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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2011-07-28 Daily Xml
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LOCAL GOVERNMENT REFORM

The Hon. R.B. SUCH (Fisher) (11:29): I move:

That this house notes with concern the lack of will by the state government and metropolitan councils to undertake meaningful and cost-effective reform.

Members would be well aware that this is one of my passions, a hobbyhorse. I intend to keep pursuing the possibility of reform at local government level. It is not in any way based on any animosity towards the local government sector. As members know, I used to be in local government quite a while ago and have great respect for the people who are in there as paid staff or as volunteers.

The reality is that we have, in my view, more councils in the metropolitan area than we really need. If you put in Mount Barker, we have 20 councils. I do not know what the precise number should be, that is why I have always argued that it should be looked at by a retired judge, similar to what has happened in New Zealand, and I would urge members who are interested in this subject to have a look at the process in New Zealand where they actually have a royal commission to look at local government reform. It has been done in Auckland, it has been done in Christchurch and it has been done elsewhere.

I suspect that is probably the only way we will ever get significant reform here, and it will only happen if the major parties agree to support such a process. I have been given some material by the Property Tax Reform Association under the signature of Bruce Pennington who is one of the members. In a recent letter—and I share these views—in relation to council amalgamations (my proposal is reform generally but he highlights council amalgamations) he says:

We feel that there is a great need for reform in this area, and to that end I have compiled compelling information as to why we need urgent council amalgamations. The information I have provided you shows the following:

South Australia has the highest number of councillors and local government employees per capita in Australia:

many councils have increased rates well above the CPI;

PricewaterhouseCoopers reports that 26 councils in South Australia are financially unviable;

63 per cent of metropolitan councils operate in deficit; and

there is a major duplication of resources.

Accompanying that letter he has provided some statistical material, and I will just highlight some of those. Once again I am not suggesting that we necessarily have one council, but the comparison between Brisbane, which does have one council, and the 20 councils in Adelaide, if you include Mount Barker (19, obviously, if you do not), is quite stark.

Brisbane, one council; Adelaide, 19, plus, if you add, as I say, Mount Barker 20; population Brisbane, 1.07 million; Adelaide 1.2 million (so, fairly similar). The number of chief executive officers: obviously in Brisbane you would have one; here we have 19, or 20 if you include Mount Barker. The cost of the CEO salaries: $410,000 in Brisbane; the cost here is $7 million for the 19 councils, plus Mount Barker.

The number of councillors: in Brisbane they are paid, there are 26; here they get an allowance plus expenses. There are 276 in the 19 councils in Adelaide. The salaries for councillors: in Brisbane totals $4.8 million; here, for the allowances for those volunteer members, $5.26 million. The rate revenue they are dealing with: Brisbane, $1.26 billion; Adelaide metropolitan area, the 19 councils, $800 million.

Just on the basis of one item alone, the salary of the CEO, there would be significant savings—$410,000 as against $7 million plus. That is only one cost factor, obviously, but there are others. I make a prediction that, come the next election, one of the key issues will be cost of living. It will not just be water, electricity and gas prices, it will also be council rates. I have a chart for all the council rates for 2011-12. These council rates are becoming very significant.

The Marion council rate, based on a house with a residential capital value of $700,000 (which, by today's standards, is not an extravagant house), is $2,134. That is a lot of money—basically, $40 a week. If you look at Onkaparinga, which is a council in my electorate, theirs is very similar at $2,145 annual rate for a capital value of $700,000. Some other councils are more and some are less.

The costs being borne by ratepayers are significant and that will be part of the factoring-in that ratepayers and taxpayers (voters) make come the next election. Any member, I believe, who is listening to their community would be told that their constituents are hurting, particularly those on modest incomes. They are being hurt really severely.

The Land Tax Reform Association did an analysis in relation to seven councils and what they could save if they were amalgamated. I am not supporting that number for amalgamation: as I said at the start, I do not know what the desirable number is. They have done an analysis of these councils and the savings if they were one council: Burnside, Campbelltown, Mitcham, Norwood, Prospect, Unley and Walkerville. Obviously, you would have one CEO, as opposed to seven, and the number of councillors would drop from 86 to 22. The savings in rate revenue, based on a reduction in CEO numbers and other senior staff, plus other cost savings, they have estimated at $31 million. I guess we can argue about whether that amount is exactly correct but I believe it is an indication of the sort of savings.

