Private Members Motion: Rate Capping

Friday 11 August 2017
Private Members Motion: Rate Capping

From Hansard - House of Assembly

Thursday 10 August 2017

Private Members Motion from Member for Goyder Steven Griffiths MP

Rate Capping

Mr GRIFFITHS (Goyder) (11:32): I move:

That this house—

(a) notes the level of local government rate income increases over the past five years;

(b) notes the concerns expressed by the local government sector of transfer of responsibility from the state government to local government and the associated cost impact; and

(c) requests the member for Frome, as Minister for Local Government, confirm what legislative, regulatory or practical action he has pursued, investigated or implemented to keep local government rate increases to a minimum.

I have brought this motion before the parliament in a very serious manner. As the person who proposed the legislation of last year, in which local government rate capping was put before the house and defeated, and as someone who started working in local government on 2 January 1979, has held the local government shadow portfolio and has taken an interest in local government matters for 38½ years now by virtue of employment or being a member of this parliament, I have done it in a very serious way.

It is intended to be a discussion about the level of increases over the last five years. It is my intention to put on the record just some of the increases from councils for the 2014-15 year through to, in some cases, the set declaration for this 2017-18 year; I know it is still a draft. I thank the member for Unley and his office for providing me with those updated figures.

It is important also to reflect on an opportunity where councils, by virtue of their advocacy body, the Local Government Association, have expressed concern for some time about the responsibilities transferred to them that they are required to fund, which has come from the state government in the main. Some of that comes from the document that was in for the 2017-18 budget submission for the state budget that the Local Government Association put forward.

The third part of the motion is about the direct question of the action by the member for Frome, as the Minister for Local Government, on what he has done to make a significant difference to the cost of rate impost upon all property owners in South Australia. The areas the motion addresses are a bit varied; however, there are very important areas where I think some responses are needed.

The member for Frome came to me before this motion was able to be put; unfortunately, he is rather unwell with a physical issue today and he has had to get treatment for that. I accept that, but it is unfortunate that the minister cannot be in the chamber to contribute to the debate because I know that was his intention.

I want to read into the record a summary of some of the rate increases from 2014-15 through to this year, projected. They paint a very interesting picture, which comes as a bit of surprise, but it is a picture that pleases me. Some examples are:

  • Campbelltown City Council in 2014-15 had a 4.5 per cent increase, and this year the adopted figure is 2.6 per cent;
  • the City of Mitcham had a 4.24 per cent increase in 2014-15, and this year 2.9 per cent is the adopted figure;
  • the City of Playford had a 5 per cent increase in 2014-15, and this year the adopted figure is 2.8 per cent;
  • the City of Prospect had a 4.4 per cent increase in 2014-15, and this year it is 2.75 per cent;
  • the City of Unley had a 4.95 per cent increase in 2014-15, and this year it is 2.9 per cent; and
  • the Town of Walkerville had a 7 per cent increase in 2014-15, and this year it is 2.68 per cent.

I did not intend to focus just on metropolitan councils—I could read in many more—but they paint a picture that is nearly replicated in most councils and also across regional council areas, where in 2014-15 the rate increase was a higher figure than it is for the 2017-18 year. I honestly think the Liberal Party can be held partially responsible for that good result. In February 2014, the Liberal Party put a policy of rate capping to the people of South Australia. Indeed, we took it to the election. The Liberal Party was not elected, but it has continued to hold that policy since.

In my previous shadow portfolio role, I have spoken to individual councils, collections of regional councils and a local government forum at Wayville that about 150 people attended. I put to them that the policy is based purely upon cost of living pressures. It is what I believe is the appropriate thing to do. I believe it is important for the people of South Australia that it is pursued because all sectors of government expenditure (and in this case I count state government and local government) need to ensure that they get the best possible outcome from the money that is spent because the money comes from property owners and taxpayers—from all people. Those people will demand, by virtue of giving the responsibility to others to raise that revenue and to expend those funds, an efficiency in how that is done.

While there are many sectors, particularly from the local government community, that are upset about rate capping and its principles, there are other sectors that are really grateful for it because they think that it creates a long-term benefit for them. I am a believer that it will ensure that the local government sector is efficient in what it does. I put on the record that there are 68 councils with about 700 elected members and nearly 11,000 staff. They control $22 billion in assets and they have budgets each year of about $2 billion, but the key issue that this motion relates to is the income that comes from property owners and the rates revenue that is collected, which is about $1 billion.

In some of my discussions with councils I have used this argument continually, based on the fact that I expected the legislation that I put to the parliament last year to be somewhat challenged, and it was. The member for Frome, in what I saw as a key point on how he voted for it, said no—that was a continuation of the position he took post the 2014 election, when he had the compact with the Premier to form government on what he would do. I also had a briefing with the member for Waite, and I think there was a level of interest there, but he also decided to vote against it. So, it was lost, and I understand that, but I think the continuing debate about it has been part of the reasoning behind—and I hope this is the case—the efficiencies that are occurring across councils.

The percentage figures that I just quoted to the chamber—that is, the rate increases for the 2014-15 year for some metropolitan councils compared with the 2017-18 declaration—show a downward trend. You could argue that that is on the basis that councils may subconsciously be considering the possibility of a change of government on 17 March next year and therefore the rate-capping policy becoming legislation. That is something they all have to work for, and therefore they are ensuring a continued drive for efficiency. That is what I proposed the legislation for. That is what Steven Marshall, as the Leader of the Opposition and the alternative premier, one month prior to the 2014 election put the proposal out there for—to ensure that efficiency existed.

