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House of Assembly - Fifty-Fourth Parliament, First Session (54-1)
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Bills

Local Government (Rate Oversight) Amendment Bill

Second Reading

Adjourned debate on second reading (resumed on motion).

Mr PEDERICK (Hammond) (15:40): With the few minutes I have remaining, I want to conclude my remarks on the Local Government (Rate Oversight) Amendment Bill, which is something dear to the heart of the Liberal Party.

I just want to note and make comments around the Coorong District Council. A Coorong ratepayers action group was formed, and I went to many meetings, and I know that the member for MacKillop went to some of those meetings. Over 500 people attended different forums between Tailem Bend, Peake and Tintinara with concerns about how their hard-earned rate money was being spent. That tells me that there are lots of questions for my particular council to answer.

It was interesting that the Adelaide Town Hall meeting the other day seemed to be a pretty one-sided meeting. It was a bit of a cheerfest for the LGA and its position against rate capping. They were talking about autonomy for local government. Local government only operates under the Local Government Act 1999, which is an act to form local government and other matters, so they are not going to have complete autonomy; it is just not going to happen.

I just want to reflect on how much federal money and state money—the federal assistance grants out of the federal government—goes into local government now. It is many, many millions of dollars, and in some cases 50 per cent of council income comes from these grants which have nothing to do with rates. It is interesting to note that some councils take the position that any money for roads—and Coorong does this—only comes out of grants, so their rates do not even go into the roads, and it shows, sadly.

At the meeting at the Adelaide Town Hall, I had a conversation with the Mayor of Southern Mallee, Andrew Grieger. We were having a fairly in-depth conversation about rate capping and its effects or non-effects on councils. He said, 'Well, road maintenance isn't legislated for, so perhaps we should legislate for it.'

I just want to reflect on a trip I did last week. I went on the road between William Creek and Oodnadatta, and I tell you what, I want that outback road maintenance crew down in these council-bound areas to do the roadworks because they could teach all our local governments how to build and maintain a road. That road between William Creek and Oodnadatta in the outback was a credit to that maintenance crew. It is far better than a lot of the roads in my council area and some of the other roads in my electorate. I support this bill and I commend its speedy passage through the house.

Ms HABIB (Elder) (15:43): It is a tough time for South Australian families and businesses, for the elderly and for single people trying to get ahead. I have doorknocked thousands of homes and spoken to thousands of people in the shops and at community events, and without a doubt consistently I hear stories of the pressure that households and businesses are under to pay their bills whilst trying to get ahead. In the lead-up to the 2018 state election, the Marshall Liberal team listened, and we responded with more than 300 policies that together form a strong plan for real change, a strong plan for more jobs, lower costs and better services.

One of our key policies to ease cost-of-living pressures for families, for mums and dads, for the elderly and for our South Australian businesses was to introduce a cap on council rate rises. You may wonder why. Why would we want to introduce a cap on council rate rises? In recent years, council rates have increased well above inflation. In some council areas, rates have risen by three times the CPI. South Australian households and businesses have been smashed with council rate increases over double the rate of the local government price index (LGPI).

Over the last 10 years, local government rate revenue has increased by 67 per cent compared with a 31 per cent increase in the LGPI over the same period. Treasury analysis shows that over the same 10-year period, state government revenue only increased by 24 per cent. To really make this very clear, local government rate revenue increases are approximately double the LGPI and more than double the state government revenue—67 per cent local government rate revenue compared with only a 24 per cent increase in state government revenue. This is simply unacceptable.

As some of us may already be aware, the City of Onkaparinga is one of the worst offenders when it comes to the misuse of ratepayers' money, where rate revenue has increased by a significant 74 per cent over the last 10 years. The Advertiser reported that between 1 June 2014 and 31 January 2016, the mayor and the CEO spent $69,643 on ratepayer-funded credit cards. Golf club membership for the CEO of the City of Onkaparinga cost $6,818, which was originally paid for by that council. I do note that he paid that amount back, according to The Advertiser, but he also received a $7,000 pay rise. You work it out. The City of Onkaparinga paid $22,000 in legal fees to keep the membership fee a secret.

There has also been lavish spending by that same council, including overnight accommodation in city hotels after functions, $18,000 on flowers and thousands more on Apple products, including an Apple Watch for the City of Onkaparinga CEO once again—and this is just what we know. Can you imagine the other unjustified and unnecessary expenses paid for by ratepayers that we may still be unaware of? I was equally shocked to learn that the Local Government Association ran a campaign against rate capping prior to the 2018 state election using South Australians' hard-earned income collected through rates. InDaily reported a total spend of $211,000.

I have served as a councillor for the City of Marion during 2010-14. I know local government provides services beyond roads and rubbish collection, and I am thankful for the magnificent libraries, playgrounds, parks and community programs delivered by our local councils. However, in my time on council, I unfortunately observed firsthand the lack of discipline by some councillors who are happy to support rate rises without due regard to the impact it would have on households. Keep in mind that some councillors were elected on the back of just 400 or 500 votes, and they were making decisions to increase rate rises, representing and supposedly governing for more than 90,000 people, as is the case with the City of Marion.