The savings in those seven councils expressed per ratepayer they have calculated at $249 per annum per ratepayer. That is significant. I believe the savings would be even greater than that because, if you could standardise policies and procedures and share computers instead of, as happens now, each council spending a lot of money doing their payroll and having their own computers and so on, a lot of those things could be simplified and there is potential for a lot of additional savings.

If you look at the statistics for South Australia, as I indicated earlier, we have the highest number of councillors and local government employees per capita. In South Australia we have 68 councils for a population of 1.6 million: Victoria has 79 councils (only 11 more) for 5,567,000 people. You can go through the list to see that South Australia is overdone in terms of the number of councils.

You can look at some of the individual councils. For example, if you look at the City of Adelaide, it has something like 600 staff, which is bigger than many government departments—not all government departments but a lot of them. The City of Onkaparinga, likewise, has about 600 staff. I think Marion council has about 380, close to 400, staff. I am not suggesting those people would immediately lose their jobs because that would be unfair and ridiculous but, over time, obviously, you would not replace people who have retired, and so on.

The issue is how you go about it following a royal commission. The critics of what I am suggesting say, 'You are taking the local out of local government.' I do not believe that is correct. What they have done in New Zealand is create local advisory committees with unpaid people who give advice to their council on issues, and it seems to work very well indeed. In fact, people have more say than they currently do under our system.

Some people in local government say, 'What about reforming state government?' I say, 'Hear, hear!' 'What about reforming federal government?' I say, 'Hear, hear!' I am not against reforming those areas as well. I think there is scope for a lot of reform because, in terms of government, Australia is 'over governed' (the term which is used). I think there is some element of truth in that.

I want to keep this issue bubbling along. It sometimes takes quite a while to get reform and change, but I think inevitably we will get to a point in South Australia where, in the metropolitan area, we need to look at whether we need 19 councils from Gawler to Noarlunga. You can just about throw a stone from one council chamber to the other, from one works depot to the other, and it is hard to justify that when the cost is borne by the ratepayer.

What we need is efficiency and effectiveness. We do not want to curtail people's input or the opportunity to have a say, but you have to ask why we need from Gawler to Noarlunga 19 mayors, 19 personal assistants for mayors, 19 cars for mayors, 19 council chambers, 19 works depots and so it goes on and on.

In terms of businesses operating, they are dealing with 19 entities—and as I say, if we put in Mount Barker it is 20—which means that, whenever someone wants to build a property or do anything like that, government agencies have to relate to those 20 councils just in that small area. That is a very time-consuming and costly operation. I put the motion. I intend to keep pushing this issue and I look forward to the day when the state government, supported by the opposition, really gets serious about meaningful reform of councils in the metropolitan area.

Mr PENGILLY (Finniss) (11:42): I would like to make a couple of comments on this motion. The member for Fisher was a member of cabinet when the Brown government made considerable reform of local government and reduced the number of councils from well over 100 down to the current 68.

The Hon. R.B. Such: Mainly in the country.

Mr PENGILLY: Mainly in the country, that's right. I know the member for Fisher is talking particularly about metropolitan councils. I was a member of the Dudley district council, then I went on to the Kingscote district council, and we amalgamated those two councils to become the Kangaroo Island Council. The point I make is that not one job was saved, no expenditure was saved, and the savings that were supposed to come out of the amalgamation—in my view, and I am sure in other places—achieved absolutely nothing, nothing whatsoever.

Yes, it reduced by one CEO and yes, it reduced a council, but the staff numbers never reduced, and the promise that rates would be effectively held or reduced over the years did not come into place. Now we have 68 councils operating across the state. I have a great interest in local government, but I also have a great deal of concern about local government. I will stand corrected if necessary, but the Local Government Association has just borrowed $17 million to take over a new building in the city from where it was on Hutt Street.

