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Legislative Council - Fifty-Fourth Parliament, First Session (54-1)
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Bills

Local Government (Ratepayer Protection and Related Measures) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 24 October 2018.)

The Hon. J.E. HANSON (16:28): I rise today to offer my commentary on this bill. No doubt while some in this place may come into contact with local government only when they might attend a function or perhaps with one of the many dozens of regulation bills we pass in this place with the council's name on it, avid listeners of my speeches in this place would know that I have a real and heartfelt connection to our smaller cousins in local government. In fact, I spoke about it in my first speech to parliament, and I take the opportunity to do so again now.

The Hon. Ms Scriven said, when introducing this bill to parliament, that the bill is appropriately named. I would agree with that, and I double down on it: the local government sector is very appropriately named as well. Local government is a sector that is all about the small and otherwise forgotten aspects of regulation and government. Anybody who has ever had any contact with it comes away admittedly sometimes frustrated, but nonetheless amazed at the level of detail it takes to the small tasks it can and does perform—always, of course, on that local level.

When I was elected to local government I would often stop and discuss with residents their concerns of the day. While having these conversations I often marvelled at the trust people seemed to have that their concerns were not just being listened to but that there was a real chance of them being acted upon.

Before we scoff at that it is worth considering the facts. Recent polling data has shown that politics and politicians, like ourselves, are now some of the least trusted industries by everyday people. Our federal colleagues seem unable to grasp the concept that the nation needs just one leader, at least for longer than 12 months. I invite any member elected to this place to say honestly to a resident that the concern that they raised with them today will receive the attention of a state bureaucrat tomorrow.

My point is this: people trust local government, and that is why this bill is so sorely needed. In recent times, it is a well-known fact that trust is being eroded in local government by the few at the expense of the many. We do not need to limit the capacity of councils to deliver vital services to local communities, but it is simply not good enough that Apple watches, Adelaide Oval roof climbs, golf memberships or trips overseas form part of the narrative of eroding trust in local government. We need to show leadership. We do not need more bureaucracy. We need to do something, and we need to do it now.

I previously stated that I have read many of the comments on this issue by those in the government in the other place. It appears from those comments made by the new government that it has concerns about council spending on matters it considers to be non-core business. For some reason, the conclusion drawn by many of those is to grasp the problem at the revenue end. There appears to be some implication that by doing so the excesses will stop.

To use a metaphor: by capping the amount that the kids receive in pocket money they will stop buying sweets with the money that you give them. I cannot say that I follow this logic. I cannot say that I believe that the new government is entirely sincere in the logic itself. In its budget this year, I saw absolutely no caps on any of its spending, despite a belief that it engaged in the trite commentary of the budget black hole that we always hear. In truth, the state budget analysis shows that over 2,000 fees and charges went up by 2.3 per cent or more. So much for a cap on revenue.

One could say that the government's logic is perhaps to do as I say and not as I do, but this of course undersells the problem significantly. From those in the other place, I have heard expressed concern about regional investment that may not occur if council rates were capped and about the status of regional roads should rate capping be introduced. It is right that these concerns should be expressed; they are well-founded.

In fact, a regional council contacted me with a concern about comments made by the minister in July this year when he asked why no-one had been able to show to him why councils had required such large rate revenue increases. This council outlined that, while their increases had not been as high as the minister seemed to be implying, their council had identified through the legislative required creation of asset management plans that their community infrastructure was decaying. The issue was identified as being long-term underfunding or, in other words, that their rates had been too low.

I know that many on the government side would scoff at this one too, but in doing so they scoff at themselves as hypocrites. While they did nothing to cap any of their budgets in their overall revenues, they furthermore ignored that there is ABS data that shows as fact that local governments in our state have been the most efficient at spending in the nation per capita. That is right, local government national reports and ABS population statistics reveal that overall revenue per capita from local government in South Australia is the lowest in the country. To make this plain, our councils are the most efficient in the nation with the dollars they collect.

Further than this subjective evidence, there is also what we have seen in New South Wales where rate pegging has been introduced. It was introduced there and it did not result in cuts but simply increased debt and more charges from councils. Empirical evidence from the New South Wales rate pegging system shows that reducing rate revenue does nothing to slow council expenditure. Instead, data comparison conducted by Professor Dollery of the University of New England revealed that council expenditure remained high and council debt simply increased. User charges for basic council services became commonplace.

In South Australia, without rate capping, user charges are quite limited and, with some exceptions, usually constitute more of a price signal effect rather than a charge. But before we all rush to the silver-lined cloud of 'user pays', we have to acknowledge that user charges cost money to collect. For every dollar sought in every charge you pay, there is a fee to collect it of almost a third of that dollar. Extrapolating that over many services would drive up collection point pricing to inefficient and of course unsustainable levels, particularly in those regional councils.

Coming back to the point of our bill and my discussions around keeping trust in local government, all the capping in the world does nothing to stop waste and rorts. I have made mention previously in this place that, in 2013, there was an expert panel on local government reform. I encouraged this new government to seek out the advice provided by this panel in seeking to provide a remedy to its grievances with local government mismanagement. Judging by their attitude to rate capping not having changed, I take it that they are not listening to that advice, or perhaps I am simply regarded as white noise.

The report recommends a whole range of other things that should be done to improve the democracy, accountability and financial management of local councils, tools that are very instructive in governments. These include better financial oversight, reforms to council elections, performance monitoring of councils, meaningful community engagement and work between councils to get better efficiencies and services such as rubbish collection.

It is clear to me that the problem the new government and many I have spoken to have with local government is one of governance. Poor governance is eroding the trust they feel in their local representatives. Certainly, from the speeches I have read by its own regional members in the other place, a blanket approach to any legislation would not be supported if it resulted in degrading services and infrastructure in those communities, particularly in regard to regional road networks—rightfully so, because what is financially good in terms of infrastructure and services for Port Lincoln, Whyalla, Adelaide or Kangaroo Island will be as varied as the geography that makes up those locations.