Our legislation to introduce rate capping represents yet another election commitment we are committed to delivering. As I mentioned earlier, prior to the election, we listened, we responded and now, in government, we are delivering. Make no mistake, we are a government that is committed to delivering our strong plan for real change—our strong plan for more jobs, lower costs and better services. I can only hope that those opposite—the Labor Party and those who serve independently—are as committed as we are to easing unnecessary cost-of-living expenses for families, households and businesses.

The legislation we have introduced will deliver more oversight, transparency and accountability for the local government sector. Our rate capping policy strikes the right balance between keeping cost pressures down for South Australian households and businesses while also facilitating growth in the local government sector. After all, our priority is to keep cost pressures down, but we do not want to get in the way of growth or the delivery of productive infrastructure and necessary services.

That is why, through consultation with the local government sector, we have devised a rate capping scheme which will enable councils to increase their rates if they can convince ratepayers and the independent regulator that the increase is necessary. Interestingly, since the Liberal Party announced our rate capping policy, some councils have already tightened their belts and kept rate increases to a minimum, which is great news for ratepayers.

This shows rate capping will make councils more accountable to the people they represent, and also ensure that councils have to look within for efficiencies and are not able to pluck rate rises from the air. Local councils are currently holding meetings to determine their position on the legislation by 3 August. From there, it will go to the LGA Board for a sector-wide position. We sincerely hope the local government sector will accept rate capping to restore faith amongst their ratepayers.

The rate capping process will give confidence to ratepayers that their councils are spending their money more wisely. After all, at every level of government, there is a duty to ensure service delivery is as efficient and as effective as possible. The money raised through taxes and rates does not belong to the people in elected positions; it was hard earned. It was hard earned by the mum who goes to work and sacrifices time with her children, hard earned by the older person at home who hesitates to turn on the heater so that they have enough money to pay the bills and by the young person who is studying and working to get ahead.

This money is hard earned by so many South Australians, and we must never forget that. We must instead change the conversation from, 'How much can we splash around and spend?' to, 'Are we doing the best with what we've got, and how can we do more?' I commend the bill to the house.

Mr BASHAM (Finniss) (15:52): I rise to support the bill, and I think it is a very key part of the policy the state Liberal Party took to the 2018 state election: to introduce council rate capping to ease the cost-of-living pressure on South Australian households and businesses. Rate capping is alongside other measures that the Marshall Liberal government is looking to introduce, including capping the NRM levy and lowering power costs. These are just some of the key things we need to do to look after our community.

Many residents within my electorate are on fixed incomes. Many of them are retirees who are living off either pensions or superannuation as they have retired from their working lives. To have significant increases in the cost of living, it is very difficult for them to make their budgets work going forward. They have to be able to get food on their tables and make sure they can live comfortably, and keep their houses warm over the cold days of winter and keep them cool through the hot days of summer. There are many pressures on people in my community in particular.

I think this legislation will deliver more oversight, transparency and accountability for the local government sector, but I also think it will deliver the same transparency and accountability to both the state and federal governments for the services they already deliver and may at times walk away from. If the local council has to pick up a service that has been neglected by the state government or federal government, they are going to have to find a way to fund it.

Under this method, they are going to seek to get an extra rise. Therefore, it will very much publicise that removal of support by the other tiers of government, allowing them to focus on the key factor of having to pick up the service when others have walked away. So we will not see cost shifting just occurring in the background: it will be very much in the forefront. I think those discussions will be useful for council, state government and federal government to make sure we are not just cost shifting.

Due to the way the bill has been drafted, we are going to see an encouragement in the development and growth of regions. The more growth that we can stimulate, the more rates are going to be delivered back to those councils that have high growth. There is a lot of potential in the seat of Finniss, particularly around the coastal towns. The inland towns are also within a commutable distance to Adelaide and we are seeing a lot of growth there. As the number of allotments grow, so does the rate capping to those councils in the seat of Finniss.

In the seat of Finniss, I am very lucky because I have two main councils and also piece of a third. I have about half of the Alexandrina Council in my electorate, I have the totality of the Victor Harbor council and a small piece of the Yankalilla council. I believe those three councils are very good, responsible councils and do their utmost to make sure their rates are kept as low as possible. They have been very well consulted and I have been part of that consultation process through the Southern and Hills LGA group.

I was at a meeting with them recently and I did not hear much concern at all. There were maybe some minor technical concerns around some of the aspects of the bill and wanting some clarity about it, but I would not say that they were overly concerned. They may not like rate capping, but they are not concerned that it is likely to come in. They are more than happy to work with government to make it work.

