Bills

Local Government (Ratepayer Protection and Related Measures) Amendment Bill

Introduction and First Reading

The Hon. C.M. SCRIVEN (16:20): Obtained leave and introduced a bill for an act to amend the Local Government Act 1999. Read a first time.

Second Reading

The Hon. C.M. SCRIVEN (16:21): I move:

That this bill be now read a second time.

I stand today to introduce the Local Government (Ratepayer Protection and Related Measures) Amendment Bill. Firstly, I would draw members' attention to the title of this bill and how appropriately entitled it is. We all know why protection for ratepayers is needed. There have been numerous examples of waste and excess in some councils: Apple watches, claimed to improve decision-making; ratepayers paying for council employees to do the Adelaide Oval roof climb; one council CEO having the ratepayers pay for his membership of the Naval, Military and Air Force Club of South Australia. They are just a few examples of the excesses currently happening in the local government sector. Unfortunately, there are many more examples I could provide, which speaks volumes about why we need to ban bad practice and deliver greater accountability in the local government sector.

This ratepayer protection bill does exactly what it says it will. Its content will protect ratepayers, and ratepayers will be front and centre when the council considers how to operate. Further, the bill strengthens the democratic control of councils by the people they serve, the ratepayers. Provisions are made for greater ratepayer oversight of council budgeting, greater disclosure of council expenses and performance and greater and more effective consultation between councils and ratepayers.

The new measures in this bill seek to directly tackle the waste and excesses which have afflicted some South Australian councils. In doing so, the bill empowers ratepayers to restrain council revenues and expenditures which otherwise can increase their cost of living. Unfortunately, stories of waste and largesse from councils have caused South Australians to be rightly outraged by the abuse of ratepayers' money, yet there are differing opinions on how to effectively reduce these abuses.

Those opposite have long put forward the view that placing a cap on council rate revenues will reduce council expenditures and, by implication, reduce council waste and rorts, but they have been peddling a fallacy, because evidence shows that reducing a council's revenue does not automatically reduce a council's expenditure. There is a missing link in this flawed logic. The empirical evidence from the New South Wales rate-pegging system totally undermines their assumption. The New South Wales experience has been clear: reducing council revenues does not lead to reduced council expenditures. Instead, council expenditures remain high but council debt is increased.

Data comparison conducted by Professor Brian Dollery of the University of New England reveals that in the period 2013 to 2016, New South Wales councils expended, on average, significantly more than South Australian councils and maintained significantly higher levels of debt. Further, capping council rate revenues does not reduce the incidence of waste and rorts. Like any policy problem, you do not solve council misconduct through a proxy measure. The way you can reduce council waste and rorts is through increased ratepayer oversight of budgeting, greater disclosure of council expenses, restrictions on CEO remuneration packages, and annual council performance reviews.

If the waste and rorts of some South Australian councils are to be avoided in the future, the provisions of this ratepayer protection bill must be supported in this parliament. To restrain council waste, oversight of councils' annual business plans and budgets must be strengthened. Under the ratepayer protection bill, any new council project valued at $1 million or more and any new service valued at half a million dollars or more, calculated for the life of the service, would require a rate impact statement.

These statements will disclose the amount of revenue required to be raised from rates and the impact on different classes of ratepayers. Rate impact statements are an important tool because they create a link between council revenues and expenditures, a link which is not created under a proposed rate capping system. This is necessary for ratepayers to be able to assess whether or not the expenditure is justified.

For example, the City of Mount Gambier is currently considering the construction of a community and recreation hub which is estimated to cost $39.1 million. The local community is rightly asking what impact the initial and ongoing costs of such a project will have on them, and the council has now released information about the rate impacts. This will enable ratepayers to make an informed decision when council conducts a ratepayers survey to gauge the level of support for the centre later this year.

Provisions in this bill will require all councils to reveal the impact on rates of major projects and services. The logic is simple: if councils are forced to publicly disclose the rate impact of any new project or service above the relevant cost thresholds they are far more likely to make sure that the ratepayers want them and are prepared to pay for them.

In addition, the bill also compels council CEOs to report on the reasons for budget overruns on new projects and services if their costs exceed 110 per cent of the amount budgeted. No longer will councils be able to hide cost overruns, because these reports will also be required to be published in a prominent place on the council's website. The bill also includes provision for council budgeting to include a detailed four-year estimate of revenues and expenditures, similar to the forward estimates currently included in state budgets.