In terms of good governance, however, there should be no difference between any of them, and it is to this end—better governance—that the bill before us is directed. While I do not see the need to step through all aspects of this bill, I want to make a few highlights in terms of addressing how it will create better governance. By putting in place boundaries for leadership, a tone is set for ethical and responsible decision-making throughout an organisation.

Key measures in this bill will address this by banning extravagant perks for CEOs. Rightfully, the public has been outraged for some time about a notably consistent theme occurring in the media about the extravagant perks of CEOs. While I feel I have to rush to note that local government is not alone in its leadership coming under scrutiny for extravagant perks, it is still no excuse. While I can do very little in this place to restrain the blatant extravagances of those in the private sphere, we can step in to stop it in local government, and we should.

While it is not widespread in council CEO packages, the fact is that Apple Watches and golf memberships, while they are not golden handshakes or ridiculous bonuses, forming part of remuneration packages does not just fail to meet the pub test: it is not fostering good direction and leadership for the councils that CEOs lead. We should limit remuneration to understandable allowances like vehicles or other work equipment, salaries and superannuation. This bill seeks to do that. It has been noted by the Hon. Ms Scriven in her second reading explanation that this bill will also address credit card use, gifts received and all non-land-based travel for members and staff.

While a significant governance issue, we all have to recognise that credit cards, travel and even gifts are a necessary part of the modern life of organisations. This bill seeks not to remove them but to increase disclosure of their use or their reception by members of council. Similarly, we cannot ignore that, in each of these areas, ethical and responsible decision-making is required for their use. A cost-effective balance is required, a balance that meets public expectations for their use while at the same time acknowledging that not every council will have the same level of use of these items. This bill attempts to achieve that balance with disclosure.

Over and above these ethical and responsible decision-making matters, we need to put in place an appropriate system of risk oversight and internal controls. Councils can help increase the likelihood that their organisation will deliver on its purpose by having them. Key measures in this bill will enforce the kinds of transparency and independent scrutiny on budgets and rates that will assist in this regard. Notably, there are a few things. Any new project of council valued at over $1 million or more, and any new service valued at half a million or more (calculated to the life of that service) would require an impact statement. Similarly, CEOs would have to report on council overruns to the value of 110 per cent of the amount budgeted. Councils will also have annual reviews of council performance.

In all these fiscal matters, it is important to note that there is no binary logic being used by us in their implementation. By this I mean that these measures do not imply that all councils are not meeting these standards now. We do not need to see this kind of logic that leads councils to panic, to increase debt, to increase charges, to cut services as we have seen in what has occurred in New South Wales or Victoria. There should not be a view that somehow these performance indicators, reporting of overruns, nor provision of impact statements are directed at a race to the bottom in terms of service. The fact is that ratepayers deserve to receive high-quality services and value for money. This bill, through the measures I have outlined, aims to deliver both.

Lastly, I wish to highlight one aspect of the bill which I wholeheartedly support, and I am actually really glad to see coming into effect. That is, restraints upon vexatious or frivolous complaints between members for alleged code of conduct breaches. Through my work in the local government sector and, further, through my involvement in being directly elected into local government as a member, I saw the critical failures caused by the worst abuses of making allegations that were petty and probably baseless. Regardless of the circumstances surrounding why allegations were made, too many times I saw the complete waste of time, money and, frankly, emotion that petty allegations, such as not returning a phone call soon enough, can make.

The fact is that these practices reveal some of the worst that haunt not just local government but which have caused the kind of loss in trust that we have seen in government generally in this nation. The bill, as I have said previously, seeks to stop the erosion of trust in local government. While this trust is not built by having a cop on the beat in every single formal or informal meeting of government—and, similarly, we live in an age where you cannot and should not just say what you want anymore—we still need a check and balance on complaints, and this measure really goes to the heart of that by placing a prohibition on frivolous and vexatious complaints to hopefully prevent them from occurring.

The fact is that this bill is effective governance. As a metaphor, the local government industry is a very large and finely tuned machine. Each council forms its own unique part of the machine in a manner that varies in its importance at any given particular time. If removed from the machine, aspects or policies of the councils—like the nuts and bolts that make up any metaphorical device—can look like pieces that do not or will not fit.

In this regard, and in summing-up, I wish to thank and congratulate a few people on this bill because it is not easy to tinker with a machine nor, as this bill seeks to do, tinker with the governance manual that guides its use. The member for Light and the Hon. Ms Scriven are to be thanked for their incredibly hard work on this bill. Similarly, while not wanting to leave anyone out, those members of the crossbench, including the Hon. Connie Bonaros, the Hon. Mr Pangallo, as well as the Hon. Mr Parnell—and you can say 'shucks' now if you like, Mr Parnell—have all assisted in the creation of this bill, and I sincerely thank them.

The hardworking employees and members of the Australian Workers' Union and the Australian Services Union need to also be thanked for their input and patience for an industry that I know is well dear to their hearts, as it is my own. Anyone who has ever been involved in local government will understand all too well when I say that the workings of the machine of local government are not always clear when it comes to opening your rates envelope. I have said before in this place that the fact that people do not like paying a bill is a bit of an easy political point to make. Alleging, therefore, that any cap will solve all the problems that may exist in the local government community, such as golf memberships, trips overseas or mismanagement of council budgets is another thing entirely. We do need to resolve those problems.

I know those opposite want to solve those problems. They can look to doing so by stopping the easy political point scoring and by supporting the government's measures in this bill. I know I will, and I hope to see that occur today.

The Hon. I. PNEVMATIKOS (16:44): I stand today to speak on the Local Government (Ratepayer Protection and Related Measures) Amendment Bill. I do so because earlier this year I rose in this place and spoke about the need for effective measures to protect ratepayers and tackle local government rorts and waste. South Australians have had enough of the repeated abuses of ratepayers' money and decisions to undertake spending influenced by personal rather than public interests.

