asked the member for Frome, the Minister for Local Government, questions about assistance being provided within his portfolio to help communities that are dealing with increased costs. Minister, if I am wrong in this I will apologise, but my reflection upon the answer provided to me was that it was a variety of issues that were undertaken five years ago. My response to that is that there is an immediate need for it to occur.

I have absolute faith in the fact that there is still an immediate need for issues to happen and for improvements to occur. That is the reason why we have done it. It has been a rather drawn-out process. I would have preferred it to have occurred in different ways, but it has been done via a private member's bill. I hope that the Minister for Local Government ensures that on the date that we select to have a full debate about this he contributes towards it and that we do actually talk about the seriousness of the individual clauses and what we are going to do. It is not a political argument; this is about real facts, and that is why we have done it.

Rate capping has been used in New South Wales for over 35 years. For a short time, I was the general manager of a shire in New South Wales, so I have practical experience in how it works there. It is being established within Victoria. It has been shown that there need to be controls in place, and that is why they have done it. So, we have a mixture of political thought processes involved there: the Liberal Party and National Party in New South Wales and the Labor Party in Victoria. Indeed, it was part of the Victorian Labor Party election policy that assisted them in getting elected most recently.

For us, we have done it two years out, though, because we want to ensure that the opportunity is here now to do things. That is why the minister will note, when he reviews the act, that the commencement date I have for it is 1 July this year, because by putting that in place, it allows the processes that collect the necessary information to make the determination in time so that local government, in setting the 2017-18 financial year rates, will actually have the basis of it.

I did not want to do it later, into the ether; I wanted the commencement of it to be as soon as possible, to allow ESCOSA (which is the Essential Services Commission that the Liberal Party has chosen to do the review and come up with the rate cap figure, if I can use that term) the opportunity to review not just the CPI, because I recognise there is a separate local government cost index that has to be used. That is able to be ascertained for the four quarters of the previous full financial year and for the quarter immediately prior to the determination by ESCOSA, which has to be 31 December of this year to allow it to be in place, for consultation to occur and for local government to set its budgets accordingly.

If local government wishes to seek an opportunity to go above the rate cap, that opportunity exists. For me, though, and I have worked very hard with parliamentary counsel, to whom I express my great thanks for the assistance they provided me on this, it is to ensure that there is an opportunity for those councils that may be part of a growth area—and I do recognise those that are having larger than state-average population increases or are in an area where projected growth to occur via developments is going to impact upon the capacity to provide services and infrastructure. There will be a process in place for that, but they can apply on the basis that they also have community support—and that is an important thing, where real consultation has to occur about their budgeting process.

I know councils have tried and I know the legislation currently has conditions in place for that, but the minister and I have both been part of forums where it has been a handful of people who have turned up. I actually take some heart from the fact, as much as I try to believe it will be the case, that the Minister for Planning, as part of his planning reviews which are nearly through the Legislative Council, talks about a charter for community engagement. I think that is where I want real consultation to occur with the community. The Minister for Planning has done it as part of that portfolio responsibility. My desire will be that it exists for local government rate setting, too.

There were different opportunities. I could have thought about an efficiency dividend, but as I said before, I do not have a lot of faith in the ability to actually achieve it, report it in an accurate way, and ensure that it impacts in a positive way for people. In this case, we recognise that local government is vital to the state. There is near $20 billion worth of infrastructure, I believe, that they have control over, and they provide very important services and infrastructure. But we want to make sure that there is engagement that occurs which ensures that decisions made for the future reflect what the community is.

I do not criticise the elected members; I think they do the best job they can. I do not criticise the staff; I believe they do the best job they can, too. But my demand of all 700 elected members and all the staff of the 68 councils is to do even better, and to do the absolute best that they can to ensure that they are efficient in what they do and provide the best possible rates, and that is why we have done it.

Using ESCOSA's services has been done so on the basis that it exists already, it has a role to play in the determination of price increases, and it therefore removes any accusation of political influence. I do not want it to be a determination that a minister makes at an opportune time to make it a better resell opportunity for a future election. I want it to be, and the Liberal Party supported this very strongly, based around the assessment undertaken by experts in their field who look at the issues that impact upon councils and determine an appropriate figure, while still, remember, providing this opportunity for local government, if they wish and if they have strong community support, to do something different to that. That is why we have done it now, and we have ensured that the time frames that are in the legislation allow the 2017-18 declaration of rates to reflect it.

My follow-up from this will be a lot of conversations, minister; there is no doubt about that. As one would expect, I have had text messages and emails from people on an individual and a collective basis. I have not quite got the daggers in my back, but they are wondering what is going on. Some might consider it to be a brave action to take, but in my heart I believe that it is an appropriate one. I hope that is why the parliament sits and considers this very seriously.

There will be a variety of opinions. I already have examples of those in local government who support it, but it has been put to me that most people in local government will be against it. I am sure there is a wide variety of community groups out there that, in their own way, have tried to create some structural change and have been unsuccessful. The intention here is to put in legislation that it demands that occur. I just want to take the opportunity to put on the Hansard a few words from a mayor—I will not name this mayor, but I think I will put it through:

There's been a lot of concern raised in Local Government about this proposal, but I personally haven't seen anything that changes my stand.

This person is supportive. They continue:

I still support this idea raised by Steven Marshall MP. Sure, there is a 'populist' side to this policy, but also a logical one.

The fundamental thing here is that Council rates are a tax. Increasing them beyond the reasonable measure of people's ability to pay i.e. inflation, has to be the fundamental target or ideal. Where this has been introduced interstate there are a range of exemptions still allowing Councils to raise extra monies if appropriate—

as I have included in this legislation—

but still compelling Councils to do the right thing.

This is an interesting point, and I do take this very strongly:

The other factor is that having this rule puts responsibility back onto the State [government] not to cost shift to local government.

That has been a concern raised to the minister, and I personally have been aware of this for a long time. That is where I think there has to be a recognition. As part of the Liberal Party policy in February 2014, we also announced support that we were putting in place to assist councils. There was a fund of $5 million per year for 10 years to assist as an interest offset for infrastructure works. I think the minister was also aware of this one, as part of his review and follow-up negotiations.

That was an example of where were recognised there are pressures upon councils, and we wanted, from a state government perspective, to assist. I asked a question of the minister yesterday about natural resources management levy increases, and the real concern that exists about up to 150 per cent increased collection in 2017. Minister, your response was that you have heard nothing from us about solutions to it; it is your job, minister. NRM levies are your job; let's be clear on this.

On this one, there has been no positive position on what the state government intends to do. The Liberal Party has chosen to be rather proactive on this. The Liberal Party has chosen to ensure that it puts itself out there as part of the public debate, and that we discuss it with local government and with community groups—and we want to make sure that happens—and that we get back in this place to talk about the implications and have a fulsome debate.

I truly hope that the minister and I have an opportunity to sit down in this chamber and potentially have private discussions to talk about it. I put this forward on the basis that we want it to ensure. Two months' consultation, minister—from my point of view, I am going to be writing to the mayors and providing them with a copy of the speech and the legislation, trying to address issues of concern. I am going to be meeting with them as much as humanly possible, remembering I have a grandchild being born in 23 days' time—

Mr van Holst Pellekaan: Hear, hear!

Mr GRIFFITHS: Thank you—but I want to make sure that, as part of the debate that occurs in this place, we respond to what South Australians want. That is what I believe is the key. I commend the bill to the house.

Debate adjourned on motion of Hon. T.R. Kenyon.