As a long-term resident in the Alexandrina Council, there are some things I have seen, and tree trimming is certainly something that has caused significant problems for the council. There are some things in that space that are putting extra costs into the system that I believe we need to sort out from a state government point of view. To me, rate capping will allow us to focus on finding those cost savings.

We have seen where councils are required to trim the trees on the road to keep the window of clearance out to a safe distance to make sure that the trees do not encroach onto the road. If they do not trim those trees within a five-year period, they have to seek natural vegetation clearance permits to trim those trees. If they do not do it within 10 years, they have to have a site visit, all of which the council has to pay for. This is just to fill the window.

Particularly through my area, a lot of those trees do not grow at those rates and do not need to be trimmed every five years, but we see them out there trimming more often, trying to avoid the cost of going through the full process. The sensible thing is to actually fix the problem, rather than spend money so that the problem does not get too big. I think there are many cases where we can get productivity improvements through the councils.

Again, I think Alexandrina have done a very good job this year. They have put a rate rise of 2.9 per cent forward for this year, and I think they have done that in a very constructive way. They have looked for savings out there to deliver them back to the community. I think this will encourage many others to do exactly that. As others on this side of the house have said, the rate rises we have seen from some of the other councils and as an average across the board are not acceptable. To see increases of 67 per cent over 10 years is just not acceptable. At the same time, we have seen an increase of only 24 per cent across the state government revenues.

To me, we have to get this back into reality, and we also need to make sure that it is transparent and that people understand where they are spending their money. This brings that transparency back. Councils do not have quite the same scrutiny we have in this place. Many things here are seen in the major newspapers, whereas council meetings are sometimes covered in local newspapers, but it is certainly nowhere near the coverage we get here. I think the community has a right to know a bit more and a right to know and understand the pressures on those councils.

We have to change the conversation. We have to talk about how we can do what we need to do with the right amount of money. We have to work out how we can spend on just what we need to do to cover the community's total needs because some things may not be needs: they may be wants. Not everything should necessarily be done. I think that councils are probably dipping their toes into some issues that may not necessarily be in the best interests of their communities just because there is some minimal support to have a look into those issues.

We have to make sure that we do not waste money, and we also have to look at how councils can work together more closely. I am very excited that the three councils in my electorate are talking together about how they can save costs in things like back-of-house HR management so that they do not have HR managers in each of the councils. They are working together to see if they can deliver that together. There are many things that can be done to improve the productivity of councils, and I think that is just part of it.

A few days ago, I was very disappointed to read an article by the Hon. Frank Pangallo from the other place saying that he does not support this. One of his concluding remarks was, 'It's only going to be a cup of coffee a week that people have to find.' Many people in my community cannot afford a cup of coffee. Many of them will have a cup of coffee at home out of the instant coffee tin rather than go out and spend $5 for a cup of coffee. I think it is an insult to the community to make that comment. We are talking $250 a year at $5 for a cup of coffee a week, and $250 is a lot of money to some people. We really have to consider everyone in this equation, and this is just part of managing costs for the community. We really have to be careful about how we think about this.

This policy is certainly not about reducing services but about reducing costs to households and businesses to get the economy moving again. This legislation meets a key election commitment. It is one of the key reasons why South Australians voted for the Marshall Liberal government. This policy does not prevent councils from raising rates. There are many mechanisms in the legislation to allow individual councils to apply for increases and also for groups of councils to work together. For example, if regional councils think that they have extra costs above city councils, they can work as a group to put forward a proposal, so I think there are many opportunities in this legislation.

The community I represent is very fortunate to have the three councils it has, and I have nothing to fear for them from the increased transparency and accountability. In closing, I very much support this bill and encourage others to do likewise.

Mr PATTERSON (Morphett) (16:05): I rise to support the Local Government (Rate Oversight) Amendment Bill 2018, which seeks to amend the Local Government Act 1999 to introduce a rate capping scheme here in South Australia. The rise in the cost of living is putting undue pressure on South Australian households and businesses. Reducing cost-of-living pressures is a key focus of the Marshall Liberal government. Council rates are one of the biggest taxes that homeowners pay on an annual basis. In recent years, council rates have increased well above inflation. In some council areas, rates have risen by three times the CPI.

At every level of government, there is a duty to ensure that service delivery is as efficient and effective as possible to contain costs to taxpayers or ratepayers and ease cost-of-living pressures. The introduction of rate capping legislation in June this year delivered on a key election commitment and sees the government delivering it in its first 100 days. Australia has three levels of government that work together to provide Australians with the services they need: federal, state and local. Local government is often referred to as the third level of government. The constitutional responsibility for local government lies with state and territory governments, so the South Australian state parliament has given councils the task of looking after the particular needs of their local communities, and this is administered by the Local Government Act 1999.

In South Australia, 68 councils are created under the Local Government Act. Some of the objects of the present act are to encourage the participation of local communities in the affairs of local government; to provide local communities, through their councils, with sufficient autonomy to manage the local affairs of their area; to ensure the accountability of councils to the community; to improve the capacity of the local government system to plan for, develop and manage local areas; to enhance capacity of councils to act within their local area as participants in the Australian system of representative governments; and to encourage local government to provide appropriate services and facilities to meet the present and future needs of local communities.