South Australians were rightfully shocked and appalled when it was revealed that ratepayers had paid for the CEO of the City of Onkaparinga's membership joining fee to the prestigious Kooyonga Golf Club, valued in excess of $6,000. Under the ratepayer protection bill, this bill, CEO remuneration packages are strictly limited to salaries and superannuation contributions, a vehicle or vehicle allowance, and a reasonable provision of ICT equipment for work purposes. There will be no more golf memberships or other excesses. CEO remuneration will be transparent, and will also be published in a prominent place on the council's website.

Councils will also be required to disclose all member and staff credit card use, all council-funded gifts received by members and staff, and all non-land-based interstate and overseas member and staff travel. Note that it does not prevent valid and useful travel. There may be times when travel will have a clear and definite positive value for a council and its ratepayers, but active disclosure means that members and staff will think much more carefully about the cost-benefit analysis before committing to any travel. When expenses are required to be disclosed on prominent pages of a council website it places a significant deterrent on misuse of ratepayers' money.

The ratepayer protection bill also requires an annual review of council performance. Performance reviews will measure quantitative performance indicators, designed to provide cross-council comparisons, such as: the cost and quality of service delivery; the timeliness of service delivery; and complaint handling procedures. The publication of performance indicators creates an extra level of accountability on councils, allowing for comparisons to be made between councils of similar composition.

It should be emphasised that the publication of performance indicators is not designed to apply pressure on councils to reduce costs in a race to the bottom on service quality. Service quality measures are also included, so that ratepayers receive high-quality, value-for-money services and avoid the service cuts and infrastructure backlogs that have been experienced in New South Wales and Victoria.

Provision also exists for councils whose performance indicators raise significant concern to be referred to the SA Productivity Commission for investigation. The Ratepayer Protection Bill also prohibits councillors from lodging frivolous or vexatious complaints against other members' alleged code of conduct breaches. An example of that is the member for King, in her former role as a councillor on the Tea Tree Gully council, where she racked up over $2,500 costs in lodging what was described at the time as a weak complaint, when then councillor Luethen lodged a complaint against the mayor for asking whether she was a member of the Liberal Party at a public event.

I must say that I am sorry to hear that the member for King was so embarrassed to be a member of the Liberal Party, and embarrassed about her political affiliation, that she would lodge an official complaint. One might question why someone is a member of a political party if they are so ashamed to admit it in public, but, no matter, that is another issue for another day. The relevance is that her weak complaint cost the ratepayers of Tea Tree Gully over $2,500.

Another example again involves the now member for King who, when she was a councillor, lodged a complaint against another councillor for not returning a phone call for a few days. Instead of mediation, councillor Luethen demanded that a code of conduct be pursued, which subsequently cost ratepayers, according to media reports, another $900. It is this type of conduct that needs to be prevented from occurring in the future, and it is this bill that will help prevent it from occurring.

Recent inquiries, including one conducted by Ombudsman Wayne Lines, into the Burnside city council has revealed the shortcomings of the Local Government Act in dealing with councillors who present a risk to health and safety because of their bullying or intimidating behaviour. The ratepayer protection bill empowers a local government commission to suspend or dismiss members considered to have seriously failed to have observed the provisions of the members' code of conduct.

There are also other measures in the ratepayer protection bill designed to improve council accountability and transparency. Council audit committees will become completely independent, featuring neither council members nor council staff. Mayors and chairpersons will be given greater powers to maintain order in meetings. There will be electoral consequences for successful no-confidence motions moved against mayors and chairpersons, deterring council gridlock. Higher thresholds will be applied for meeting proceedings to be able to be confidential, and members' voting at those meetings will be disclosed.

These reforms will empower ratepayers to shape the operations of councils according to their wishes and their interests. Council accountability, transparency and disclosure will be strengthened through the provisions of this bill. I would like to thank the shadow minister for local government, the Hon. Tony Piccolo MP in the other place, for the work he has done to prepare this bill.

The opposition also appreciates the input from the Hon. Justin Hanson, the Australian Workers Union and the Australian Services Union on the real issue of improving governance, in contrast to the sham issue of rate capping that does nothing to address the real issues facing the local government sector, and employees who are employed in the local government sector, of which the majority are members of either the AWU or the ASU.

Equally, recognition and thanks must go to the members of the crossbench in this council, who have worked diligently and collaboratively to shape this bill and its provisions. Ms Bonaros, Mr Pangallo and Mr Parnell have all left their imprints on this bill, and on behalf of the opposition I thank them for their collaborative approach.