I seriously question the necessity for that sort of thing when the councils, at the end of the day, across the state and the organisation, bring that into play and have to fund all that through various memberships and whatnot. I think it borrowed a lot of the money from the Local Government Finance Authority, which is an extremely well-run good organisation, put together by local government.

If we are going to reform metropolitan local government we have to have an idea of what we want as an outcome, and it would be good, in my view, to have someone do some work on just how effective the amalgamations in the country ended up being. I know on the Fleurieu Peninsula Yankalilla did not want to amalgamate with anybody, and it did not. Goolwa amalgamated with Strathalbyn in a dreadful hurry because they did not want to amalgamate with Victor Harbor, and so on and so on. A lot of parochial issues happened.

By and large, in my electorate the councils run pretty well, with the odd hiccup, and that probably has more to say about the way councils are formed. People with the best intentions in the world put their hand up to get on council and there is really no training required, unlike this place, unless you happen to fall in as an Independent for some reason or another. If you go through the major party structure, you have an idea of what you are coming into and you have to work pretty hard to get here, so it is quite different. People with the best intentions in the world who get into local government struggle sometimes when they get there. They just do not understand.

Overwhelmingly, the amount of pressure that is thrown on the local government sector from both federal and state by way of legislation, imposts and having to do more with less is a major concern. I do not know where it is going to end because they are restricted by their rates and various levies to the amount of money they can raise, and I will come back to the rates in a minute. However, I do not know where it is going to finish because they have these additional costs that go out and they can raise a waste management levy or whatever to cover them, but they are actually limited in their revenue base. However, they have more that they have to spend money on, much of it coming out of this place, which I do not think is thought through by the people who put the legislation into place for us to debate.

Just on the rate issue, this is a major concern because what we have seen—and I do not have the exact figures—it would appear to me, is that the average rate increase perhaps across the state has been about 6 per cent this year over the vast majority of councils, which is about double inflation. The concern is that the councils are putting up rates—and they have done it in the past—way above inflation and they have absolutely no consideration for people's ability to pay, people who are on fixed incomes—and they are so many people. They may get a wage increase of CPI and then they are expected to pay their council rates at probably double the CPI, so that is a major problem in my mind. It is very difficult for people on fixed incomes to absorb a 6 per cent increase.

I have done council budgets, as have others in this place, and I remember that we had to put it up more to cover our costs, but I really think it is time that we had a look at the structures within councils. It could be a good case study—and the member for Fisher may support it—to have a select committee to inquire into the structures of councils and just how many officers they have.

I know that of two councils in my electorate of similar size with a similar number of ratepayers, one has 20 more employees than the other. They are probably doing what is in their best interests but the concern is that there is nothing to stop them. They are their own entities, operating under the Local Government Act, as indeed they should be, but there is really nothing to oversee them. They run their own business.

There are many in this chamber—former mayors, chairs, councillors and whatever—who have had a lot of experience in this and they probably all know what I am talking about. Long term, if there is to be reform in local government, as suggested—and I know the member for Fisher is talking about metropolitan councils—I do not think you want to have reform just for the sake of having reform. If we are going to reform it, we need to make sure that it is going to be of beneficial outcome to the ratepayers and to the district within those councils.

The Brisbane City Council seems to work exceedingly well. It is almost a large empire, quite frankly, and it seemingly operates quite well. There is a host of 19 councils that the member for Fisher talked about around the city. If you tried to bring them together, you would just about have World War III, so you just about have to go back to the time when the member for Fisher was in cabinet under the Hon. Dean Brown, a former premier, and they took the decision to reduce the number of councils and then they worked through it in a sensible way. Just to repeat myself, I seriously question whether anybody actually saved anything out of the amalgamation of councils in the 1990s. We had more of them speaking with one voice.

As a matter of interest, yesterday I was at Settlement Day on Kangaroo Island with the Premier and the member for Bragg. I had to say a few words last night at a dinner and I went back to the civic record that was produced in 1986 with all the councils before amalgamation, and I started to go through them. It was with a great deal of interest that I read through and looked at the names. I was quite staggered at the number of people who were councillors in 1986 and who are still there now—it was quite amazing. There are some names that are well known in local government circles floating around these days that were there back in 1986.