At every level of government, there is a duty of care to ensure that service delivery is as efficient and effective as possible to contain those costs to taxpayers and also ease those cost-of-living pressures. These responsibilities of local government include planning at a local and regional level for the development and future requirements of the community. Councils also provide infrastructure for their community and help conserve, manage and protect their local environment in a sustainable manner. Additionally, they provide services and facilities for not only ratepayers but residents and visitors. This includes supporting organisations, businesses and industries in the local area, so it can be seen that local government does provide a valuable service to its local community.

In Morphett, there are three councils: City of West Torrens, City of Marion, and City of Holdfast Bay. Prior to being elected to represent the people of Morphett, I had the privilege of representing the people of Holdfast Bay, first as a Somerton Ward councillor from 2010 and then as their mayor in 2014. Providing value for money to all ratepayers was one of my key focus areas from when I was elected in 2010 until concluding as mayor last year. This was based upon providing a budget that runs in surplus, which is vital to the long-term sustainability of any organisation, based on a long-term strategic plan that is also aligned to community expectations. This strategic plan then feeds into annual business plans and budgets.

One of the focuses was based on slowing the yearly growth of rates by supporting robust income-producing community assets, such as the redevelopment of the Brighton Caravan Park, and paying down council debt, which then reduces the amount of interest being paid in future years. Consequently, the rate capping policy that the Liberal Party has progressed has always had my support, firstly as a local government representative and now at state level, as I know that reducing the rise in rates has the support of the broad community.

The latest annual report of Holdfast Bay outlined that 360 kilometres of footpaths and 160 kilometres of roads were maintained, 540 new street trees were planted, nearly 450,000 items were lent to over 16,000 library members, 10,400 community transport trips helped residents get out and about and 445 volunteers contributed over 85,500 voluntary hours worth approximately $3.5 million.

No-one in this chamber would dispute the value of these to their local community. The challenge, as with all levels of government, is to balance the services a government provides to their community with the ability to pay for it. In the case of local government, the income sources include statutory charges, user charges, investment income, operating grants and subsidies from both federal and state governments and special rates, but principally general rates revenue, which is derived from property owners in the council area.

General rates revenue takes into account a property's valuation, as well as various land uses across the council district, and so how much each individual ratepayer pays varies depending on property type. Each financial year, councils determine a rate in the dollar that is based on the amount of revenue that will be required to meet their ongoing cost of providing services to the community and this revenue is then used to produce a rate in the dollar, which is the ratio of the overall general rates revenue divided by the total valuations of land in the council area.

As I outlined previously, the general rates revenue is the principal source of income for councils and is arrived at by each council to provide services. I should mention that people are prepared to pay their rates as they recognise the value of services that councils provide; however, compared to a business, or other levels of government that have to estimate their income sources and then set their expenditure in their budgets, a significant portion of council's income is set by general rates revenue, which councils have complete control over setting. Being in effect a monopoly where ratepayers cannot shop around for better deals, councils have a large responsibility to their community that the general rates revenue that they raise to provide services to their community is in fact supported by that community.

There are cost pressures on the budgets of all organisations, but over the last 10 years council rates have increased at a rate three times the level of inflation and local government rate revenue has increased by 67 per cent. The rate oversight bill therefore seeks to amend one of the objects of the Local Government Act to not only encourage local government to provide appropriate services and facilities to meet the present and future needs of local communities but also provide for the appropriate contribution by ratepayers to those services and facilities. To provide for an appropriate—

The DEPUTY SPEAKER: Time has expired, member.

Mr PATTERSON: Could I seek leave as they forgot to change the clock?

The DEPUTY SPEAKER: Did they?

Mr PATTERSON: Yes. I have been speaking for about five minutes.

The DEPUTY SPEAKER: Sorry, I did not pick up on that. Member for Morphett, there has been a misunderstanding with the clock, it would seem, so it is my decision that you can have another 10 minutes, or up until 10 minutes.

Mr PATTERSON: I was going to ask for 15.

The DEPUTY SPEAKER: Member for Morphett.

Mr PATTERSON: To provide for an appropriate contribution by ratepayers for services and facilities, the bill introduces a rate oversight scheme to the Local Government Act. It will therefore shift the focus to analyse services, rather than expand them.

This rate oversight provides for the establishment, operation and reporting of a system to cap the amount of revenue that councils can gain through their primary rating tool: general rates. This will require councils to carefully consider the decisions they make around their own operations and seek efficiencies ahead of greater revenue.

This bill provides a rate oversight framework that establishes the key element of rate cap determinations. The establishment of rate cap provisions enable the cap to be set, determining that the cap applies to a council revenue recovery for general rates and providing for its calculation on an annual basis for all councils. It will apply to general rates but not to prescribed services. The scheme will be administered by an independent body, the Essential Services Commission (ESCOSA), which will set the cap for all councils, a class of councils or a single council.

