Local Government (Ratepayer Protection and Related Measures) Amendment Bill- Second Reading

I thought I might touch on at least one concern I have with the nature of what is contained within this bill. I am going to start with the title: Local Government (Ratepayer Protection and Related Measures) Amendment Bill. This is the local government (Labor Party) protection bill, because they are embarrassed that they took an opposition to rate capping to the last election. They needed to find something to say in this space, where the overwhelming majority of the community are on the side of governments that support rate capping.

The Labor Party needed to have something to say when they were asked at the doorstops, when they were doorknocking, and when they were asked by their communities, 'Why are you opposing the Liberal Party's rate capping policy, which is supported by an overwhelming majority of the people of South Australia?' At every opportunity we have put forward, this has been opposed by the Labor Party. They are embarrassed by this.

The Labor Party are embarrassed about their own position on this matter, so they came up with this ragtag set of unworkable ideas. They called it a piece of legislation, they brought it to this parliament and they brought it to this house. It is time for us to strike it from the record and to strike it from the house.

I urge all those opposite to spend some time over the coming months, as they recover from what I hope and pray will today be a heavy defeat of this tawdry bill, and talk to their constituents about rate capping. I urge them to ask their constituents whether they would like rate capping introduced in South Australia—as the Liberal Party took to the election, and as we had a mandate from the people of South Australia to introduce—and support the government's legislation, which I hope and pray will one day come back to this place to be debated again.

The Hon. A. Piccolo: He didn't even talk about this bill.

The Hon. S.K. KNOLL (Schubert—Minister for Transport, Infrastructure and Local Government, Minister for Planning) (11:07): I think I can provide that service to the house. Can I say, in agreeing with the comments made by the member for Morialta, that this bill is a little fig leaf to cover the fact that the Labor Party are not willing to support what the overwhelming majority of South Australians wanted and voted for: a rate capping system in South Australia.

Interestingly, you can actually trace the origins of each clause within this bill not back to evidence, not back to some sort of structured process, but back to a media story. The shadow minister (member for Light) got out some press clippings and said, 'Hang on, there's been a story on this; we can do something about this.' They have simply grabbed a ragtag bunch of measures, which they cobbled together, as a fig leaf to cover the fact that they are thwarting the will of the South Australian people. It is a disgrace.

It is also a disgrace that we see the SA Greens and SA-Best being complicit in this bill. This is not reform. This is not moving the debate forward. This is not helping to improve the local government sector. This is merely an exercise in covering something that is unmentionable in this parliament, and covering it very poorly.

The reasons this bill will not work are many and varied. Firstly, this bill seeks to hive over a whole heap of new power to the Local Government Grants Commission. The Local Government Grants Commission doles out the financial grants from the federal government. From 1 January this year, it also performs the functions of the Boundaries Commission, which will look at taking council submissions about potential boundary changes, assessing them and then making a determination on whether it is appropriate for that boundary to change. That is all they do.

It is a three-member panel: one appointed by me as the minister, one appointed by the LGA, and one chair that is essentially agreed to between the two of us. That is it. The Labor Party wanted to vest in this body the ability to be judge, jury and executioner, with no resources, no skill set and no history in being able to adjudicate on the matters that the Labor Party wanted them to take on. That is absolutely and fundamentally ridiculous. In fact, it goes against what a lot of the councils were telling us, which is that they do not want to see the state government regulating them further. They would like to look after themselves, yet the Labor Party's bill basically hands over decision-making power to the Local Government Grants Commission, which is fundamentally ridiculous and flawed.

This bill wants to give the Local Government Grants Commission the ability to suspend or disqualify a member of a council if the LGGC considers the designated behaviour of the member involves a serious failure to observe a prescribed provision of the Code of Conduct for Council Members. This leap is giving power to somebody with no history in this area, which does not exist anywhere currently. This leap is completely out of step with considered policy and considered process and hands over responsibility to a body that is fundamentally unqualified to make those decisions.

This bill also proposes limitations in relation to remuneration of chief executive officers of councils. That is fair enough; people do not like to see excessive executive pay packets. But what is interesting here is that, if you are a council CEO in a regional area, a lot of the time, to attract good quality talent councils will make sure that their package, over and above base salary, includes housing and rental subsidies, which are not provided for in this bill. Such a method would lessen the transparency for ratepayers and communities about how their CEO is being remunerated. It actually reduces the level of transparency. Again, it is a very ill thought-through part of this bill. Clause 20(2)—

The Hon. A. Piccolo interjecting:

The Hon. S.K. KNOLL: You will have your chance to respond, member for Light. I think the LGA has also provided some comments that might disagree with you.

The Hon. A. Piccolo interjecting:

The SPEAKER: Order!