Unfortunately, numerous cases have occurred across the state, from maladministration over council-funded trade missions to the purchase of council-funded gifts with the pretence of aiding efficiency, that absolutely cannot be allowed to continue. There are very serious concerns in our community that require real solutions. South Australians deserve to have their rates used in a manner that will most efficiently improve the delivery of services and programs in the local area that are cost effective. The principles and clauses that reinforce this bill will allow it to protect ratepayers and ensure that they are pivotal in the decisions undertaken by council.

Among the key measures, the bill will enforce unprecedented transparency and independent scrutiny of council budgets and rates; ban unnecessary and extravagant perks for CEOs; compel council members and staff to publicly reveal expenses and credit card use for both members and staff; crack down on non-land-based interstate and overseas travel; and empower the local government commission to deal with council complaints and disputes.

Importantly, this bill does not limit the capacity of councils to deliver the services local communities rely upon and wish to develop. It merely acts as a deterrent for the misuse or abuse of ratepayers' money. I refer to the example provided by my colleague the Hon. Clare Scriven, that rate impact statements will now be required for any new service valued at $500,000 or more.

These statements will disclose the amount of revenue required to be raised from rates and the impact it will have on the different classes of ratepayers. This will allow ratepayers to assess whether the expenditure is justified. Furthermore, if councils are required to publicly disclose the rate impact above the cost thresholds, they are far more likely to be what communities want and are willing to pay for.

This bill will allow and require annual reviews of council performance to measure quantitative performance indicators to allow for cross-council comparisons. This is not to place pressure on councils but to provide ratepayers with a service quality measure to ensure value for money services and avoid the backlogs we have seen occur in New South Wales and Victoria.

The last measure I would like to mention is the provision to prevent members from making frivolous or vexatious complaints against other members' alleged code of conduct breaches, which waste both ratepayers' time and money. For example, a member would no longer be able to lodge a complaint against another councillor for not returning a phone call for a few days.

Yes, it is hard to believe that this occurs, but it has. In fact, a member of the other place did exactly that before her time as the member for King. That investigation cost the council $900. This was in addition to another complaint lodged by the same then councillor, which after investigation was deemed to be too weak. This 'weak' complaint cost local ratepayers $2,500.

These are but a few of the provisions to address transparency, accountability and efficiency from local government. I have listened to the call from local communities and I have engaged with local governments, associated organisations, unions and employees to obtain a clear perspective on how we can go forward in addressing the matter. What I have learnt is that the view of placing a cap on council rates, as proposed by the government, will not work. It would merely shift the oversight of the rating system from ratepayers to an unelected administration, ESCOSA, the same regulators for our water rates and, previously, for our electricity.

It has been the experience of neighbouring states that through the placement of a cap, communities could very well experience a reduction in services, reduced investment in infrastructure and backlogs in crucial maintenance. This belief has been reaffirmed by Ms Linda Scott, President of Local Government NSW, and councillor David Clark, Deputy President Rural of the Municipal Association of Victoria, based on the New South Wales and Victorian experience of rate capping.

At the heart of the issue, ratepayers want to see less waste, secrecy and rorting and an end to extravagant perks and unnecessary travel interstate and overseas. They want to be a part of a vibrant, responsive and effective local council that services the interests and needs of the local community. Many in this place share the same views which underpin this bill. We all want to ensure that local government is transparent and accountable. If we are to succeed in stopping the waste and rorts that have occurred in some councils in South Australia, the Local Government (Ratepayer Protection and Related Measures) Amendment Bill must be supported in this parliament.

I congratulate my colleagues, both in this place and in the other place, for their tireless efforts to ensure that this bill addresses the real issues of concern. I also thank members of the crossbench for their meticulous contribution to forming this bill and its provisions. Lastly, I ask the government to remain true to their commitment for legislative reforms to strengthen local government transparency and accountability and support this bill.

The Hon. M.C. PARNELL (16:51): The Greens will also be supporting the Local Government (Ratepayer Protection and Related Measures) Amendment Bill. I want to start by acknowledging the efforts of the member for Light in another place, Mr Tony Piccolo, and to put a challenge out to the government—that they could take a leaf from Mr Piccolo's book in relation to how legislation can be drafted and amended and moulded in a multipartisan fashion. The example of this bill shows that it can be done.

I must have been to four, possibly five, meetings with members of the opposition and members of the crossbench where we sat down and went through draft after draft of this legislation to try to get it in the best possible shape. We sat down with representatives of the Local Government Association, a key stakeholder in this area, to see whether they had concerns about it, which bits they were happy with, which bits they thought needed more work, and at the end of the day a piece of legislation has been produced that will have the numbers to pass today—and I am very glad of that—but it is one that is the product of a collaborative effort.

I will also make the point that, whilst this bill does not deal with the issue of rate capping, it is certainly a response to many of the issues the government said they were trying to address with their rate capping response. What I would say is that, if the answer is rate capping then you are asking the wrong questions. When you look at what the government was pointing to as examples of things that had gone wrong in local government, rate capping was not the answer to any of them. It was the wrong solution to the problems that they have identified.

Other members have spoken today already, and we have talked about the behaviour of elected members and council staff, the idea of frivolous and vexatious complaints that cost us ratepayers a fortune in legal fees to resolve; there are issues of transparency, issues of accountability, issues of waste. These are issues that are dealt with in this bill, and they were not dealt with by rate capping. In fact, rate capping only had one guaranteed outcome and that was a reduction in the services and the quality of services that residents would enjoy. It was guaranteed to result in less maintenance. They could have called it the pothole bill or the collapsing footpath bill, because ultimately when you restrict the ability of a level of government to raise the resources that it needs to do the job that people expect of it, you are asking for trouble.

Interestingly, we have just had the local council elections. As we find with every local government election, there are some people who put their hand up whose only claim is, 'Vote for me for lower rates'. I can tell you I had a look at the results across a lot of council areas and I do not think those people did that well—if the best they could offer was lower rates.

