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A New Local Government Act?

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Mr MORRIS (Mornington) — It is a pleasure to rise this evening to open the debate on behalf of the opposition on the Local Government Bill 2018.

The bill is intended to give effect to section 74A(1) of the Constitution Act 1975. Of course, as all members will be aware, that is the section of the constitution that provides that local government is a distinct and essential tier of government consisting of democratically elected councils, councils that have functions and powers that the Parliament considers necessary to ensure the peace, order and good government of each municipal district. That is a rather quaint and old-fashioned term — peace, order and good government — but I think it is a term that sums up pretty effectively the appropriate role of local government.

In terms of actual legislative impact, the bill repeals and re-enacts the Local Government Act 1989 apart from the provisions that deal with sewers, drainage and transport; repeals the City of Greater Geelong Act 1993, which has largely passed its use-by date and the necessity for it to continue to exist; and amends the City of Melbourne Act 2001 and the Victoria Grants Commission Act 1976.

I must say I do have a bit of a sense of deja vu because when I was first elected as a councillor, which is now more than 30 years ago, the Local Government Act 1989 had been under development for some time. It had reached the draft bill stage in August 1987 when I got elected. Yes, I know some members of the house were not yet born in 1987, but that is just the value of experience and being able to bring that to this chamber.

It had reached the draft bill stage by August 1987, but it was not second read in this house until the following year, in April 1988. And it was not until April 1989 that it was second read in the other place.

Despite the great care and the long consultation that occurred with that bill, it still needed to be amended significantly and reasonably soon after the act first became operational.

As is proposed with this bill, the phase in had quite a long tail to it. Some of those changes were new provisions that needed to be brought in, some were by way of repairing omissions and some of course were a result of the evolution of the role of local government itself.

That bill was a significant change from the Local Government Act 1958, which was the 1958 consolidation, but when you look at the 1958 act it bears a remarkable resemblance to the Local Government Act 1874, which is where it really all started.

The transition to the 1989 act from the 1958 act introduced a significant change to the way in which local government was governed. Of course there was some history around the introduction because the Cain government had attempted to force amalgamations of local councils; we had 210 of them at the time. That attempt had effectively been abandoned in August 1986 and a lot of work was done to try and repair the lack of trust on both sides, from government and from local government, but certainly when the bill was being discussed the scars were fresh.

I think probably the act that emerged from that was in fact a better act because of the extent of genuine, serious discussion about the future of local government that had to occur.

As we know, the bill is significant in terms of size as well as substance.

Unfortunately it would take me a couple of days to talk about the various provisions and what they will do, but essentially the bill relates to the role and powers of a council, so things like the office of mayor and deputy mayor and how they are elected; provisions relating to councillor entitlements; the CEO, staff; audit and risk committees, which are certainly something that were not in the 1989 act to start with; council decision-making; accountability procedures; local laws; and good practice guidelines. I will come back to the good practice guidelines a bit later.

The bill relates to planning and financial management, so strategic planning, budget processes, financial reporting and financial management rates and charges, which is exactly what it sounds like apart from the incorporation of the environmental upgrade agreements and the continuation of the rate capping provisions; council operations, so service performance, procurement and beneficial enterprises — again something that if time permits, I will come back to — and powers in relation to land.

There is a whole part on council integrity, which is certainly something that would not have been a feature of the act 30 years ago. Some may say it is unnecessary now; I am not one of those people. I think perhaps it could have been done in a more succinct and less complex manner, but in whatever form we have a separate part of this bill that deals with those issues.

The next part deals with ministerial oversight, governance directions, municipal monitors — of course we have had another one of those appointed today — commissions of inquiry, suspensions and temporary administration. The next part deals with the electoral provisions and all things relating to elections, and then there are general provisions: the service of notices, criminal liability, obstruction of council and so on.

That is a very, very quick skim across the top of what is a very, very — and necessarily so — detailed piece of legislation. It is the outcome of effectively a four-stage consultation process. The initial discussion paper was issued in September 2015, and input was sought in a variety of ways, including a series of forums. I understand there were 12 commissioned technical papers, various meetings between the government and peak bodies and so on.

A total of 348 submissions were received, so a reasonable number of submissions, although in the context of local government — something that affects every citizen of the state in one way or another — perhaps that is not so many submissions.

The second stage was the reform policy directions paper, which was in June 2016. Again a similar community engagement strategy was followed, and there were still a reasonable number of submissions — 333. The number was slightly down but effectively much the same. The detail of the reforms was then developed further for consideration in the context of a draft bill — to inform the draft bill, essentially.

Then late last year we had the release of the draft bill. Again public submissions were sought, and 190 were received. By my estimate at least half of those submissions, and perhaps more, were not submissions from the general public. They were from councils, associations, other industry bodies or organisations like regional libraries and so on. They were valuable but perhaps not as valuable as submissions from the broader community might have been.

Since then the process has been somewhat telescoped because, while the initial early deadline for submissions on the draft bill was — quite sensibly, in my view — extended to the end of February, from then on basically it had been an internal process until we saw the bill second read in this house less than a month ago.

