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House of Assembly - Fifty-Fourth Parliament, First Session (54-1)
2018-11-28 Daily Xml
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Local Government (Ratepayer Protection and Related Measures) Amendment Bill

Second Reading

The Hon. A. PICCOLO (Light) (11:03): I move:

That this bill be now read a second time.

I rise to speak on the Local Government (Ratepayer Protection and Related Measures) Amendment Bill. Firstly, I would like to comment on how appropriately titled this bill is, because its provisions will protect ratepayers. Indeed, ratepayers will be placed at the very centre of how councils operate.

The bill strengthens the democratic control of councils by ratepayers and residents. Provisions are made for greater ratepayer oversight of council budgeting, greater disclosure of council expenses and performance, and greater and more effective consultation between councils and ratepayers. Through the empowerment of ratepayers, the bill directly tackles the waste and rorts that have afflicted some South Australian councils. I note that the Auditor-General is currently undertaking a discretionary audit of credit card use by local government. This is an area that the bill tackles head on. The bill also empowers ratepayers to restrain council revenues and expenditures that can adversely impact upon the cost of living.

We have all heard about the waste and rorts that have occurred in some councils. South Australians have been rightly outraged at these examples of waste and abuse of ratepayers' money. While the outrage of these abuses is widespread, there are different opinions on how to effectively reduce their recurrence. Those opposite have long put forward that placing a cap on council rate revenues would reduce council expenditures and, by implication, reduce council waste and rorts. However, not only have those opposite never put forward a specific council rate cap but they have also been peddling a fallacy because reducing a council's revenue does not automatically reduce a council's expenditure or priorities that are not supported by the ratepayers and residents they serve.

There is a missing causal link in this flawed logic, and empirical evidence from the New South Wales rate pegging system undermines their assumption. The New South Wales experience has been that reducing council revenues does not lead to reduced council expenditure. Instead, council expenditures remain high and council debt, and therefore ratepayer debt, is increased. Data comparisons conducted by Professor Brian Dollery of the University of New England reveal that, in the period 2013-16, New South Wales councils expended on average significantly more than South Australian councils and maintained significantly higher levels of debt.

Capping council rate revenues does not reduce the incidence of waste and rorts either. Like any problem, you do not solve council misconduct through some sort of proxy measure. You reduce council waste and rorts through increased ratepayer oversight of budgeting, greater disclosure of council expenses, restrictions on CEO remuneration packages and annual council performance reviews. If the waste and rorts of some South Australian councils are to be avoided in the future, the provisions of the ratepayer protection bill must be supported by this parliament.

I now turn to the major provisions of the bill. To restrain council waste, you must strengthen oversight of councils' annual business plans and budgets. Under the ratepayer protection bill, any new council project valued at $1 million or more and any new service valued at $500,000 or more, calculated for the life of the service, will require a rate impact statement. These statements will disclose the amount of revenue required to be raised from rates and the impact on different classes of ratepayers.

Rate impact statements are important because they create a link between council revenues and expenditures, which is not created under a rate capping system. The logic is simple: if councils are forced to publicly disclose the rate impact of any new project or service above the relevant cost thresholds, they are more likely to make sure that their ratepayers want them and are prepared to pay for them.

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

South Australians were rightfully shocked and appalled when it was revealed that ratepayers had paid for the CEO of the City of Onkaparinga council's membership joining fee for the prestigious Kooyonga Golf Club, valued in excess of $6,000. This type of rort cannot occur again, and will not occur again, if the bill is supported by this parliament.

Under the ratepayer protection bill, CEO remuneration packages are strictly limited to salaries and superannuation contributions, a vehicle or vehicle allowance, a reasonable provision of ICT equipment for work purposes, and the provision of a place of residence for those regional councils with an existing asset that is wholly outside the metropolitan Adelaide area. This is designed to ensure that there is no additional cost imposed on rural and regional councils where they actually provide housing that is in council ownership to attract suitable candidates for the position of CEO. That was some of the feedback that we received from country councils.