The member for Fisher may well have a good idea to have a look at it but I think we really need to review it. The local government sector is a critical part but, along with the state parliament and the federal parliament, they all think that the world revolves around them. We all do that; it is part of the parochial nature of our business. I suspect that if we are going to do something about it that we should be clever about it and that one day, if a government has the courage to take on some of these further reforms to local government, that it does it sensibly and considers the best interests of the ratepayers of those districts where it is making changes.

At the end of the day it is the ratepayers who pay the bills, it is the ratepayers who should be getting the benefits, it is the ratepayers who feel the pain at rates time, and that is not going to change, but I think we need to be very smart about it. My personal thoughts are that the member for Fisher may consider wanting to have a select committee to look into whether there were any tangible benefits out of the amalgamations in the nineties and what came out of that. I will follow this debate with interest.

Mr PEGLER (Mount Gambier) (11:51): As somebody who did fall into this place, I have had a lot of years in local government.

Mr Venning: Fell?

Mr PEGLER: That is what the member for Finniss said. I must say that if we are approaching this as purely amalgamating councils to save money, it will never happen. In every amalgamation that I have seen there have not been great savings in money but there have been some great benefits in services that go out to those communities, provided that where those amalgamations have happened the demographics of the amalgamated councils are very similar and the will of the people within those councils is to have that happen. As far as Adelaide itself goes, there may be chances for some amalgamations but I think that it should be left to local government to make that decision.

If we are looking at trying to help our communities, what we should be encouraging is more cooperation between councils, particularly when it comes to planning regulations and rules so that we do have consistency across regions and across the state. If we really want to make changes to save money, I believe the big issue that we should be looking at is a better, clearer delineation of roles and responsibilities between the three spheres of government in this country. There is up to $20 billion a year to be saved by making sure that each sphere of government in this country is acting within its own realm and with its own responsibilities. Unfortunately, too often we see responsibilities and rules passed from one level of government to the next which ends up costing that next level of government a lot of money for very little gain.

Whilst I support the intention that governments in this country could be a lot better I do not believe that we can achieve that by trying to impose amalgamations on councils.

Mr VENNING (Schubert) (11:55): I was here when we did the council amalgamations with Hon. Bob Such who was in my party room at the time, and we welcome him back before we both leave this place. I think it is an opportunity worth considering.

The Hon. R.B. Such interjecting:

Mr VENNING: He smiles. For the Hansard, he smiles. We entered the council amalgamations with a fair bit of enthusiasm, which we pulled off generally with the councils agreeing to amalgamate. The problem was that we did not finish the job because, although we did implement it, we were to go straight back and put in some benchmarking with these councils, but we did not do that because, during the debate itself, particularly in negotiation with the other house, certain things got axed and that was one of them. I was very concerned about that.

We were also to consider reviewing the boundaries themselves because we had moved the councils. Certain boundaries have been in place for many years and are clearly out of date, and they ought to be moved to major corridors or to major geographical modern-day facilities that are there now. For instance, in the Barossa, we have Light council coming into the outskirts of Nuriootpa. These things should be changed because across the road you have a different council within a suburban environment—

Mrs Geraghty: Or on the same property.

Mr VENNING: —or on the same property. These boundaries need to be looked at. They were going to be. It was minister Scott Ashenden at the time who said 'Enough is enough, we have done all of this.' Mayor Eiffe was in charge in those days—it is all coming back to me—and we had special meetings, and they were very successful and we were able to bring about this amalgamation that we currently have. What we achieved in the Barossa was pretty good. I was amazed that we ever got the three councils in the Barossa to sit down around the table but we did. It might have taken a few bottles of red wine but we had success, and what we have there now, one council instead of three, is very good.

