Local Government (Rate Oversight) Amendment Bill

Second Reading

I rise to speak on the Local Government (Rate Oversight) Amendment Bill 2018. In doing so, I would first like to acknowledge the provision in the Constitution Act 1934 and in particular section 64A, which was inserted in 1980. It was designed to provide a constitutional guarantee for the continuance of local government in this state.

In particular, it provides that there shall be a system of local government in our state, of which the powers are set out by the parliament as considered necessary. Secondly, the manner in which the local governing bodies are to be constituted, and their powers, functions, duties and responsibilities, shall be determined by this parliament. Thirdly, no bill, in respect of applications before this parliament, essentially can act to cease a system of local government in the provisions of the aforementioned subsections (1) and (2), unless it is passed by an absolute majority of members of each house of parliament.

Local government exists essentially within the parameters of what this parliament determines it is to do. Essentially, that is outlined in two significant pieces of legislation: the Local Government Act 1999 and the Local Government Act 1934. Why do I mention this? I think it is important for us to remember that having an oversight principle added to the legislation is consistent with what this government had committed to do in the lead-up to the election if we were successful—that it is something we would do. Its purpose was to ensure that there was some management of what had clearly been identified as unacceptable expenditure on behalf of some councils in South Australia and, most importantly, to provide financial relief and certainty to those in the community who pay the rates.

In that respect, can I say that, yes, I am a ratepayer. I confirm that I am a ratepayer in three councils in South Australia: the City of Adelaide, Kangaroo Island Council and City of Burnside Council. As you might expect, all of these are varied and reflect the diversity of councils we have across the state. I hear other speakers contributing to this debate and being somewhat critical from time to time of some councils members and, in particular, their reasons for being there.

I am sure there are examples of that, but on the whole in my experience, even though I have never been a member of the council board or aspired to be, I have very high regard for those in the community who put themselves forward in pretty much a voluntary capacity to provide leadership within the terms we have identified here in the parliament. I commend them for doing that work.

In the time I have been here in the parliament I have been deeply disappointed in having been asked to amend the local government legislation from time to time, and in having sought advice and indications of the work and views of councils via the Local Government Association, which is essentially the union for councils. They have been challenged from time to time because sometimes their published view was consistent perhaps with some of their large metropolitan councils but not consistent with smaller regional councils, and there has been much debate over that time as to whether in fact they are an effective body in being able to provide a unified view that is for the benefit of their membership, diverse as it is.

All that said, this side of the house gave a commitment to provide this oversight provision, and that is exactly what we intend to do by pursuing this legislation. I also want to point out that in the Local Government Act 1999 the functions of the council include many things, and the principles to be observed by a council are detailed. They are a bit like the Ten Commandments, I can tell you. The last two paragraphs in section 8 are:

(j) achieve and maintain standards of good public administration;

(k) ensure the sustainability of the council's long-term financial performance and position.

The question of good public administration has been repeatedly brought into question in respect of examples. I do not vote for my local council in expectation that they are going to provide the CEO with a golf course membership. I vote for my local councillors on the basis that they will administer their area of responsibility, as per the principal role, functions and principles outlined in the act and that they ought to be complying with them. When they have not done so, as a parliament we have not only a responsibility but an obligation to provide for some variation to those rules. That is, as I say, exactly what we are doing.

I will refer to one of the issues that has been raised with me during the course of this debate. I am perfectly satisfied not only that this measure is necessary but that the formula that has been presented is achievable and is a sensible way to deal with the issue. It does have the supervision of ESCOSA. Members should read the legislation carefully, and of course members may have some questions of our minister in relation to the particular workings of it, by all means. It is important that if, for example, the member for Light is a bit clueless as to how it is going to work, of course his opportunity is to ask some questions during the committee to make sure he is fully apprised and fully understands how it is going to work.

My issue, which I bring to the parliament and which has been reported to me is: how do we ensure, even with rate oversight legislation, that councils will not subvert this process, if they wish to, by borrowing significant amounts of money—that is, they will not use debt financing to essentially avoid this? They could, by borrowing a significant amount of money, for a period of years have some servicing arrangements which are still achievable within their annual budget but which would enable them to explode into the debt financing of significant projects or pursuits that they want to follow.

Obviously, the answer to that is that ultimately they would be caught up because they would still have to service these debts, but a lot of damage could be done in the meantime. A council could obtain millions of dollars worth of debt, secured on the assets within its region, and then not be able to avoid some capping in relation to it. We have to consider whether they might attempt to do that. If they do, I remind them that there are obligations under the act already with respect to their financing and the representation they have in respect of their obligation. I am just going to go to the objects of the act again, and section 3(f) provides:

(f) to encourage local government to provide appropriate services and facilities to meet the present and future needs of local communities—

and of course then areas in relation to a sustainable manner in their operations and the like.

I suggest to the parliament that there is already a framework of legislation which would fundamentally be breached if a council were attempting to borrow significant moneys to support some profligate spending that was unacceptable in the objects and pursuit of supported services to its community, and that is a matter which, of course, then may attract the attention of the minister and certainly this parliament. I am sure that the ratepayers in those circumstances would be outraged, and they would have every right to come to us and seek support for even further reform.

In any event, this is a modest means by which the identified, I think, breach of trust of some councils in respect of some of their expenditure will be brought to attention and arrested and which would be a helpful and protective measure against inappropriate spending by councils to the detriment of their taxpayers. I commend the bill.