Where I live, the mayor was elected on the basis of a whole lot of new initiatives and a whole lot of programs that had been neglected in the past. That is what attracted people's interest and that is what people voted for. Ultimately, the Greens' position on rate capping—whether it is rate capping, tax capping or whatever, at any level of government—is that it is an integral part of the democratic process. People vote for representatives that they entrust with the task of looking after their money, their taxes or whatever it is, and providing the services they want. At the end of the day, that is the discipline that applies at the federal level and the state level, and the Greens' position was that it ought to apply at the local government level as well.

If as a community we think we are being taxed too much, we don't vote for those people, we vote for someone else—that is how it works. Sure, you will have some people—in fact, one senator in New South Wales got elected on almost an anti-government platform, not believing in government at all, but those people are very much in the minority. As a rule, Australians get the balance about right. If your only claim is to say, 'Vote for us and you'll pay less tax, pay less rates,' those people historically do not do that well. Australians prefer people who have vision and people who are looking to make society better, not just make society cheaper.

I will not go through the bill clause by clause because we may or may not do that in committee—that will be up to the government, I think—but I will make what is perhaps an obvious point. I used to say this to my law students many years ago: you cannot legislate for good government, but what you can do in legislation is put in place the frameworks and the principles that make it hard for them to make bad decisions. There were a lot of double negatives in there, but you can make it easier to make good decisions by putting in good frameworks, frameworks that go to financial accountability, which make it clear that the public will know where the money was spent. Provisions like that make it much harder for people to make bad decisions—transparency and accountability, and similarly with waste.

The irony of the rate-capping issue is that simply saying to local councils, 'We're going to force you to raise less money,' did not actually do anything to deal with waste. You can waste a small amount of money or you can waste a big amount of money. I liked the Hon. Justin Hanson's lolly analogy: you give someone less pocket money and they will buy fewer lollies, but if they were wasting their money before they are still going to keep wasting it.

I will make the point that, whilst this legislation, as I have said, was a collaborative and cooperative effort of the opposition and members of the crossbench, the Local Government Association has said probably two things that stand out. The first is that many of these reforms are things that they were going to do anyway or that they would have put to the government as needing doing anyway. They were things that had been on their agenda for a while.

I went to a meeting at the LGA looking at how to deal with behavioural issues with local councillors long before this bill was ever drafted. In fact, I think it was even before the last election. Local government has been alert to some of these issues and they have been keen to deal with them. This bill does deal with many of them. However, there are other issues where I think it is fair to say the Local Government Association is not convinced.

I think that is the challenge for this parliament and the challenge for this government, because when this bill passes shortly, as it will, because it clearly has the numbers in this place, the government has a couple of options open to it. One is, in the lower house, it can just bury it. The government has the numbers down there and it can make sure it never sees the light of day and never gets debated. Or they can put the bill on the desk, pick it apart, make some further amendments or other suggestions and bring it back to us, because ultimately these are reforms that are all worth implementing in some form or another.

I am open to further reform. I am open to further amendments to these, but really the ball is now back in the government's court. The government must resist the temptation to take its bat and ball and go home. The government must resist the temptation to say, 'It's our way or the highway; it's rate capping or nothing.' Here is an alternative that deals with all the major problems at least that were identified over the last 12 months or so.

I look forward to the bill passing today, I look forward to the government giving adequate time to debate the bill in the other place, and I expect or hope that we will see it again, perhaps with some further amendments to consider. But, at the end of the day, I think this approach is a far better approach than rate capping, which, as I have said, would have done little more than reduce services and reduce the quality of life for people living in our local government areas.

The Hon. C. BONAROS (16:59): I, too, rise to speak in support of the Local Government (Ratepayer Protection and Related Measures) Amendment Bill and echo many of the sentiments that have been expressed today and previously by other honourable members in this place. Can I begin by saying at the outset that SA-Best is delighted—absolutely delighted—that a centrepiece of its proposed local government reforms, the establishment of a local government conduct commissioner, is an integral part of the proposed new bill.

The bill is a common-sense compromise to the state government's proposed rate capping bill. I commend the Labor Party for advancing the bill with input from SA-Best and the Greens, as has been highlighted by the Hon. Mark Parnell. The government's proposed rate capping bill, we know, was never going to pass the pub test. Our party went to the state election with a very clear and concise opposition to it, and our decision was made even clearer when the government itself confessed it had not bothered to do any economic modelling on its proposed reforms.

The government's rate capping bill was nothing more than a populist move and a desperate grab for votes at the last election. There was absolutely no basis for the implementation of rate capping in South Australia. It has led to the loss of services in the Eastern States and will no doubt do the same here, services that ratepayers rely on. In actual fact, I believe many South Australians were sold a furphy on rate capping. As part of our research on this matter, we consulted extensively with a plethora of stakeholders and members of the community. One gentleman even went so far as to tell me not to oppose the Liberal's proposed rate capping legislation as, and I quote, 'I'm on a set income and can't afford my rates to go up.'

I think he was voicing the misconstrued views of many South Australians who believe that rate capping meant that rates would be capped, as in they would never increase again or, if so, rarely. That was never going to be the case, but the government never sought to correct that message. I have spoken to plenty of other constituents whose own view changed when they learned that the government's proposed changes will not result in rate reductions. Of course, that is what we have been led to believe.

As the level of local government closest to the people, local government is an integral and trusted part of our democracy and community. Think of our public libraries, swimming pools, community parks, support services, health and welfare services within people's homes, housing services, education services, and the list goes on. Unfortunately, local government is becoming increasingly squeezed by a combination of the shifting of responsibilities onto councils from other levels of government and a declining level of funding and resources to deliver these services.

