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House of Assembly - Fifty-Third Parliament, Second Session (53-2)
2016-09-28 Daily Xml
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Economic and Finance Committee: Inquiry into Local Government Rate Capping Policies

Adjourned debate on motion of Mr Odenwalder:

That the 91st report of the committee, entitled Inquiry into Local Government Rate Capping Policies, be noted.

(Continued from 27 July 2016.)

Mr PEDERICK (Hammond) (11:25): I rise to finalise my remarks in regard to the Economic and Finance Committee's 91st report, entitled Inquiry into Local Government Rate Capping Policies. At the end of my recent comments in this house, I was talking about how people who are residents in local government areas are keen to make sure that they get appropriate services for their rates.

I certainly know from living in a country electorate with a country council that people are concerned, especially in regard to the maintenance of their rubble roads, dirt roads or whatever you want to call them. Yes, it does eat up a lot of funds, but councils certainly receive funding from the federal government for some roadworks. The biggest thing that causes angst amongst constituents is when they see that their roads are not being tended to.

Just because of populations, different councils can have far higher rates than others, and it has certainly happened in my electorate in the past. I have had people at the end of one council area who would like to move to another one. I just advised them of the processes they needed to go through and said, 'It's in your hands now.' It did not progress, but they made the point that they wanted their roads serviced more regularly, especially because they were paying very high rates compared to the neighbouring council.

It is all population based, and raising the relevant amount of funds to get the requirements for road funding can be a real issue in council areas with small populations. I have certainly had cause to contact my local council about a road in my council area just behind my property. I use the road quite a bit and I had to tell them that it is in the worst condition I have seen it in my 54 years of living at Coomandook.

Mr Whetstone: Are you really that old?

Mr PEDERICK: Sadly. Thankfully, they got onto it and tended to it within a couple of weeks, but it should not get to that, and that is the issue. There has been a change of management and a change of how they manage it. It appears that there is less grading. I met with the mayor and the CEO and they indicated that it is because of the way the roads were built in the past.

One of the biggest bugbears of people living in rural council areas is making that sure their roads are getting dealt with and that funding is not being dealt with elsewhere, because councils are a far bigger beast than they were. Years ago, you had the town clerks and now you have a lot of staff who have come through the system who have not been brought up in the area. They have an outside view, and sometimes that is a good thing.

Sometimes, it can be a more interesting view of the world as to what happens in your local council area, but people who have lived there all their life have a long memory of how things have worked, what worked in the past, what did not work and certainly of what they would like to see into the future. That is why we have a policy of rate capping in our Liberal policies and will be taking that to the next election.

Mr SPEIRS (Bright) (11:29): It is a pleasure to be able to speak today on the inquiry into local government rate capping that was undertaken by the Economic and Finance Committee of South Australia's parliament. In May 2015, the committee gave bipartisan support to this inquiry when I proposed that we look into rate setting by local government. What unfolded was a really interesting period for the committee. I believe we went through a fairly detailed analysis of the processes and systems behind rate setting by the local government sector and eventually came up with two positions: the government had a position against the policy of introducing a rate cap on local government rates; and the opposition members of the committee (the member for Schubert, the member for Hartley and I) submitted a minority report which sought to support the introduction of a rate capping policy by the state government on local councils in South Australia.

I think the process that the committee went through to reach this position was a healthy one. It involved policy analysis and hearing evidence from a range of different sources—some for the introduction of a rate cap and many against the introduction of a rate cap. Those who were against the introduction of a rate cap were largely representing local councils which, you would imagine, would have a built-in bias against a policy which seeks to restrict their ability to raise revenue. This is a policy in which I strongly believe. People often say to me, 'Well, as someone who came from local government prior to entering state government, why would you be in favour of a policy which restricts the capacity of the local government sector to raise revenue?'

In fact, my time on local government is the reason that I am so supportive of such a policy. When I sat on the City of Marion council, which for over a decade raised its council rates by an average of 5 per cent per year, I was particularly troubled by that approach. An increase of that amount which is above and beyond CPI or inflation, eats into the discretionary income of households bit by bit. You can only sustain that for so long before you are putting a significant cost impost on those households. We know the cost of living is a significant problem for South Australian households. It is an issue that comes up time and time again and is brought up with me in my role as a local member of parliament.

People worry about the cost of utilities, the cost of groceries, the cost of fuel, the ever-rising emergency services levy, and the various taxes, fees and charges that are levied on them by our state government. People find this onslaught of charges increasingly limiting their ability to make decisions to improve their lives, to send their children to private school, to pay down their mortgage a bit more, and so on. We should be exploring anything that we can do, as a Liberal opposition or as a state parliament, to reduce the cost of living pressures facing South Australians today in difficult economic times and giving it serious consideration.