ESCOSA is an independent economic regulator established under the Essential Services Commission Act 2002. The objective of ESCOSA is the protection of the long-term interests of South Australian consumers with respect to the price, quality and reliability of essential services. I know that councils want to put the long-term interests of their community first, so it would sit comfortably with them, I would have thought, to say to their community, 'I support ESCOSA having oversight of the essential council services we provide in terms of price, quality and reliability.'

The amount of the rate cap can be compiled from various sources: the consumer price index, the producer price index or the wage price index. The most recent cap for South Australia was 2.4 per cent. It also takes into account some efficiency dividends. By way of comparison with other jurisdictions that have enacted rate capping, New South Wales has had rate capping since 1976. Since 2010, the rate cap has been set by the Independent Pricing and Regulatory Tribunal, and in the 2018-19 year, it was set at 2.3 per cent. In Victoria, the rate cap is set by the Minister for Local Government, rather than by an independent body, and in 2018-19, the cap was 2.25 per cent.

It is important to note that the South Australian bill does not simply cap councils' total generated revenue. One of the chief criticisms of rate capping schemes in New South Wales and Victoria is that they do not allow councils to manage additional costs that can come from growth in their area. To ensure that this is not the case, the bill proposes that the primary rate cap will apply to a base standard rate.

This is a single rate that is calculated each year by applying the cap and dividing the council's total annual revenue by the number of rateable properties in the council area. This method of calculation will mean that if the number of rateable properties within a council increases, this growth will be captured in the council's annual calculation of the cap. This mechanism should overcome fears of infrastructure and service shortfalls from a cap.

At this stage, I refer back to the three councils in Morphett and their 2018-19 annual business plans. West Torrens projects a rate rise of 2.3 per cent, with similar rate increases in following years. Importantly, their annual business plan states that it is acknowledged, for the purpose of the council's forward estimates, that rate capping may be introduced by the incoming Liberal government and that the possibility is manageable within the framework of what is being proposed. Holdfast Bay council projects a 2.7 per cent rate increase. In their annual plan, they state that this rate is made up of:

…76 per cent of our revenue…Whilst we are a leader in South Australia for non-rate revenue, we are seeking to reduce this rate burden by increasing our revenue from other sources…

The Marion council had their lowest rate rise in 20 years, with 1.8 per cent for 2018-19. Their annual report states:

The council is committed to delivering value to our ratepayers. We continue to focus on identifying on-going savings that can be passed on to ratepayers. This strong efficiency focus has enabled a further reduction in the average rate increase down to 1.8 per cent while maintaining current service levels.

At the same time as they are setting these rates, the councils are also investing in important community access. Two examples in Morphett are the Morphett Park Sports and Community Club and the Marion Outdoor Pool. As shown, these three councils in Morphett are well-run councils that have good, long-term financial plans that are sustainable. They can survive and prosper under any proposed rate oversight scheme that the Marshall Liberal government is seeking to introduce as part of its program to reduce cost-of-living pressures.

During the election campaign I was continually listening to ratepayers, either while doorknocking or at shopping centre visits or listening posts, and they were all concerned about that cost-of-living pressure. I received good support for the Liberal plan for council rates to be capped. Many of these people could well be referred to as the silent majority that councils have such difficulty connecting with. As an example, each year, prior to a council's budget being adopted, it is put out for consultation, and unfortunately, despite councils' best efforts, the number of responses to this consultation process is usually very small. However, the absence of respondents is then taken as an endorsement of the proposed plans.

As I outlined previously, well-run councils with good long-term strategic plans that are connected to their community should have nothing to fear from rate capping. Well-run councils are also reliant on competent elected members because these councils are significant, going concerns. Holdfast Bay, for example, has a budget of $57 million and controls $600 million of assets. West Torrens has a $65 million budget with $700 million of assets, and Marion has an $88 million budget with assets over $1.1 billion.

These really require elected members to have strong financial competency. Unfortunately, some members who are elected to councils, while all very worthy community members, have run for council without an understanding of the number of services the council runs and the significant budget required to administer them. Consequently, the introduction of rate capping will help inform the decision-making process of elected members when formulating their budget.

One of the narratives I hear against rate capping is that the councils will just cut services or stop maintaining buildings. To me, this is a lazy approach. I believe that, rather than councils just continually going back to ratepayers for more and more money, rate capping will force the elected members to improve efficiencies of service delivery and so deliver more from what councils have. The upcoming local government elections, in November this year, become an opportunity for candidates to promote their financial credentials in terms of how well they will set their council on a path to working with rate capping and improve efficiencies of service delivery.