This was comprehensively documented in the 2003 Australian government's Inquiry into Local Government and Cost Shifting, the Hawker report. The report also found that duplication and inefficiency across all levels of government amounted to more than $20 billion per annum. Clearly, something needs to change. In 2013, the South Australian Local Excellence Expert Panel, headed by the Hon. Greg Crafter AO, made several recommendations to reform the local government sector, including a move towards regional local government; a closer working relationship with the state government, particularly with a focus on regional development; infrastructure provision and service delivery; a stronger role in strategic planning and environmental and natural resources management; and new strategies to build capacity with governance and administration.

In handing down its report, the expert panel formed the view that not to embrace change would be most unwise. We could not agree more. That said, as has been articulated by other members, some councils, their staff and elective members have done themselves absolutely no favours in bringing unwanted and unnecessary scrutiny upon themselves. The same can often be said for the Local Government Association that, rightly or wrongly, is at times subject to the same sort of criticisms as councils.

Of course, like other members, I could have listed a series of examples here of those sorts of instances but many have already been well documented and do not need repeating again. The fact that local government collectively is in debt to the tune of $345 million, as reported in The Advertiser today, strikes at the heart of one of the objectives of this bill, namely that our rates are invested wisely in infrastructure and projects that benefit the community. At the state election, SA-Best made its position on local government reform crystal clear. We remain committed to local government reforms focused on finding better, more efficient ways of delivering services that communities need, want and expect but without compromising local decision-making and democracy.

SA-Best believes this new bill will make the current legislation even better and provide more efficiencies and increased services. The appointment of a commissioner to oversee the day to day governance of councils with investigative powers has been a longstanding commitment of SA-Best's local council reforms, and we are delighted that both the Labor opposition and the Greens see the practicality of its establishment and have supported us with this most important proposed appointment and inclusion in the bill. Any local government reforms should be based on three essential pillars, namely, accountability, transparency and efficiencies. The sort of measures contained in this bill will do exactly that and, importantly, result in council rate increases being better managed while crucial services are also maintained.

Other SA-Best components of the bill include a crackdown on credit card and travel expenses by members, performance standards and benchmarks for councils, and a root and branch review of the Local Government Act and Local Government (Elections) Act including mandatory rebates.

SA-Best was always concerned about the effect that rate capping would have on council services into the future. Interstate experiences have certainly indicated that rate capping has not worked, and the very fact the government has admitted it had not done any economic modelling on its proposed funding model should have given everyone the shivers. It is a bit like being told by your doctor to take a dose of medicine but you have no idea of the side effects of that medicine.

As I said earlier, local government is the closest level of government to the people. As such, councils need to be empowered and resourced to respond to the needs of their local communities, and they need to be accountable. There are, of course, a number of other measures which could be considered in the context of broader local government reform, and this is something that we are committed to seeing and others in this place—the Hon. Mark Parnell and the member for Light, Mr Tony Piccolo—are also committed to seeing by way of further review. That is why we have all agreed that a thorough review, as I have already mentioned, of the Local Government Act and the Local Government (Elections) Act be undertaken.

From our perspective, it is particularly pertinent that we consider matters connected with the establishment of benchmarking systems; cross-council collaborations; better collaborations with regional councils; rebates and exemptions from rates; diversity of representation; the establishment of a register of state-owned land under the care; control and management of councils; the use of citizens initiated referenda, whether binding or nonbinding, as a means of contributing and improving council decision-making through community involvement; the issue of compulsory voting; and, of course, the vexed issue of council amalgamations. Of course, in order to get a complete picture, it is also necessary to consider reforms in the broader context of cross-collaborations and/or overlapping roles and responsibilities between state and local government.

We also remain committed to a thorough review of the services and functions of state agencies to identify where those resources may be better reallocated and delivered through local government. We will not cap council rates. We believe councils need to be empowered and resourced to respond to the needs of their local communities. The Hon. Mark Parnell is absolutely correct in saying that you cannot legislate for good government or good governance, but you can provide the framework for good government and good governance, and that is precisely what we have done in this instance. Like us, as democratically elected local members, councils will be judged by their own communities at every election.

In closing, I too would like to thank the opposition and, of course, the Greens—the Hon. Mark Parnell in particular—as well as the member for Light, Mr Tony Piccolo, for working together in a multipartisan manner on this most important issue. Again, I could not agree more with the Hon. Mark Parnell that the government could definitely take a leaf out of Mr Piccolo's book on how to work collaboratively with the crossbench to come up with a workable and, above all, very sensible solution. We support the bill.

The Hon. J.A. DARLEY (17:10): I rise today to speak on the Local Government (Ratepayer Protection and Related Measures) Amendment Bill. At the election the government undertook to introduce rate capping for council rates. This was done earlier this year; however, the opposition and other crossbenchers did not agree to this proposition. Instead, the opposition undertook to introduce its own measures to address the concerns that ratepayers have over ever-increasing rates.

Councils have been reported as spending hundreds of thousands of dollars on legal costs in relation to disputes between elected members, thousands on golf club memberships, and thousands on overseas trips that the Ombudsman found were influenced by personal rather than public interests. It is no wonder that there is a feeling within the community that councils are not spending rates in an appropriate manner. Like the state government, councils do not have their own money: they have only ratepayers' money. Spending ratepayers' money this way can contribute to an increase in rates.

As such, the opposition has introduced this bill to ensure the operations and expenditure of ratepayer funds is more transparent. The bill will rename the Local Government Grants Commission to the Local Government Commission, and will charge it with the responsibility of reporting annually on quality and cost standards for services, equity and timeliness of service delivery, complaint-handling processes and other local government-related matters that the commission considers relevant.

The bill outlines a number of new reporting requirements relating to travel, credit card expenditure, gifts and the chief executive's salary. There will be new consultation and advertising requirements for councils in relation to their business plans and budgets, and new provisions relating to conduct at meetings and dispute resolution.

Overall I am supportive of the bill; however, I have concerns some of the measures may be a little heavy-handed. What is being proposed is more than is required of any other government. This does not mean it should not be done, but perhaps consideration should be given to raise the standards required for our and other governments.

