Local government reform

02 July 2015

Mr SPEIRS ( Bright ) ( 17:24:08 ): I rise to give this grieve following my budget reply speech and follow up on one item that I canvassed yesterday when delivering that speech. At the time I tried to focus on a range of things that the state government could look at that might not necessarily have an impact on the state budget's bottom line but would be legislative reformist measures which would enable South Australia's economy to be developed and to have the boost that it needs at this time.

One of the matters I mentioned was my desire and anticipation for the planning reform that the government, through the Deputy Premier, is going to bring in to this house later in the year. I mentioned yesterday what I thought was the significant need for our planning legislation in South Australia to be given the ability to fast-track projects of economic merit and, in a more general sense, for it to be much easier to get non-controversial development projects, both large and small, through our planning system. In particular, I feel that rezoning is so convoluted and so unnecessarily bureaucratic within local government at the moment that I believe it is something the state government really needs to have as a major focus of its updated planning legislation.

Related to the local government space, I also want to talk in more detail about my desire to see local government reforms brought into the house. I am very pleased that the Minister for Local Government is here at the moment and yesterday was able to present the government's proposed updates to the Local Government Act through his second reading explanation of that bill. Yesterday in my speech I raised some concern that I felt that the broad outline that we received from the minister might be a bit more pedestrian than what I was hoping for and a bit more process focused rather than real reform to local government in South Australia. However, I am pleased that the government has got something on the table and I hope that the opposition can work alongside the state government as we look at the third tier of government and what we can do to make it more productive and to give it some economic imperatives.

I have often said that local government has the potential to be the most functional tier of government. It is the tier of government closest to the people, so it can do a lot for them and it can have a very immediate impact on local communities. However, far too often local government is the most dysfunctional tier of government and really is not what it could be here in this state. I think it is a stale sector and it is suffering from many years where reform, driven by the state government into the local government sector, has been lacking. I really hope this term of government is one where the state government takes up local government reform with some zeal. Although I am not part of this government and it is the Labor Party that has formed government here, I would still like them to take the lead on this now. I do not think we can wait for a potential change of government in 2018 before we take local government on, because it is crying out for reform.

I am very pleased that the state parliament's Economic and Finance Committee has taken the opportunity to investigate how any future move by state government to impose a rate cap on South Australia's councils might impact them. I think it is worth having a really open-minded discussion about rate capping. This is something that has been in place in New South Wales for many years and has been in place in Victoria on and off. It was in place during the Kennett years and, after a period of not being in place during the Labor and Liberal administrations of the 2000s, it is now in the process of being reintroduced by the Labor government, led by Daniel Andrews, in Victoria.

It will be quite interesting to look at the process through the Economic and Finance Committee that the Victorian government is going through as they reintroduce a rate cap on local government based around CPI. Not all of these local government rate capping procedures in other jurisdictions are based around CPI. In Victoria, they are going to link local government rate raises to CPI rises. In New South Wales, a body similar to our Essential Services Commission sets a local government rate rise which then has to be used by local governments there, and they can only not use it and have an extra increase by making a submission to an independent panel.

My interest in exploring rate capping comes from personal experience. I spent three years at the Marion council, two years as deputy mayor, and learnt a huge amount during that time. It was a time which I guess could be seen as an apprenticeship for my current role. I enjoyed my time on council, particularly the leadership of Felicity-ann Lewis and some of my other now retired council colleagues. However, what did frustrate me about being on council was the way in which that council and many councils spend other people's money without any respect for what they are doing with that money. That is my personal view.

The council budgeting process was just one of the most incredibly backward processes that I have ever seen at work. What councillors did was come up with a wish list of the things that they would like to do in a particular financial year—maybe a local park, an upgrade of some local environment initiative, or maybe new council decor. I remember some of the things on the list at Marion council were multicultural programs, arts programs, often things out of what you would traditionally think was the jurisdiction of local government.

They came up with this wish list and it would be on the whiteboard during one of our workshops and, once that wish list was put up, we would tally how much it would cost. Let's say it would be $1.1 million to do those additional items above the budget of $70 million or so that the City of Marion had in a given year. We would then turn to the finance people and ask, 'Well, what rate rise do we need to put in place across our city? What do we need to take from ratepayers in order to deliver that wish list?'

Inevitably, the figure would be brought up and the finance officers in council would say, 'You'll need to go with a 5.5 per cent rate rise in order to fulfil that wish list.' That is how rate rises would be delivered. They would be delivered by looking at your wish list, working that out and then raising the money accordingly, as opposed to asking, 'How much money do we have to work with?' and working out what we could deliver for the amount of money that was already in the bank. That backward process does council no favours because it results in a situation where rate rises occur year on year, in and out.

Just this morning, I was speaking to a Hallett Cove resident (who happened to be my mum) and she had kept a copy—being of Scottish heritage, she keeps copies of all her bills—of her 2005 council rates bill from the City of Marion: it was $1,500. Theirs is a fairly average house in Hallett Cove and probably worth about $500,000, and they were paying $1,500 in 2005. Their last rate bill was almost $2,500. That is a rise of almost two-thirds, about 60 per cent in a decade.

This has occurred during a decade of record economic instability, very low wages growth and contraction of many private sector industries in South Australia as a consequence of the global financial crisis. Many of the small businesses, the tradies, the sole proprietors, have seen their business growth plateau or decline in recent years; yet council rates continue to soar. The City of Marion's long-term financial plan was predicated on an annual rate rise year in year out of 5 per cent.

This year the City of Marion is trumpeting a rate rise of 2.8 per cent and they are trumpeting that as a record low, but it is still more than double the rate of inflation. It is still higher than CPI and it is still higher than the special LGPI-created local government CPI, so it is still eating into people's discretionary income. You just cannot do that forever. You cannot continue to eat into people's discretionary income. That is why I believe in local government rate capping and that is why I am pleased that the Economic and Finance Committee is taking a serious look at this policy.

Extracted from Hansard