Remember, it comes back to this $1 billion in total rate income figure. If you can argue that the discussions that have taken place have created an increase of, say, if we round it off, a 1 per cent increase less than what it might otherwise have been if you use the simple numbers again, that equates to $10 million per year. That is $10 million that remains in the pockets of property owners. It is $10 million that remains in the pockets of an economy to spend in other areas to grow opportunity, and it has ensured that efficiencies are starting to be delivered through councils. Rate capping will be an extension of that, and that is what I believe is important to pursue.

An important part of the Liberal vision on rate capping is not to just say that there can be no increases. An opportunity exists for councils where they have long-term financial management plans and where they have community support for that. It is not just by the current legislation when it comes to community involvement but via a regulation that will be formed on the basis of what the Minister for Planning has as part of the charter of community engagement that comes from the planning, development and infrastructure legislation that passed through the parliament early last year for a greater range of community involvement to ensure the people who are involved, the decisions being made and the guidelines that will be used by others who make decisions for them—that is what I think is the key thing.

Where councils with involvement with communities do have that level of support for a percentage that may, in fact, be higher than the local government cost index—the example of ESCOSA in determining—if they can demonstrate that, they can get authority from ESCOSA for an increase above the ESCOSA-declared figure for an individual financial year based on the evidence of the previous year and a projection of what the future year will actually be to go above that for a five-year period. I think that is where the legislation provides an opportunity for councils and the community to really drive the outcomes they want because the long-term financial management plan is linked to what the needs of the community are. If a council wants to pursue a particular project, then put the cost of that into the long-term financial management plan.

I am very frustrated when I read part of the campaign that the Local Government Association puts out that talks about the loss of services. Those services already form part of the budget. It is amazing to me that the Local Government Association does not believe that there is any opportunity for a continuation of services already provided when rate capping will be based upon the cost of local government services they do provide and increases that those services are meeting. It is not general CPI; it is a particular local government cost index.

It is a very poor excuse, I believe, for a local government sector and a local government association in this case to come out and say, 'You are going to lose things like playgrounds, libraries, parks, gardens and all that sort of stuff.' The cost of that operation already exists. ESCOSA, or its equivalent, will ensure that it uses projected cost increases in the provision of those services in the percentage it allows for future years, so why suddenly is there an expectation that they are going to be lost?

It is interesting to me to see that, of the 68 councils, 50 have resolved to support the local government campaign. I try to take the positive from that: that there are 18 that have not. To me, that means that those 18 believe that it is a political campaign and that the Local Government Association, by virtue of being a sector of government and a child of the state parliament because it is an act of parliament that actually controls them, have chosen not to be involved in a political campaign.

To those 18, I say, 'Well done.' I believe they are freethinkers. I have no doubt that, from those 18, there will be individual members and staff who will talk to candidates from the Liberal Party approaching the election period and say that they do not want it. I understand that, but as a council they have resolved not to be involved in a political campaign, so I commend them.

I have no doubt, even from the 50 councils that have decided to support it, that there are some who do not. I know that in many cases it came down to a vote and what a position was going to be. I know that democracy is about freedom of speech. I completely respect that, but I tell this chamber and the people of South Australia, who might have a chance to review this and submissions made by others, that this is done on the basis of efficiency of service delivery and the projected cost being controlled to ensure that people are not paying more than they have to. Private enterprise has to do that already. It is important that the local government sector, as a billion-dollar per year revenue area, has to do the same—as Steven Marshall, as premier, will ensure that state government departments do the same.

I refer to section (c) of the motion, which requests information about what the Minister for Local Government, the member for Frome, has done. In 2015, after he had been Minister for Local Government for about a 14-month period, as the then shadow I asked questions of the minister about what he had done to pursue the reduction of costs and efficiencies and to assist local government in controlling what they do and the revenue they need for what they do. The only response I received referred to the 2005 financial sustainability project. There was no demonstration of what had occurred in the minister's 14 months to assist councils, even though the minister himself has come from this sector. I have seen no real demonstration of it post 2015, when I asked the minister in estimates periods what he had done to try to assist councils to reduce costs.

I can quote two examples of where I believe the minister has let the local government sector down. One was in the significant rewrite of the planning, development and infrastructure legislation. It was the first time since 1993 that the legislation had had a review—legislation that had a significant impact upon local government and its operations from an administrative point of view, in terms of the controls it had to put in place on development issues and how to consider and manage those. I would have presumed that the minister, the member for Frome, would have put forward the case for local government. He made no contribution at all—not a word said. That frustrated the life out of me.

Another example is in legislation that the minister proposed to bring to the parliament for changes in the Local Government Act. As part of the briefing provided to me as the shadow minister, I saw that there was a clause that reflected upon the requirement for councils to grant an up to 75 per cent rebate on defined areas, an example of which is community housing authorities. At that stage, the minister recognised that as an issue and on the day that the legislation was tabled, that clause was removed.

This is a significant issue for councils across the state, particularly metropolitan councils. They are concerned about the cost implications of having to provide this rebate. 'It is on the basis of one-on-one discussions, as I understand it,' was the comment made by the Minister for Urban Development about how it was going to be addressed was, but I think that leaves the local government sector at a significant disadvantage because there are not long-term agreements in place.

In considering this motion, I urge the minister and the government to ensure that they work with councils to control future growth in costs and to ensure that some assistance is provided so that there is not a responsibility transfer from state to local—yes, there might be some dollars attached to it at the very start, but then those dollars suddenly disappear for three years, and councils pick up the remainder of that cost in the long term. This is an appropriate motion and I hope that it is supported by the house.