I note the Local Government Association has indicated it has not finished consulting on the bill; however, there is still time to consult and negotiate on the bill between the houses. I look forward to the committee stage of the bill.

The Hon. F. PANGALLO (17:12): I rise to speak in support of the Local Government (Ratepayer Protection and Related Measures) Amendment Bill. Chances are that the American political journalist Norman Cousins was not thinking about council rate capping when he so aptly described history as being 'a vast early warning system', but his observation can be easily applied to the current debate because there are ominous history lessons from interstate council experiences sounding loud alarm bells about the perils of rate caps as the local government minister, Stephan Knoll, quixotically prances ahead with his wobbly policy ostensibly to restore faith in local government.

I note that the minister claimed that support for rate capping was reflected in last weekend's council elections. It is hard to see the evidence to support that, when 70 per cent did not bother to turn out to vote, or what direction his father Franz will now take after being elected a counsellor on the City of Adelaide following Knoll Senior's rejection of deregulating shopping hours.

Yes, governance reforms and improved efficiencies are needed along with more amalgamations, perhaps, but I do not think we have had real cause to lose confidence in our third tier of government, as Mr Knoll would have us believe. Save for the venial sins at Onkaparinga council and occasional bewildering decisions by a few flamboyant, stupid and eccentric popinjay civic leaders elsewhere, local government, both in the city and regions, has served its communities exceptionally well. In the past two years, the average rate increases across all councils have been kept at a very modest 4 per cent, hardly warranting the government's sledgehammer approach. Some have even frozen their rates, others recorded slight increases, yet ratepayers across the state are under the illusion that if the government bill succeeds there will be no increases in their rates.

As a long-time ratepayer I should marvel rather than take for granted what my own council, the City of Mitcham, has gifted to the entire community. Among my favourite leisure spots is the delightful enclosed CC Hood dog park at Eliza Place, Panorama, where owners and their canines can interact with strangers, then collect the poo with doggy bags provided for free. It is ringed by a beautiful reserve, walking track and modern, fixed gym equipment—all free.

Just up the road, the old Lynton waste dump, under Windy Point, has been turned into the most scenic walking and cycling trails you will find anywhere in Adelaide. Yes, it is free too, for everyone to use. There is loads more of other free stuff, courtesy of rates, grants and loans, from libraries and community centres, hosting events to busing around senior citizens, immaculate gardens, parks and picnic grounds, sporting fields and playgrounds. I have not even started on the other essential services provided, like maintaining the roads, footpaths, infrastructure and rubbish collection. Much of this is repeated in the other 67 state council jurisdictions. What a lucky state and lucky country we live in.

Back to those history lessons which validate how these service benefits are now at risk, threatening to turn our municipal tranquillity and vibrancy into nightmares on Elm, Main and Struggle streets. One newspaper columnist claimed he had yet to hear a legitimate reason to not support rate capping. We know there is a large body of compelling evidence in many credible, independent reports carried out by experts, economists, researchers, as well as a 2015 SA parliamentary Economic and Finance Committee inquiry that found that rate capping was an unworkable and impractical financial drain. New South Wales is a prime example of this, having been burdened with a system of rate capping for 40 years.

A report published last year by the University of New England's Professor Brian Dollery, in which he compared New South Wales to non-capped South Australia, showed it to be a dismal failure and no amount of tinkering has been able to fix the irreversible mess. His findings are echoed by City of Sydney councillor, Linda Scott, who told an LGA forum earlier this year that it has not led to better outcomes for her state's 128 councils and there is a wealth of evidence that communities have been damaged. The net result from their reduced revenues is high levels of debt, large backlogs of infrastructure works—in fact, New South Wales needs to find almost $1 billion from somewhere to cover them—cuts to services and increases in other fees and charges to make up for the shortfalls.

To make do, many must go hand in cap to their regulator each year seeking variations to their imposed limit. Guess who must pay for those expensive applications, which can run into the tens of thousands of dollars? Victorians are three years into rate capping and the same dramatic picture as in New South Wales is already emerging. Regional Mayor, David Clark, bluntly told the same LGA forum, 'If the state starts pushing up levies and charges, you will be screwed.' Well, SA's solid waste and national resource management levies and water charges loom large on that front. The state government has cost-shifted services on to local government and that too contributes to their budget.

The West Torrens council, for instance, has inherited a government white elephant called Cummins House. This historic heritage listed homestead at Novar Gardens was put in their care by the government. Over 31 years, West Torrens ratepayers have paid between $2 million and $3 million for its operation and upkeep. It is losing money as a function centre, yet the government does not want to know, while the West Torrens council faces a renovation bill of $400,000.

The South Australian legislation is based on the failing Victorian model, with an unelected statutory authority, ESCOSA, assigned to manage and set the cap to a still unknown and convoluted formula. In doing this, the government will create yet another unwanted and expensive layer of bureaucracy and red tape, after admitting that it has not done any economic modelling. My opposition to rate capping is based on the solid 'form guide', which I do not think is in the best interests or expectations of our communities and ratepayers.

It will remove some of the autonomy of elected representatives, hurt councils' bottom lines and impact on the myriad services communities rely on, especially in regional areas, all for a net benefit to ratepayers equal to about a cup of coffee a week. The Property Council keep trotting out their push polling of just under 400 people, which showed most SA-Best supporters were in favour of rate capping—if only the pollsters explained the full picture to them. Ask: do you want tax cuts? Guess what the majority would say? But if you told them that it would come at a cost, you might get a different answer.

I do not like the idea that one day my garbage can be collected only fortnightly, there are potholes, kerbs and verges that cannot be repaired and maintained in a timely manner, seniors and students are made to pay to use municipal library facilities and rents need to be jacked up for local amateur sports clubs using council-maintained facilities. However, let me say that local government should not be entirely let off the hook. The co-sponsored bill before us takes local government reform to a new level that is not even covered in the government's proposal.