In concluding my contribution today, I make one final observation: the principles which underpin this bill's clauses reflect those trumpeted by the Marshall government. Under the Office of Local Government section of the budget papers, it mentions as a target for 2018-19, 'Legislative reforms to strengthen local government transparency and accountability'. The Minister for Local Government has also emphasised his desire to improve transparency and avoid costly council tiffs. Just prior to the March 2018 state election, the member for Unley, while serving as the shadow minister for local government, called for the disclosure of extravagant council expenses.

In this light, I would expect the Marshall government to support a bill that will empower ratepayers to constrain council rates and expenditures, will empower ratepayers to tackle council waste and rorts and to generally strengthen council accountability, transparency and disclosure. If the Marshall government is really sincere about improving local government, it should support the bill and I look forward to seeing that occur. I now seek leave to have the detailed explanation of clauses inserted into Hansard without my reading it.

Leave granted.

Explanation of Clauses

Clause 4 (Amendment of section 4—Interpretation)

Defines references made to the Commission or Local Government Commission as references to the South Australian Local Government Grants Commission established under the South Australian Local Government Grants Commission Act 1992.

Clause 5 (Insertion of section 8A—Annual review of performance of councils)

Establishes that the Local Government Commission will prepare and publish an Annual Review of SA Council Performance setting out quantitative performance indicators relating to the delivery of services to the community.

If, in the opinion of the Commission, the performance indicators provided by a council raise significant concern about the performance of the council, the Commission may refer the council for investigation by the chief executive of the South Australian Productivity Commission or other designated administrative unit.

Clause 6 (Amendment of section 50—Public consultation policies)

Requires councils to actively promote statutory documents relevant to the community (such as business plans) on platforms like social media to encourage greater community participation in decision making.

Clause 7 (Amendment of section 56—General election to be held in special case)

In those instances where members of a council pass a vote of no confidence in their principal member (i.e. Mayor or Chairperson), the chief executive officer of the council must declare the council to be a defaulting council—triggering an election of all members – except in those circumstances where a council's principal member is chosen by the members of the council.

Clause 8 (Amendment of section 62—General duties)

Subsection (2a) prohibits members of a council from making frivolous or vexatious complaints about other members' alleged contraventions of the member Code of Conduct.

Other provisions require members to obtain council pre-approval for overseas travel and provide a report, to be considered at a council meeting within 2 months of the conclusion of the travel, on the actual expenses incurred and outcomes achieved.

Clause 9

(Insertion of section 79A—Publication of credit card expenditure)

Councils are required to disclose monthly credit card statements used by members on a prominent part of a council's website.

(Insertion of section 79B—Publication of travel by members)

Councils are required to disclose on a monthly basis, council-funded member travel to overseas and (non-land based) interstate destinations.

(Insertion of section 79C—Publication of certain gifts funded by council)

Councils are required to disclose on a monthly basis, council-funded gifts provided to members.

Clause 10 (Amendment of section 90—Meetings to be held in public except in special circumstances)

The deletion of section 90(3)(b) and the amendment of section 90(3)(d) of the Act relate to the ability of a council to close a meeting to the public (i.e. to deal with a matter on a 'commercial in confidence' basis).

The amendments to section 90(7) relate to those circumstances in which a council decides to hold a meeting (or part of a meeting) in confidence. In these circumstances, the vote to do so must be recorded in the minutes and the details of who voted for and against disclosed.

The insertion of section 90(7aa) provides that when a meeting of a council is being held in confidence, any resolution passed must be recorded in the minutes and the details of who voted for and against any resolution disclosed.

Clause 11 (Amendment of section 91—Minutes and release of documents)

This clause relates to the amendments to section 90(7) and the insertion of section 90(7aa). Information recorded in the minutes for the purposes of those provisions cannot be kept confidential.

Clause 12 (Amendment of section 95—Conduct at meetings)

These amendments relate to the regulation of member conduct at meetings and the introduction of a power for the presiding officer to eject disruptive members.

Clause 13 (Insertion of section 95A—Petitions)

This amendment prevents councils from rejecting a petition on the basis that the petition does not comply with a requirement of the regulations. In addition, councils are required to, within 60 days, consider the petition at a council meeting and respond to the lead petitioner.

Clause 14

(Insertion of section 99A—Remuneration of chief executive officer)

Limits chief executive officer remuneration to: salary and superannuation contributions; a vehicle (or vehicle allowance); and information and communications technology equipment required for work purposes.

(Insertion of section 99B—Publication of employment contract of chief executive officer)

Requires the publication of a new or renewed chief executive officer employment contract on a prominent part of a council's website.