The Hon. S.K. KNOLL: Clause 20(2) of the bill relating to annual business plans and budgets represents a duplication of the existing statutory requirements. I do not know in what universe duplicating an existing requirement is reform. It is just more red tape, which is endemic in the way the Labor Party likes to go about things. It is ridiculous and it shows that this simply has not been thought through. This was a grab bag of newspaper clippings that was turned into a bill.

Some of the underlying reasons for clause 20(3) appear to be conceptually flawed, as it is assumed that all new products and services will be funded only from rate revenue. In practice, we know that councils take a holistic approach to such funding decisions and consider estimates of total available revenue from all sources—that is, from rates but also from grants, user charges, fees and interest receipts—before committing to these projects.

Also, councils fund new products and services, especially around infrastructure, by debt, which all responsible councils should do. They should responsibly use debt to make sure that they are growing productive infrastructure. It is something that state, federal and local governments have been doing since time immemorial, but obviously it is something that the Labor Party, the former government that also borrowed money via debt to fund infrastructure projects, have failed to understand. Again, it is a fundamental flaw, conceptually, in this bill.

Clause 21 proposes that council audit committees be completely independent, featuring neither council members nor council staff. My department has been unable to discover any audit committee in the private sector, a federal or a state government agency where all members of an audit committee are independent. It is absolutely ridiculous and fundamentally flawed. Again, it shows that someone has not sat down and thought through the idea. It is just a bunch of newspaper clippings that have been put together into a bill.

The comments from the member for Light are that this bill is going to help crack down on poor behaviour within councils. It will not. It will actually incentivise poor and factional behaviour within elected member bodies. For example, one of the amendments in this bill—clause 8, new section 62(2a) of the act—will 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 frivolous or vexatious. The bill proposes that a council and a chief executive officer of a council be a prescribed authority.

Basically, what the member has not thought through is that the person making the complaint now needs to hand over that complaint to a chief executive officer who is, by their very nature, conflicted because their employment is based on an elected member body putting them back in and saying, 'You now have to make this decision against your own elected members.'

That is fundamentally ridiculous and again shows that somebody has not thought this through; somebody has just grabbed some newspaper clippings and chucked them together to form a bill. I have spoken to many council CEOs who are fundamentally uncomfortable with having to make these kinds of decisions over their own elected member body. It does not make sense; it does not make sense in any universe any mortal human being lives in and maybe potentially suggests there is some other multidimensional plane this bill works in.

Further, clause 7 of the bill proposes to empower a majority faction of a council to trigger a general election if they are unhappy with or disagree with the democratically elected principal member by passing a resolution of no confidence. It is not something we do in this place, otherwise Ian Hunter would have been booted out a long time ago. Essentially, they want to give a majority of elected members the ability to sack their directly, democratically elected mayor. That will encourage and incentivise factionalism within councils and lead to unnecessary elections and a thwarting of the democratic will of the South Australian ratepayer. It will cause chaos.

Once again, this is not a thought-through reform bill but a grab bag of poorly thought-through ideas. I have spoken to so many councils—mayors, CEOs and elected member bodies alike—who are fundamentally uncomfortable with what is being proposed here. Clearly, the member for Light did not actually consult anybody within local government before doing this. Before putting their bill through the upper house, after saying they were the champion of the Local Government Association and the industry, did they allow the Local Government Association to actually provide any constructive feedback on their bill? No, they jammed it through the upper house because they were looking for a political headline.

This is not a reform bill. This is a poorly thought-through grab bag of ideas designed to cover the backside of the Labor Party for thwarting the will of the South Australian people. We on this side of the house will not stand for it. We will vote down this bill and we will do so gladly, and we will undertake a reform process that discusses these ideas contextually, comprehensively and in conjunction with the local government sector that it is supposed to be helping.

Mr PATTERSON (Morphett) (11:17): I also rise to speak briefly on this bill. Last year, I spoke on the Local Government (Rate Oversight) Amendment Bill moved by the Minister for Local Government, which sought to amend the Local Government Act and introduce rate capping for the people of South Australia to relieve them of the rising cost of living that is putting undue pressure on their households and businesses. We know that reducing the cost of living is a key focus of this government, and we know that council rates are one of the biggest taxes home owners have to pay on an annual basis.

In recent years, we have seen council rates increase well above inflation, and in some council areas rates have risen up to three times that of the CPI rate. In every level of government there is a duty to ensure that service delivery is as efficient and as effective as possible to contain costs to taxpayers and ratepayers but also to ease those cost-of-living pressures. While local government does provide valuable service to its local—

The Hon. A. PICCOLO: Point of order: at some point the speaker actually has to address this bill, not a previous bill that was defeated.