It seeks to address all the issues and problems that have concerned ratepayers. It tackles governance, expenditure, excesses, exorbitant salaries, credit card use and the behaviour of elected representatives as well as administration staff. It is about ensuring accountability with oversight by a local government watchdog. It is measures like this that will put the brakes on budgets and spending and have a ripple effect on rates. We would also like to see more reforms further down the track such as candidates having to declare their political affiliations on nomination and consideration for compulsory voting. With that, I commend the bill.

The Hon. D.W. RIDGWAY (Minister for Trade, Tourism and Investment) (17:22): I rise on behalf of the government to speak to the Local Government (Ratepayer Protection and Related Measures) Amendment Bill 2018. This bill seeks to amend numerous parts of the Local Government Act 1999, purporting to improve ratepayer protection and other related measures. The effect of the bill, however, would be to create an undue administrative burden and increase red tape for councils while focusing on specific issues that have received media attention in recent times.

This bill has the effect of significantly extending the role of the Local Government Grants Commission (the grants commission) by assigning to it three new substantial and disparate roles. The first of these proposals is to assign the grants commission the role of conducting an annual review of the performance of all councils. The second reading explanation introducing this bill provided a very limited direct explanation of what the proposed amendments covering an annual review of councils' performance are intended to achieve.

Some of the proposed performance indicators are unclear and highly subjective, creating measurement difficulties. Further, it appears that the bill intends to have an independent review of councils' performance while constraining the grants commission by requiring that it must, before publishing, altering or substituting the annual review, consult with the Local Government Association and consider any submission by the LGA within three to six weeks.

The second new role the bill proposes to assign to the grants commission is to become an investigator of designated behaviour and deal with such complaints against individual council members. The bill proposes to empower the grants commission with the same powers as the South Australian Ombudsman, and it would also give the grants commission the power to suspend and disqualify an elected council member if it considered the designated behaviour of the member involved a serious failure to observe a prescribed provision of the code of conduct for council members. The serious powers of suspension and disqualification of an elected member currently sit with the South Australian Civil and Administrative Tribunal.

The third significant new role the bill proposes to assign to the Local Government Grants Commission is the responsibility to comprehensively review the Local Government Act and the Local Government (Elections) Act and prepare a report within a 12-month period for the minister that must then be laid before both houses of parliament within six sitting days. The primary function of the grants commission is to make recommendations to the Minister for Transport, Infrastructure and Local Government on the distribution of untied commonwealth financial assistance grants to the local governing authorities in South Australia.

The grants commission publishes an annual report each year on its activities, as required by the Local Government Grants Commission Act 1992. The commission also publishes general and financial information on each council. Annual database reports dating back to the 1995-96 financial year are publicly available on the grants commission's website. On 1 January 2019, the grants commission will take on an additional role as the boundaries commission, the independent body that will assess and investigate boundary change proposals and make recommendations to the minister. It is essential that any other functions assigned to the grants commission do not compromise this vital role being performed by the grants commission.

The limitations proposed in clause 14 of the bill in relation to the remuneration of chief executive officers of councils have the potential to impact adversely on the future recruitment of high-quality CEOs to rural and remote areas. It is understood that the existing remuneration packages for the CEOs of these councils can sometimes include housing and rental subsidies, for example, and these costs could possibly be incorporated into the base salary component of the CEO's remuneration package. However, such a method would lessen the transparency for ratepayers and communities to know how much their CEOs have been remunerated.

Further, this proposed amendment does not actually address the situation where CEOs are reimbursed for golf club membership fees, for example. Reimbursements for business expenses are not addressed by this bill. The underlying logic of clause 20(3) in the bill relating to new projects and new services over a certain amount requiring a rate impact statement appears to assume that certain new services or projects will be funded only from rate revenue. In practice, councils take a holistic approach to such funding decisions and consider estimates of total available revenue from all sources, including rates, grants, user charges, fees and interest receipts, before committing to new services or projects. Further, in many small regional councils, rate revenue is a relatively small part of the total revenue.

Separately, clause 20(3) does not appear to recognise that many infrastructure projects are initially financed by the responsible use of debt, thereby helping to deliver cost-effective and intergenerationally equitable service levels from investment in infrastructure projects. Some of the proposed amendments in clause 20(2) relating to annual business plans and budgets represent a duplication of existing statutory requirements. The act already requires information on a council's revenue, expenditure and financial position for a 10-year period to be included in publicly available long-term financial plans.

Essentially, the amendment would result in figures that are already published in a council's long-term financial plan being duplicated in a council's annual business plan. The proposed amendment makes no provision for meaningful explanatory material to be included with the figures. This is in contrast to the existing legislative arrangements surrounding long-term financial plans, where councils are required to put financial information into context, explain a council's financial strategies and set out key conclusions that may be drawn by a reader.

A number of amendments proposed in the bill also have the potential to increase factional disputes within councils and potentially increase incidences of bullying and harassment, which the bill is purporting to address. For example, clause 8 would make it a breach of a council member's general duties if a prescribed authority determines that a complaint lodged by a council member is a frivolous and vexatious complaint. The bill proposes that a council and the chief executive officer of the council be a prescribed authority. This could lead to undue pressure and bullying and harassment behaviour within the elected member council body against the chief executive officer.

Further, the South Australian Ombudsman has previously expressed his concern about impediments to people lodging complaints. The SA Ombudsman and the Independent Commissioner Against Corruption have the ability to refuse to investigate complaints that they consider to be trivial, vexatious or frivolous. This ability is also currently provided to councils for Code of Conduct for Council Members complaints.

The bill would empower a majority faction of a council to trigger a general election by passing a resolution of no confidence in a principal member while having an exemption for a principal member who has been chosen by the majority, rather than the ratepayers through a democratic process. This has the potential to undermine the democratic process and result in substantial additional costs to councils through additional election processes.

The proposed amendments in the ratepayer protection bill relate to matters that the government has already committed to doing as part of its election commitments for increasing transparency and accountability in local government, including increasing reporting on travel and credit card expenditure. As was pointed out in the second reading explanation in support of the ratepayer protection bill, under the Office of Local Government section of the budget papers there is a target for 2018-19 of legislative reforms to strengthen local government transparency and reform.