Where there is a need for a council to have an increase in rates above the prescribed rate to ensure financial capacity to deliver for its community, then it can apply for one. This bill provides for the ability within the system for councils to apply for individual variations on this cap. If councils apply for a variation of the rate cap, they must demonstrate engagement with their community on a rate variation, why that variation is necessary within the context of the council's operations and long-term financial planning, and whether they have considered making efficiencies as opposed to just increasing rates.

Again, ESCOSA will be responsible for receiving and assessing these applications, which must be made by 31 March each year. Variations can be requested for up to five years. In order that the provisions not be onerous on councils, the information councils are currently reporting on, such as their long-term financial plans and asset management plans, will form the basis for ESCOSA's decision-making, again dispelling an argument mounted by opponents to this rate capping measure, that the effort required to request a variation will exceed the rate increase they are requesting.

At the same time, during the consultation, the Liberal Party has recognised that over recent years there has been cost shifting from the state to local governments, which has imposed an unfair burden on ratepayers, so a Liberal government will not continue Labor's cost shifting to local councils. Just today in this chamber, the Minister for Environment indicated that the Marshall Liberal government is starting the process for capping NRM levy rate rises. This is a levy that councils collect on behalf of the state government, so quite rightly the councils complain about this and say, 'If you want rate capping for the councils, why not look at your own backyard?' So we are going about that.

Other levies include the solid waste levy. The solid waste levy and the NRM levy have both increased over the last 10 years well in excess of the CPI. These are examples of cost shifting that councils then have to pass on via ratepayers. Again, not all the rate rises experienced are councils' fault. Some of it has to do with the previous Labor government.

On the other hand, the Marshall Liberal government is committed to keeping these cost pressures down for South Australian households and businesses, and capping council rate rises is one way of doing this. The legislation will deliver more oversight, transparency and accountability for the local government sector. This rate capping policy strikes the right balance between keeping cost pressures down for South Australian households and businesses and facilitating growth in the local government sector. This rate capping process should give confidence to ratepayers that their councils are spending their money wisely. I commend the bill.

The DEPUTY SPEAKER: Before I call the member for Waite, I can assure the member for Morphett that he had almost exactly the right amount of time after all of that. The member for Waite.

Mr DULUK (Waite) (16:24): Thank you for your great management, sir. It gives me a lot of pleasure to also make a few remarks about the Local Government (Rate Oversight) Amendment Bill 2018, and I am proud to say that those on this side of the house do support this legislation and we do know what our position is.

I found the contribution this morning from the member for Light once again very, very interesting and exciting, because I would have thought that, by now, the member for Light—a good man that he is, a very earnest local member and someone with a long-time interest in local government who it is good to see back in the shadow ministry—would have been able to convince the Labor Party what its position would be on this bill, whether it is to support it or to oppose it.

It is fine to oppose the legislation if that is the will of your caucus, but if you are opposing it let us know. If you are going to support it, let us know. It is not as if the position of the Liberal Party and now the government is news to the Labor Party or those opposite. In fact, I believe my predecessor as member for Davenport, the Hon. Iain Evans, first mooted in 2013 Liberal Party support for rate capping, and we took this policy to the 2014 state election.

So those opposite, and indeed the people of South Australia and those who support common sense and responsible fiscal management by levels of government, know that supporting this rate capping legislation is a good piece of legislation. The Liberal Party, in the lead-up to the 2014 election, had this commitment. In the lead-up to the 2018 election, this was a very key platform of ours and one which the LGA spent a lot of hard taxpayer funds opposing. I notice they spent a lot more money on its campaign opposing rate capping than they did against the former Labor government's hard waste green tax on councils, which essentially they rolled over on because I think that, at the time, the mayor of Prospect, mayor O'Loughlin—of course, a former Labor candidate for the seat of Adelaide—was just doing the bidding of the Labor Party through the LGA.

It is incredible that the shadow minister does not have a position in his contribution to this debate, and I just think it speaks volumes on where the Labor Party is at the moment. We saw them today in question time on the most bizarre line of questioning from the member for Kaurna. They do not have a narrative. The Leader of the Opposition has actually gone into hiding. He thinks that the winter break has come a bit early. He does not know that there are another couple of weeks of sitting.

The Hon. V.A. Chapman: You are not allowed to reflect on people not sitting in the chamber.

Mr DULUK: Indeed, thank you. I have barely seen a press conference from the Leader of the Opposition in recent weeks.

The Hon. D.C. van Holst Pellekaan: He's keeping quiet.

Mr DULUK: He's keeping quiet. I see a lot from the member for West Torrens. He is pretty active. He has cleaned up his act. He has taken off his beard. He is enthusiastic. I know what his position is on rate capping, and I suppose this is a debate that is happening right now within the Labor Party. So, it is intriguing that we are having this debate. The minister (member for Schubert) has presented to the LGA, and all I can surmise from this is that the Hon. Frank Pangallo from the other place is pulling the Labor Party every which way on this position.