The SPEAKER: I have the point of order. I will listen carefully to the member for Morphett, thank you.

Mr PATTERSON: I was about to talk about the work of my local council—

The Hon. A. Piccolo interjecting:

The SPEAKER: The member for Light will have his opportunity.

Members interjecting:

The SPEAKER: Members on my right, be quiet; you will get your chance. Thank you.

Mr PATTERSON: In Morphett, there are three local councils: the City of West Torrens, the City of Marion and the City of Holdfast Bay. They are significant going concerns.

Members interjecting:

The SPEAKER: Order!

Mr PATTERSON: Holdfast Bay has a municipal budget of $57 million and controls assets worth $600 million, West Torrens has $65.5 million and controls assets worth $700 million, Marion council has $88 million in revenue and assets of over $1.1 billion. So you can see—

The Hon. A. Piccolo: Did your council support rate capping?

Mr PATTERSON: Absolutely, yes. Marion council supported rate capping—

The Hon. A. Piccolo interjecting:

The SPEAKER: The member for Light will not interject the member for Morphett. I am trying to listen.

Mr PATTERSON: What these councils require with such big budgets are elected members who have strong financial competency and who listen to their ratepayers. The challenge with all levels of government is to balance the services that they provide with the ability to pay for it.

In the case of local government, general rates revenue is the principal source of income for councils and is arrived at by each council to provide their services. Being a monopoly, where ratepayers cannot shop around for a better deal, the councils really have a large responsibility to their community that the general rates revenue they raise to provide services to their community is supported by that community.

We understand that there are cost pressures on all organisations' budgets, but over the last 10 years council rates have increased at a rate, as I said before, that is three times the level of inflation. In those 10 years, local government rate revenue has increased by 67 per cent. Where previously we had rate oversight, which would have provided for the establishment and operation—

The Hon. A. PICCOLO: Point of order: at some point, let's actually debate this bill, not the previous bill which was defeated.

The SPEAKER: I have the point of order. I believe the content of the member for Morphett's speech thus far has been germane to the bill, but I will continue to monitor that closely.

Mr PATTERSON: Thank you for your guidance, Mr Speaker.

The Hon. A. Piccolo: You might want to skip a few paragraphs and then get to the point of the bill.

Mr PATTERSON: We can do that, certainly.

The SPEAKER: Member for Light, you have had your go.

Mr PATTERSON: Councils need to carefully consider the decisions they make around their own operations, and they need to seek efficiencies ahead of greater revenue, in other words, shift their focus from expansion to analysing the services they provide. Certainly, while I was out doorknocking in the election, and even now at shopping centre visits, I was continually listening to ratepayers. They are concerned about cost-of-living pressures, and I received good support for the Liberal plan for rate capping.

Rate capping would have guaranteed lower rates. Unfortunately, it was disappointing then to see that this bill was blocked in the other place, not only by the opposition but by SA-Best and the Greens. They had their chance to help South Australians reduce their cost of living and they did not take it. They did not listen to the will of the people. Therefore, in its place we have before us the opposition's attempt to appease the vast majority of South Australians who wanted rate capping, the ratepayer protection bill. They have not consulted with the LGA at all. They pandered to the LGA and then did not consult with them.

The effect of this bill is that it attempts to achieve purported ratepayer protection in a way that would actually create undue administrative burden and increase red tape for councils while narrowly focusing on specific issues that, as we heard before in other members' contributions, have received media attention in recent times, which is effectively a fig leaf to cover up.

The bill has the effect of significantly extending the role of the Local Government Grants Commission by signing three new substantial and disparate functions to the commission. It is essential that the performance, and any other functions assigned to the Local Government Grants Commission, does not compromise the commission's important current and imminent functions.

I will move to other clauses in the bill. Clause 20(2), relating to annual business plans and budgets, represents a duplication of existing statutory requirements.

The Hon. A. Piccolo: In what way?

Mr PATTERSON: I will tell you. Essentially, the amendment proposed in the bill would result in figures that are already published in the council's long-term financial plan—

The Hon. A. Piccolo: No.

The SPEAKER: Order! I will start calling members to order shortly if this continues.

Mr PATTERSON: —now being duplicated in the annual business plan. The proposed amendment makes no provision for meaningful explanatory material to be included in those figures. Effectively, it just puts more red tape on councils. There are also a number of amendments proposed in the bill that will have the potential to increase factional disputes within the council and increase incidents of bullying and harassment, which this bill is purporting to address.

The Hon. A. Piccolo: You have not even read the bill.

Mr PATTERSON: We have. We heard the minister before talking about the proposal to 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 or vexatious complaint. The bill proposes that a council or a chief executive of a council be a prescribed authority.

The Hon. A. Piccolo interjecting:

The SPEAKER: The member for Light is called to order.