That is one of the reasons that I so strongly support rate capping. Is it going to be a huge year-on-year saving for households? Perhaps not, but every little bit counts. I remember when I was on the City of Marion council, people repeatedly said, 'We can raise our rates by 5 per cent or 5.5 per cent a year—or whatever they were proposing that year—because that is only the price of a cup of coffee each week.' Now that might be the case. It might be $4 or $5 a week, but that is on top of a $4 or $5 increase per week on electricity, water and the emergency services levy, so the cumulative effect of that is particularly damaging on a household budget.

As a state parliament, if we can find ways to reduce that coffee a week increase in people's expenditure on different aspects of life, whether it be rate capping or the emergency services levy reduction (which the Liberal Party has proposed as a policy moving forward into the election period in 2018), and if we can find these ways to reduce the cost of living within individual households in this state that can only be a good thing.

As a state parliament, I think we should be looking at the third tier of government, being local government in South Australia, and asking, 'Are there ways that we can help or assist or encourage local government, whether that be in a legislative way or not, to help them reduce the cost imposts that they are placing on South Australian households?' If a rate cap is required to encourage councils to cut their cloth more effectively and to look at efficiencies within the way that they do business, I am absolutely supportive of us going down that track. That is why I am a vocal proponent of the South Australian Liberal Party's policy to introduce a rate cap on local government rates.

Many times I have mentioned in parliament my concerns about local government. I have said many times that local government has the capacity to be the best tier of government because of its ability, on a day-to-day basis, to impact the lives of ordinary South Australians because of its relative closeness to our communities. Too often, rather than being the best tier of government, local government is the worst tier of government. It gets distracted and does not necessarily have the capacity among elected members to deliver the reforms that are needed and often it gets in the way of progress.

It gets in the way of economic development and it looks for ways that it can stop things from happening as opposed to looking for ways to make things happen, particularly when it comes to economic development. I see that time and time again, councils putting up barriers to planning, putting up barriers to businesses moving ahead, creating unnecessary rules and creating unnecessary red tape. I often say to the councils that fall within my electorate, 'It's not action that you need to take to create economic development that you need to look at, it's actually what you shouldn't be doing that you are currently doing that might have more of an economic impact.' I encourage councils across the state to look at what they can stop doing in order to stimulate their local economies and really have a different lens over their business when it comes to economic development.

In closing, I would like to re-emphasise my strong support for the introduction of a local government rate cap as proposed by the Liberal Party of South Australia. I think this is a valuable policy and one which our minority report, as presented by me, the member for Schubert and the member for Hartley to the Economic and Finance Committee, outlines in considerable detail. I would like to thank all the members of the committee who went into this inquiry with an open mind, I hope, and heard plenty of evidence over the year that this inquiry took place. Our minority report makes good reading and I would commend it to the house.

Mr DULUK (Davenport) (11:38): I also rise today to add my comments in support of the minority report on the rate capping inquiry and, of course, to make a contribution on that. In recent years, I believe that we have seen an unhealthy habit develop within local government, and that is to impose annual rate increases well above CPI and the Local Government Price Index on ratepayers.

My electorate of Davenport overlaps two councils: the City of Mitcham and the City of Onkaparinga. The average annual increases for the past five years have been slightly under 5 per cent for the City of Mitcham council and slightly over 5 per cent for the City of Onkaparinga. This is a year-on-year increase with a compounding effect, and it is increasing beyond the reasonable measures of the people's ability to pay, as the member for Bright put so well in his contribution.

These 5 per cent annual increases have been so habitual within these two councils that they have become quite the norm. When Mitcham council was considering its budget for 2016-17, local councillor Karen Hockley described a proposed 2.95 per cent increase as 'manageable'. Let us be clear: a 2.95 per cent proposal that is deemed to be 'manageable' by councillor Karen Hockley is indeed no small amount. It is more than double the current inflation rate. The inflation rate for the June 2016 quarter was just 0.4 per cent, and to have a 2.95 per cent rate rise on an average 2015-16 rate bill of $1,581 is an increase of about $32 per annum.

To some of us in this chamber $32 per annum might not be seen as a big increase for those council rates. I do not believe our constituents who are on fixed incomes or who are senior residents in our community would share councillor Hockley's view that a $32 increase in their council rates is manageable, especially when they themselves do not necessarily see the tangible benefit of that rate increase.

A $32 increase, on average, in the City of Mitcham is compounded when we have the cost-of-living pressures that have been imposed by this Labor government. We have seen ESL increases year on year, and we have seen surging cost-of-living expenses in recent times, particularly in water and electricity costs. Those are set to rise. At the moment we have the Treasurer engaging in a paper bag war about electricity prices and who has been responsible for the increases. He is blaming the privatisation of ETSA by the previous Liberal government in the last century; of course, he always fails to mention that the Olsen government took the decision to privatise ETSA on the back of the State Bank debacle. We never hear those opposite talk about that.