Clause 15 (Amendment of section 105—Register of remuneration, salaries and benefits)

Requires council chief executive officers to publish council's Register of Salaries on a prominent part of council's website.

Clause 16

(Insertion of section 105A—Publication of credit card expenditure)

This clause applies the disclosure provisions for council member credit card expenditure (Clause 9 – Insertion of section 79A) to council employees.

The disclosure of employee expenditure must only identify an employee's position.

(Insertion of section 105B—Publication of certain gifts funded by council)

This clause applies the disclosure provisions for council-funded gifts to members (Clause 9 – Insertion of section 79C) to council employees.

The disclosure of council-funded employee gifts must only identify an employee's position.

Clause 17 (Amendment of section 109—General duty)

This clause applies the council pre-approval and reporting requirements for overseas travel, as applied to council members in Clause 8 (amendments to section 62), to council employees.

Clause 18 (Amendment of section 115—Form and content of returns)

Council employees, required to submit annual returns, will be required to include council-funded overseas and interstate travel in those returns.

Clause 19 (Insertion of Chapter 7 Part 4 Division 2A section 119A—Travel by employees)

This clause applies the disclosure provisions for council-funded member travel (Clause 9 – Insertion of section 79B) to council employees.

The disclosure of council-funded employee travel must only identify an employee's position.

Clause 20 (Amendment of section 123—Annual business plans and budgets)

Subsection (2ba) requires councils' annual business plans to identify works relating to the maintenance, replacement or development of infrastructure which have not been substantially completed in line with previous annual business plans and budgets.

Subsection (2ea) requires councils' annual business plans to feature estimates of revenues and expenses for the 3 financial years following the financial year to which the annual business plan relates.

Subsection (2fa) requires councils' annual business plans to provide estimates of the impact on rates (including the impact on different classes of ratepayers) for each new project (valued at $1 million or more) and for each new service (valued at $500,000 or more, calculated for the life of the service).

Subsection (4aaa) requires councils to seek public submissions on proposals for activities and projects for inclusion in council's annual business plan, prior to its finalisation. Councils are required to seek submissions through internet platforms such as social media.

Subsection (4aa) requires councils to consider these public submissions at a meeting.

Subsection (11a) requires councils to prepare a report which responds to the public submissions received, within 14 days of the adoption of their annual business plans and budgets.

Subsections (13) and (15) require council chief executive officers to prepare a report to council on those occasions when a council has incurred expenses during a financial year in respect of a new service or project which exceeds 110% of the amount allocated in council's annual business plan or budget. Within 30 days of receiving said report, council is required to publish it on a prominent part of their website.

Clause 21 (Amendment of section 126—Audit committee)

These amendments require the audit committee of a council to be chosen from a list of persons established by the Auditor-General. These lists cannot include members or employees of a council.

Clause 22 (Amendment of section 264—Complaint lodged in District Court)

Subsection (1c) extends the powers to lodge complaints against council members with the South Australian Civil and Administrative Tribunal (SACAT) to the Local Government Commission.

Subsection (2a) limits the lodgement of complaints with SACAT to the Local Government Commission for alleged council member contraventions of section 62(2b) and (2d) (see Clause 8 above).

Clause 23 (Amendment of section 265—Hearing by District Court)

Establishes the investigative powers of the Local Government Commission.

Clause 24 (Insertion of Chapter 13 Part 1A—Conduct—complaints to Local Government Commission)

Establishes the powers delegated to the Local Government Commission to deal with complaints relating to the members' Code of Conduct.

Subsequent to a Commission investigation, the Commission can: reprimand members; require members to attend a specified course of training or issue an apology; impose fines on members; and suspend or disqualify members for serious breaches of the members' Code of Conduct.

Clause 25 (Amendment of Schedule 3—Register of Interests—Form of returns)

Members are required to include council-funded overseas and (non-land based) interstate travel in their annual returns.

Clause 26 (Review of Local Government Act 1999 and Local Government (Elections) Act 1999)

Requires a comprehensive review of the Local Government Act 1999 and Local Government (Elections) Act 1999, as soon as practicable after section 24 of this Act comes into operation. A report on the review is to be provided to the Minister for Local Government.

The review and report must be completed within 12 months of the day on which section 24 of this Act comes into operation.

The Minister must cause a copy of the report to be laid before both Houses of Parliament within 6 days after receiving the report.

Schedule 1—Transitional provision

Establishes the transitional arrangements for council audit committees, as related to the reforms included in Clause 21.

Debate adjourned on motion of Hon. D.G.E. Hood.