If the Labor Party is not careful, we are going to see SA-Best making policy on behalf of the Labor Party, and I do not know whether that is the position that the Labor Party wants to see. I would like to see between the houses the Labor Party come out with its position. I would love to see what some of the other members of the Labor Party actually think about rate capping. I would like to hear what the member for Reynell in her contribution—when she makes it—and the member for Kaurna think about how Onkaparinga is serving its constituents at the moment, and I think that is really important.

However, I am afraid the Labor Party does not want to be involved in this conversation because all I can think is that they do not really care about the people of South Australia. Those opposite do not care about cost of living because it reflects on their 16 years in government where they constantly put up rates and taxes for South Australians at every level, whether it was through local government with their green tax, whether it was through rates and charges on services and utilities, or whether it was delivering the highest energy prices for South Australian consumers. It is in their DNA to charge and to charge because they believe that the big arm of government knows best.

We on this side of the house sensibly went to the election with a broad-ranging, common-sense approach to rate capping. There has been a big fear in the community that rate capping by this government will be some big blunt instrument, but that is not what we are doing. Through the mechanisms that we are establishing, there will be an opportunity, especially through ESCOSA, for councils to apply rates obviously within the band that ESCOSA set and then of course for there to be additional discretion.

The fear that council projects or reinvestment in ageing community infrastructures, such as community centres and sporting facilities, will not be achieved under a rate capping regime is complete and utter nonsense. Those in the LGA and some councillors across this state—some are in my good council of the City of Mitcham—are peddling a line that if we have rate capping councils will have to cut services. The situation is quite the opposite.

One thing that rate capping will do is sharpen the focus of councils and the way that councils spend their money. That can only be a good thing. If any arm of government is forced to focus its attention, and to be sensible and prudent in the way it spends its money, that is only a good thing, and that is the standard that I know this government is holding itself to. I know that Treasurer Lucas is particularly keen to see financial discipline and sound management of the Treasury bench because that is what we do on this side of the house.

Those South Australians who believe that government at all levels should always act in a responsible manner should have nothing to fear from rate capping. I urge those members opposite to really thrash this out in caucus over the next couple of weeks and come to a position because I think that will really help the parliament. Ultimately, the question is: when this bill goes to the other place, what is the Labor Party going to do? What position will the member for West Torrens convince his caucus to have? Is it going to be one that actually supports the will of the South Australian people, or is it once again for the Labor Party to be obstructionist and difficult and to stop good government?

Ultimately, that is going to be the question should the Labor Party choose not to support this legislation in the other house. I can only assume they are not going to support it in this house. When we get through the committee stage, we will know if there is going to be a division on this bill and then see the way the Labor Party vote later on. It will be interesting to see what they do as we pass this bill through the house and if there is a call for a vote, which will be intriguing. Nevertheless, when it gets to the upper house, is the Labor Party going to support the will of the people?

For two elections now, the Liberal Party has taken this policy to the election and said that a Marshall Liberal government will introduce this legislation. Everyone has known about it. I have to say that it is probably one of the most well-supported policies in my community and across the board. The question really will be: does the Labor Party believe in democracy and does it support the values of the principles of the mandate of the government? It is a pretty interesting question.

In relation to the specifics of the bill, there are three key elements. One is determining the cap that applies to council revenue recoverable from general rates and providing for its calculation on an annual basis for all councils, classes of councils or, indeed, particular councils. Of importance is that there is plenty of discretion. The second point is that the bill will set out provisions that enable councils to apply for a variation of the rate cap by demonstrating engagement with their community on a variation and that a variation is necessary within the context of the council's operations for long-term financial planning. This allows for a council to come and say, 'We are looking at this particular project.' For example, it might be the Port Adelaide Enfield council looking to build a new community swimming pool in Enfield near the member for Enfield's electorate office, and we know that swimming pools are quite expensive pieces of public infrastructure that cost many millions of dollars.

If the City of Port Adelaide Enfield was to go to the commission and say, 'This is a pressing need for the community,' and over the term of the project it will require an extra 0.25 per cent on rates over the next five, 10 or 15 years to fund that community project that may be desired by the people of Manningham and Enfield, then there is plenty of scope for that to happen within this legislation. I do not think we are going to be in a situation where we see people missing out on important government services.

Another aspect of this bill is setting out provisions that allow for monitoring and reporting on the rate oversight system. This will ensure compliance and understanding of the effect of rate oversight on councils. The rate oversight system would be managed by an independent regulator, not by the government or the minister. ESCOSA, the respected independent regulator, will be responsible for making rate-cap determinations, receiving and assessing applications from councils for variations on the rate cap, and reporting on compliance and the outcomes of the system to the minister on a regular basis.

I suppose the question is: why are we doing this? In my view, rate capping would be a positive step towards reducing some of the financial pressures confronting the people who have elected us to serve them. It is certainly my view, and that of this government, that we need to govern in the best interests of the state and ratepayers. I believe there is no doubt that rate capping is a very good way to help South Australians with cost-of-living pressures.