The council boundaries were to be reviewed immediately after the state council amalgamations. In the Barossa there is a move afoot to try to amend the boundaries again to include the Marananga area which you see on the all the postcards. You all assume it is in the Barossa—it is in the Barossa GI, that is, the geographical index—but it is in Light council. When you go to Peter Lehmann's winery, you go in the front gate and you are in the Barossa Council, but by the time to get to the cellar door, you are in Light council. That is clearly a nonsense and it is high time we fixed that. I have been in the media saying that I would be happy to help anybody wishing to bring about that change. It is quite ridiculous.

I include in that not only the Marananga area but also the communities of Truro and Keyneton. Some of our best wineries are at Keyneton. They are in the Mid Murray Council on the other side. We need to look at that. I want to commend the Barossa Council which reduced its rates this year.

The Barossa Council reduced its rates for many of the vignerons who had negative incomes this year and last year. I think it is very commendable. The rest of the ratepayers had their rates increased to cover the shortfall; that is, they subsidised those who were less fortunate. I think it is well done and I commend not only the council but also the community and ratepayers of the Barossa because we all know that the vignerons are having an extremely difficult time operating and selling grapes below cost.

I was a bit concerned about the level of rate increases across all the councils, though, because as the member for Finniss said, the increases across the state are about 6 per cent. That is twice the CPI, and I do not think you can justify that, certainly not in the long term.

Councils always have a project and the Barossa Council certainly has, and it always has the excuse that to pay for the project, it will put up the rates. That is okay as long as they do not stay up, but we know that they do. I think the council has to consider generally how much an average family is paying in council rates and what they get for that. I know councils have a lot of costs in relation to libraries and other facilities that they now provide—sometimes they did not do it in the past but they do now.

I think we have to look at the user pays principle, in some areas, so that the range of libraries and things have to be paid for by those that use them. Of course, we know that will put a huge cost then onto the borrowers of the library, where libraries have been free. We have to ask ourselves the question: if it is costing councils thousands of dollars to keep the library open, should the users still be able to have it free? If you take that across all the services that the council delivers, we certainly have to have a very good look at it.

As I said, I did 10 years in council, and I have to say they were some of the best years of my life. That was at the Crystal Brook and Redhill councils, and we amalgamated those councils then. In fact, I have been involved with three amalgamations in my time and I think all of them have been very successful, if you are of a mind to make them work, and in this instance we certainly were.

I think it is time for us to consider a Greater Adelaide council–I know it is often talked about, but never much publicly—with a council four to five times its current size. You have to look at Brisbane. The Greater Brisbane Council works extremely well. I have been up there and had a good look, and it works extremely well. I want to see a larger and more efficient local government right across South Australia, because I believe this is the government closest to the people and I think, in the years ahead—can I say it? I have never said it here before—I think we are going to see more emphasis on regional government, through local government, and less on state. I do not think I will see it but, in the end, does Australia need to have three tiers of government? If it does not, which one would go? I will leave that for the people to decide. It is obvious to me which one goes. There is a long way to go and, with this thinking around, it will probably take three or four decades, but I think that is what we will be aiming for.

In the meantime, I want the local governments to be larger, more efficient and, most importantly, accountable. We cannot have these issues like Burnside happening. It cannot happen. As the member for Fisher said, some of the levels of salaries being paid in these councils are to the point of being exorbitant. I have some very good friends who are being paid the big bucks—a lot more than me. That does not make me upset.

The DEPUTY SPEAKER: No, because you're not poor.

Mr VENNING: Not at all. I am quite well compensated for what I do here. When you speak to some of these people—and the member for Goyder was one of these. He has come into this house and has sacrificed huge personal income to be here, and people should not ever forget that. A lot of people do come in here and sacrifice personal income to serve their state, and good on them. I will never forget Mr Griffiths and others for coming in here and doing that.

We need to rein it in. I do not mind paying the fellows the big bucks, as long as there is enough work to justify the big bucks. In some areas, these people could be overseeing a population of three or four times the size they currently are. I think this motion is good. I know the member for Fisher has a background in local government, as do I and the member for Finniss. Good on them. I think we should all say that we are not out to attack local government; we are out there to ensure its longevity, its efficiency and that all the powers are at its disposal so we do not have issues like Burnside council. I support the motion and I commend the member for Fisher.

Debate adjourned on motion of Mrs Geraghty.

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