There will be no more golf memberships or other rorts. CEO remuneration will be transparent and published in a prominent place on the council website. Councils will also be forced to disclose all member and staff credit card use and all council-funded gifts received by members of staff. I need to clarify a comment I made on radio FIVEaa that this provision requires the monthly disclosure of gift giving, etc., but does not ban it. It again ensures that council ratepayers and residents know what their councils are doing.

Council will also be forced to disclose all non land-based interstate and overseas member and staff travel, which makes all interstate and overseas travel more accountable. Something I often hear residents and ratepayers ask is: what is the value to the council of travel undertaken by council members, particularly CEOs and senior staff? Certainly, that has been raised in my own council area. When expenses are required to be disclosed on prominent pages of a council website, it places a significant deterrent against misuse of ratepayers' money.

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

It should be emphasised, though, that the publication of performance indicators is not designed to apply pressure on councils to reduce costs in a race to the bottom on service quality. Service quality measures will also be included so that ratepayers receive high-quality, value-for-money services and avoid the service cuts and infrastructure backlogs that have been experienced in New South Wales and Victoria, where rate capping exists. Provision also exists for councils whose performance indicators raise significant concern to be referred to the South Australian Productivity Commission for investigation.

Numerous examples exist of how South Australian council members have pursued frivolous or vexatious allegations against other members' code of conduct violations. Investigations into these matters have wasted thousands of dollars of ratepayers' money—not only wasted ratepayers' money but also made some councils almost dysfunctional in their operations. The ratepayer protection bill prohibits councils from lodging such frivolous or vexatious complaints against other members' alleged code of conduct breaches.

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

There are also other measures in the ratepayer protection bill designed to improve council accountability and transparency: mayors and chairpersons will be given greater powers to maintain order in meetings; there will be electoral consequences for successful no-confidence motions moved against mayors, deterring, very importantly, council gridlock; higher thresholds will be applied for confidential meeting proceedings; and members' voting patterns will also be disclosed. Over the last few years, we have seen a number of examples where councils have come to a gridlock through inappropriate behaviour of some council members, and this bill will address that.

These reforms empower ratepayers to shape the operations of councils according to their wishes and interests. Council accountability, transparency and disclosure will be strengthened through the provisions of the bill. I would like to thank those crossbenchers in the other place who have worked diligently and collaboratively to shape many of the provisions of this bill. Ms Bonaros, Mr Pangallo and Mr Parnell have all left their imprints on it and, on behalf of the opposition, I thank them for their collaboration in its preparation.

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

In light of this, and given the comments made by members of the Marshall Liberal government, I would expect the Marshall Liberal government to support this bill that will empower ratepayers to constrain council rates and expenditure, tackle council waste and rorts and generally strengthen council accountability, transparency and disclosure. With those comments, I seek leave to insert the explanation of clauses without my reading it.

Leave granted.

Clause 4 (Amendment of section 4—Interpretation)

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

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

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

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

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

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

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

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

Clause 8 (Amendment of section 62—General duties)

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

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

Clause 9

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Clause 13 (Insertion of section 95A—Petitions)

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

Clause 14

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

Limits chief executive officer remuneration to: salary and superannuation contributions; a vehicle (or vehicle allowance); information and communications technology equipment required for work purposes; and a place of residence (limited to councils located wholly outside Metropolitan Adelaide, which owned the land on which the place of residence is located on 24 October 2018 and on the day of the chief executive officer's appointment or reappointment).

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

Requires the publication of chief executive officer employment contracts on a prominent part of a council's website.

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

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

Clause 16

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

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

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

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

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

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

Clause 17 (Amendment of section 109—General duty)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Clause 21 (Amendment of section 126—Audit committee)

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

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

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

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

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

Establishes the investigative powers of the Local Government Commission.

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

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

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

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

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

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

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

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

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

Schedule 1—Transitional provision

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

Debate adjourned on motion of Dr Harvey.

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