It is my view that rate capping would make councils more efficient. I think it will streamline much of the budget processing that happens in councils at the moment, and it will create consistency across the board. As I said, we have a commitment to reducing the cost of living in a range of areas. This is one of them. Reinstating the remissions on the ESL on 1 July is another way of reducing cost-of-living pressures, and I know that the Minister for Energy (member for Stuart) is doing an outstandingly diligently important job in ensuring that power prices are coming down in South Australia and heading down that path. We have seen unacceptable energy prices in this state, particularly over the past four years.

There is no doubt that we are overgoverned in this state. We are completely overgoverned in South Australia. There are, in my view, constitutionally two very important arms of government: the federal government and the state government. Local councils play a most important role at the civic engagement level, but I believe that, at times, they overstep the mark of their responsibilities. By bringing in a rate-curbing mechanism, I think we have an opportunity to have a new debate about the role of local government and the services they provide to the people of South Australia.

There is wideranging evidence to support rate capping measures to help deal with the increasing cost-of-living pressures, and that is what we are here to do. It is pretty important. Over the past 10 years, local government rate revenue has increased by 67 per cent, compared to a 31 per cent increase in the local government price index over that same time, which is really interesting. People always ask, 'What do I get for my money?' from all governments, but particularly local government services. A common complaint people make to me is that they feel councils have moved away from their traditional role of footpaths, rubbish collection and maintaining parks. At times, I wish that was what local councils actually focused on, as that would be more important.

Instead, many local councils get on board agendas. Some of them get on board quite a lot of what I would call left-wing agendas and ones that are not reflective of the broader community. I think you have plenty of councillors who get onto local government to make a bit of a play for one issue or another, and to me that is not the role of local government. Local government should be about grassroots services for people. In my electorate, in a metropolitan context, the role of local government is very much about footpaths, ensuring that we have good reserves and good bushfire management.

The role of local government is not having debates about whether we should have a Jamie Oliver garden patch or what flag we should be flying on what day. These are not debates that local government should be having. Of course, the most recent one was local government, at the LGA conference, having a whole debate on whether or not we should celebrate Australia Day. You wonder why people get sick of all politicians, including local councillors, getting off topic. It is not the role of local government to decide whether or not we celebrate Australia Day. It is completely outside their remit. Anything we can do to focus councils on what is their core business is what we should be doing.

That is why I believe that the opposition will ultimately support this legislation. I know there are sensible people on that side of the house who also do not believe that local government should interfere in social policy in South Australia, and of course Australia, and instead should just focus on what they do best. I think that common sense will prevail and that ultimately the Labor Party will support this legislation in the other place. I hope they do because they know what is good for the people of South Australia—at least, I hope they know what is good for the people of South Australia.

It has been widely reported that councils have been caught wasting ratepayer money on golf memberships, luxury cars, Apple Watches and, in some cases, unnecessary international travel. We have some mayors in some councils who think it is appropriate to spend money outside what the community feels is appropriate. I reiterate the point that I hope that, by bringing in a rate capping regime, this will start a conversation about what is appropriate.

Obviously there has been some opposition to rate capping and, in particular, most recently from the LGA in the lead-up to the state election, where they took a pretty dogmatic approach to where we were looking to go. I think sanity has prevailed. I commend some mayors who have been supportive of rate capping legislation. They know that well-managed councils with good CEOs are important. The vast majority of CEOs are very diligent, and I look at my own council, where the CEO is very diligent and has good business acumen. The Mayor of the City of Mitcham has been on the record supporting rate capping because there is nothing to fear in the City of Mitcham. It is a well-run council, so there are no dramas. It is only going to be those councils, those elected members and some of those overzealous CEOs and staff who think council is some little pet project for them, who will have something to fear with this proposed legislation.

We have to look at what is happening around the country as well. New South Wales has had a rate capping regime for many years, and their councils are still there and pretty active. In more recent times Victoria has looked at bringing in rate capping as well. We took this key piece of legislation to the last election and said that we would introduce it within the first 100 days. Of course, the minister introduced this legislation to the house within our first 100 days. It is about getting more value for money for the taxpayer.

The Hon. A. Piccolo interjecting:

Mr DULUK: Once again, the member for Light interjects. I just want the member for Light, as the shadow minister, to come up with a position for the Labor Party. He is going to have plenty of time in the committee stage that is coming up to indicate whether the Labor Party support this clause or that clause.

The Hon. V.A. Chapman: Have they reached an agreement?

Mr DULUK: I do not know if they have, Deputy Premier. One can only assume that maybe they will over the course of the afternoon. There is plenty of opportunity during the committee stage for the shadow minister to call a division if he does not agree with certain aspects of the legislation. It will be really intriguing if we go through the whole committee stage without a single division or a single amendment being moved in the chamber while we are debating this piece of legislation. All of a sudden, we are going to have a completely different regime in the upper house. I think that says spades about where the Labor Party are at the moment and where they are in opposition—and long may they stay there.

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