The legislative reforms to strengthen local government transparency and accountability are important to this government. The minister in another place has previously stated that the government will be undertaking a review of the local government legislation and developing a reform program in 2019, in consultation with the Local Government Association and the local government sector.

Following the 2018 local government elections this past weekend, the government, in conjunction with the Electoral Commission of South Australia and the Local Government Association, will also undertake a review of the election process to determine ways to improve turnout and processes. The government will be looking to identify legislative improvements to reduce the administrative and resource requirements on councils without detriment to proper accountability or the public interest.

A more balanced and consistent approach to local government reform is needed. We are being asked to vote on this bill without a final opinion from the Local Government Association being taken into account. It is not good process for this chamber to pass this bill, a bill that proposes significant changes to the way that councils operate, without waiting for final feedback from the very organisations that will be affected by the changes. The government will not be opposing this bill in this place, in order to keep all options of reform open, but will seek to take a more holistic approach if the bill reaches the other place.

The Hon. C.M. SCRIVEN (17:31): I thank all honourable members for their contributions. I look forward to the Local Government (Ratepayer Protection and Related Measures) Amendment Bill going to a vote today, and I am glad to hear that the government will not be opposing it. Very briefly, to sum up, we all know why protection for ratepayers is needed from the numerous examples of waste and excess in some councils across the state. The Marshall Liberal government has sat with their hands over their ears and failed to do anything to address the governance issues, instead purely pushing rate capping, which will not address any of the governance issues. This ratepayer protection bill fills that vacuum.

It is worth revisiting some of the main aspects of this bill. It will protect ratepayers when councils consider how to operate. 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.

They are all measures that will improve accountability. Significantly, provisions in this bill will require all councils to reveal the impact on rates of major new projects and services. Councils will therefore be far more likely to make sure that ratepayers want such new projects and services and are prepared to pay for them. In addition, the bill also compels council CEOs to report on the reasons for significant budget overruns and requires councils to include a detailed four-year estimate of forward revenues and expenditures.

I will address a couple of issues that were raised by the Hon. Mr Ridgway. First of all, the Hon. Mr Ridgway talked about performance indicators and the method of review for those. Clause 5 states that the commission must consult with the LGA to establish and/or amend the annual review of SA council performance. There is a quantity of measures of performance used, and the LGA is heavily involved in that.

The honourable minister also talked about the grants commission, as it will be renamed to the local government commission. Whilst talking about the several functions that that commission will have, he gave no reasons at all for why those functions could not operate out of the one commission. The function of the boundaries commission is in no way in opposition to improved governance, and therefore I cannot see what the argument is in regard to that.

Just a few of the other things within the bill: the bill compels council CEOs to report on the reasons for significant budget overruns and also disclosure of all member and staff credit card use, all council-funded gifts received by members and staff and all land-based, interstate and overseas member and staff travel. The disclosure of all of these will result in staff thinking much more carefully about expenditure.

I also recognise and thank again the members of the crossbench in this council who also want to see reform and sensible changes made to the local government sector to protect ratepayers. They have worked collaboratively to shape this bill.

One of the other aspects mentioned by the Hon. Mr Ridgway was in terms of duplication of long-term plans already published. The whole purpose of this bill is to increase accountability, and accountability is increased by regular reporting in places that are accessible by ratepayers and accessible by other interested parties. Thus by ensuring that that is published on a regular basis will actually improve the level of accountability and transparency, which is something that the government has alleged that it is committed to.

Further, regarding the reference to potential no-confidence motions in a presiding officer or mayor potentially undermining the democratic notion, I think what the government has failed to appreciate is that this bill is intended to change behaviour. We do not want motions of no confidence moved against mayors at the drop of a hat. If there is a significant ramification for elected members in so doing, that will ensure that everyone is committed to working towards the best for the council and the best for the community, whereas at the moment, where a motion of no confidence can be moved without any significant ramifications for the elected members moving it, that does nothing to dissuade inappropriate behaviour and inappropriate motions.

I am very glad the Hon. Mr Ridgway has said that the government was going to do some of these things anyway. That would imply that they should be happy to support this bill. I again thank members for their contributions and look forward to support from all members who want to empower residents and strengthen council accountability, transparency and disclosure, and I therefore anticipate the speedy passage of this bill. I am happy to go into committee for consideration of clauses as required.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 13 passed.

Clause 14.

The Hon. C.M. SCRIVEN: I move:

Amendment No 1 [Scriven–1]—

Page 9, after line 25 [clause 14, inserted section 99A(1)]—After paragraph (c) insert:

(d) in the case of a chief executive officer of a council that is located wholly outside Metropolitan Adelaide (as defined by GRO Plan 639/93)—a place of residence, provided that the land on which the residence is located—

(i) was owned by the council on 24 October 2018; and

(ii) is owned by the council on the day of appointment or reappointment (as the case may be) of the chief executive officer.

This amendment inserts a subsection which allows a place of residence to be provided to a council chief executive officer in those circumstances in which the council is located outside of metropolitan Adelaide, and the land on which the residence sits was owned by the council on 24 October 2018 and when the contract was signed by the CEO. This goes some way to address the issues that have been raised by rural and regional councils, where they do often provide a residence for their chief executives officers, and often the provision of that residence is one way of attracting CEOs to areas that might be quite remote. At other times it is simply part of the incentive in terms of having CEOs move to the area.

This will allow for councils in that situation to continue to make use of existing assets. It does not hide a benefit that would otherwise be monetised in the CEO's salary, and therefore does not hinder the overall intent of the bill to increase councils' transparency and accountability to ratepayers.

Amendment carried; clause as amended passed.

Remaining clauses (15 to 26), schedule and title passed.

Bill reported with amendment.

Third Reading

The Hon. C.M. SCRIVEN (17:43): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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