Those on this side of the chamber are committed to reducing cost-of-living pressures for South Australians because we understand that many households are indeed in financial distress. We understand that there are record numbers of households seeking emergency government payments just to keep their lights on. We understand that surging power prices are crippling businesses and, of course, consumers are once again hit with higher prices as businesses look to recoup their power cost increases.

South Australians do need help, and we on this side of the house believe that rate capping would be a very positive step towards alleviating some of the financial pressures confronting residents. First and foremost, the introduction of rate capping would force local governments to examine their own cost structures. It would force councils to sit back and ask, 'Are we providing the services that we should be providing, or are we providing services that are out of our mandated scope?'

In private enterprise, profitability underpins your survival. If you spend more than you make you will not be in business for too long. Too often, local councils do not face this burden. If they cannot balance their books, there is an easy answer to raising more revenue: rate increases. Rate capping would remove that safety net and compel financial discipline. Local councils would be motivated to review their spending decisions and review their role and responsibilities. That is not a bad thing in and of itself.

I agree with the member for Hammond's previous comments on this topic. He said that local governments appear to have lost their way from their core responsibilities and are now involved in a whole range of matters that are perhaps beyond the original or intended scope of councils. Recently we saw the City of Adelaide commission a toilet block for, I think, well over half a million dollars. One would hope that it is a very nice toilet block in our—

Mr Pederick: $700,000.

Mr DULUK: A $700,000 toilet block in our Parklands; that is certainly a lot of good sewage. As the member for Schubert also noted in his contribution on this debate, rate capping would start a necessary conversation about reforming local government. I think this is the most important part of the debate we are having. Councils should not fear a debate about their role. They should have conversations about reforming government and seeing how they can be more efficient in what they do. We at the state level of government should always review our operations and be as efficient and lean as we can. Ultimately, it is not our own money we are spending as arms of government; it is the people's money.

So the conversation needs to start, and I think it is starting. I know many councils and councillors have contacted me and many on this side to talk about this proposal. The conversation could be about the need for improved efficiencies, efficiencies that will deliver council services in the most cost-effective manner and efficiencies that will ensure households and businesses are receiving value for money.

The member for Schubert also noted that part of this conversation should include the ways in which state government can help local governments lower their cost structure, in particular reviewing the impact state government has on increasing local government costs through the rubble royalties program, increased NRM levies, the solid waste levy, of course the ESL that some councils are also responsible for collecting, the cost of red tape and the legislative imposts, all of which have a significant cost to councils and their operations.

That is the way in which state government and this parliament can help local governments improve efficiencies within their operations. Indeed, the member for Goyder highlighted that the submission by the District Council of the Copper Coast asked that we 'look at removing red tape and make it easier for councils to service our communities'. Indeed, that is something we should all be doing. Increasing council rates out of proportion to inflation simply are not fair, and councillors should look long and hard when they go through their budgets year on year.

They should not just scoff and say anymore that another 5 per cent council rate rise, well above CPI, is an appropriate tool. If the state government sees fit to cap Public Service wage growth, then it seems reasonable that council rate increases should also be capped to prevent increases above inflation. Rate capping would help drive improvements in service delivery to South Australians, improve efficiencies within local government and remove excessive cost to businesses and households—all of which are fundamental to growing our state's economy.

Mr ODENWALDER (Little Para) (11:46): I want to thank all members for their contributions to this debate. I want to thank the member for Bright for introducing the motion to the Economic and Finance Committee and for his always thoughtful contributions. As always, he makes a lot of sense and I disagree with him entirely. I want to thank all other members who contributed to the debate, and the member for Goyder, of course, who had some legislation to this effect which I gather prompted some of these debates. I also want to thank particularly the member for Colton on this side, who put the arguments of our side of the committee very succinctly. I would say to the member for Davenport that I think the remedy for councils making stupid decisions is to get new councillors. I think that is a simpler approach than imposing some artificial limits on their operations.

Members interjecting:

Mr ODENWALDER: I am not going to respond to interjections, Deputy Speaker.

The DEPUTY SPEAKER: But you need my protection anyway.

Mr ODENWALDER: I don't think so, but thank you. It was a good inquiry. We did approach it with an open mind. We on this side accepted that we should have a look at this. We heard a lot of evidence. In the end, there was a report and a minority report. I suspect it was always going to be thus, but we did listen and we did consult properly. It was quite an extensive inquiry and, as members have outlined, we basically brought in everybody who had an opinion on this. It took quite a while.

Having said that, although we were not in agreement in the end, I want to thank all members for their contributions. I want to thank the staff for their support throughout this inquiry. I want to again express my gratitude to Dr Gordon Elsey, who will be leaving at the end of this week, for his service to the committee. I commend the report to the house.

Motion carried.

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