Mr PATTERSON: Here we have the CEO, who is meant to be building relationships with elected members and who is employed by elected members—it is the only position in council that can be employed by the elected member body—now is to rule on them. There is certainly a conflict of interest, and you can see there is massive opportunity for pressure to be put on the CEO or council members to try to support or to make a frivolous complaint go away.

Further, clause 7 of the bill proposes to empower a majority faction of a council to trigger a general election if they are unhappy with or disagree with the democratically elected principal member by passing a resolution of no confidence. It is outrageous to think that the ratepayers of a community could elect a mayor, the mayor is out there working hard, and then a small faction of the council body, many of whom might not turn up to functions and might only talk to a ratepayer when they look at themselves in a mirror, could band together, throw out a mayor and force the whole ratepayer community to go to another election. I cannot see any support in my community in asking for more elections for local government members.

We have talked before about consulting with the LGA. Their comments on this bill are that the costs of implementing these new requirements will have a direct impact on the rates in those communities. Again, instead of our bill, which was going to bring down costs and cap rates, we now have red tape, which will put up rates for communities.

The Hon. A. Piccolo: What was the cap?

Mr PATTERSON: A rate cap.

Members interjecting:

The SPEAKER: Member for Waite and member for Light, I have a duty to prevent quarrels. If I must, I will ask you to leave.

Mr PATTERSON: I thought you did not want me to talk about rate capping. I do not know what—

The Hon. A. Piccolo interjecting:

The SPEAKER: Member for Light, please cease interjecting.

Mr PATTERSON: The LGA also noted that a more comprehensive review process is required to develop evidence-based reform proposals that create a more efficient, sustainable and integrated system of local government—there you go, instead of reading what is in the paper, actually consulting with the community and doing a good job. Therefore, unlike Labor, who are in such a rush to get something together, the Marshall government is undertaking a comprehensive reform program this year to restore confidence in the damaged local government sector.

The Hon. A. Piccolo interjecting:

Mr DULUK: Point of order, sir: the member for Light keeps interjecting. It is unparliamentary under 141 and I ask you to bring him to order.

The SPEAKER: Yes, I have warned the member for Light. The member for Waite is correct. If he continues down this path, I doubt he will be speaking to this bill.

Mr PATTERSON: Our main priority will be better outcomes for ratepayers, which includes keeping their rates low and improving their service delivery. To achieve this, we will look at lowering the cost to ratepayers, with more council financial responsibility, and providing better conduct by councils and their members alongside stronger council member capacity, more efficiency and transparency in the sector and simpler regulations. Therefore, I vote down the bill before us and look forward to the introduction of a much more positive bill that will bring down costs to all ratepayers and bring confidence back to the local government sector.

The Hon. A. PICCOLO (Light) (11:27): It is interesting that members opposite—and I thank them for their contribution, as misguided as most of it was—actually did not want to talk about the bill itself but tried to talk about a bill that has gone through this place and was approved by this place. It has not gone to a vote in the upper house because they do not want it to go to a vote in the upper house, though we are not sure why.

They have also spoken about the councils. It is interesting that they are pursuing a policy of rate capping that only four councils that I am aware of actually support—four out of 68 councils. Here they are, trying to explain that they are actually on the side of local government and trying to support local government, and the member for Morphett—

Mr Patterson: On the side of the ratepayers.

The Hon. A. PICCOLO: —you can interject; that is okay, I do not mind—talked about his three councils, not one of which I am aware actually supported rate capping.

Mr Patterson interjecting:

The Hon. A. PICCOLO: Actually, they had no position on it. It was also qualified to capping government charges, etc., which I do not think the bill incorporates. You should get your story right.

Members interjecting:

The SPEAKER: Order!

The Hon. A. PICCOLO: I will talk to my bill. Do not worry, I am happy to talk to my bill. It is interesting that, in terms of rate capping, etc., not one of them could actually tell this place what the rate cap is. Not one of them could tell what the rate cap is, and that is what local government said. It was a bit of a fraud on the community, the rate capping bill, because it pretended to give powers to another unelected body. The Minister for Local Government said that it is not really a good idea in my bill but that it is a good idea for his bill to give the powers to another unelected body to set people's rates because they have no confidence in local government to set their own rates.

What they are saying is that all 68 councils in this state are incapable of managing their budgets, yet the member for Morphett talks about his council having this budget and the right people. He does not believe so because he does not want to give them the power to set their own rates; he wants to take it away from them. You cannot have it both ways, member for Morphett.

The Hon. J.A.W. Gardner: Do you want to seek leave to continue?

The Hon. A. PICCOLO: Yes, I will seek leave to continue my remarks. I have only started!

Leave granted; debate adjourned.