It was perhaps not the best way to go about this process. It would have perhaps been better to say, ‘All right, we’ve put out the draft. We’ve have had an enormous amount of input’, and there was a terrific amount of input into the draft, ‘and we’ve picked up a number of things’, and if time permits I may go into some of those, ‘and this is what the bill now looks like’, and then go back out again and say, ‘Here’s draft 2 with all your feedback incorporated. How did we go?’. Unfortunately that did not occur.

The first time we saw the next stage was, as I said, when the bill was actually second read. Perhaps the amendments that the Attorney-General has just proposed recognise that time was of the essence in terms of the way the bill was handled.

I understand there is a logical explanation, and I am not being at all critical of anyone for seeking to do it this way. There is a perfectly logical explanation. We have got five and a half sitting weeks left on the parliamentary calendar for the year, and then the Parliament is prorogued and the opportunity to get the bill through in this Parliament is lost. I recognise the practical difficulties in terms of the time, but I think unfortunately the bill before the house reflects the omission of that next loop of consultation, and that is problematic.

As I indicated, the bill was second read on 24 May. Whilst sufficient time has certainly been made available for the Parliament to familiarise itself with the provisions proposed in the bill — I think, despite its size, I am reasonably conversant with what is in the bill, and I have been able to get feedback from the peak bodies and some others — it is obviously not enough time to get feedback from each and every council.

The peak bodies have provided good feedback, but unfortunately, as I said, this bill affects 79 councils. It affects 79 different local government communities and many more than 79 communities in the broader sense. Unfortunately we have not been able to factor their views in. Given the importance of local government to the community, I think that is an unfortunate omission.

I should make the point, though, that obviously — not obviously; it was a courtesy, and it was extended to me — I was briefed on the bill. I was briefed very, very promptly after the bill was introduced, and I want to acknowledge not only the comprehensive nature of the briefing but also the information that has been provided subsequently. Certainly there has been no impediment put in my way for me to come to a reasonable understanding of the bill, and anything that I required to be able to come to that conclusion in the relatively short time frame was provided, so I do want to acknowledge that. I appreciate that very much.

The government says there are a number of main reforms. They relate to things like greater leadership from mayors, consistency of council representative structures and increased participation in formal voting. The first two I can connect with the bill reasonably well. For the third one I think the connection is a little more tenuous. There is a requirement to undertake community engagement processes before the adoption of a four-year plan and a four-year budget. I think both four-year plans and four-year budgets are a sensible approach, if for no other reason than it requires the councillors to collectively come to a strategic view of where they want to take the council in those four years and determine the spending priorities accordingly.

There is a proposed integrated strategic plan and reporting approach — a long-term approach — a four-year plan, a four-year budget and a long-term community vision, all of which seems eminently sensible to me. I guess where I become a little bit less enthusiastic, shall we say, is the requirement for a 10-year financial plan and a 10-year asset plan, because I suspect a lot of the time, effort and ratepayers money will be consumed in the preparation of these 10-year plans and then they will be put on the shelf or put in the cupboard and essentially not referred to again except perhaps in passing when the next four-year plan is considered.

For some councils it will work and work really, really well, but I suspect for the majority it will be something that they have to do rather than something that adds value to the process.

There are also strengths and power as far as the minister goes with individual councillors. Having been on the other side of the house as Parliamentary Secretary for Local Government and having had at least one instance where that was a significant problem for a council, I certainly have no issue with that.

There is a CEO employment remuneration policy — an apparently independent advisory mechanism to guide recruitment, contractual arrangements and performance monitoring.

Personally I would have preferred to see mandated advertising of the CEO’s position. I think it is something that quite often councils will avoid, even though they know they should be doing it. They will avoid it because they do not want to offend the CEO. They do not want to say, ‘Bill, you’re doing a great job, we like you and we’re happy with what you’re doing, but we’re going to go to the market just to check’. If it is in the act and it has got to be done, it can be done and it gives the council plenty of cover to do it.

Where councils do not do it and they should, obviously there would be a compulsion. I would certainly prefer that, but that is not what is in the bill.

Again, apparently, there is increased financial sustainability — I am not sure about that — and a single method for the valuation of land.

There are a significant number of changes from the draft that are in the bill. I do not intend to go through them in any detail except to say that the changes that have been made have been more about trying to pick up many of the points that were made in the submissions, and I think largely they have worked well.

The bill does remove the unsound mind as a disqualification for being a councillor, suggesting that that provision is not in line with 21st century thinking.

I do note that the Constitution Act 1975 retains the exclusion from the Assembly and the Council voters rolls for that very reason. While those people who may be on the roll by virtue of being a landowner will not be disqualified by that provision, the bulk of people on the voters roll will be picked up by the Constitution Act.

There are a range of other matters that are changed. As I was saying, I think it is largely a successful endeavour to pick up many of the issues that are raised in the draft. It certainly does not pick up all of those and it leaves a number of issues that remain in the bill.

The Scrutiny of Acts and Regulations Committee (SARC) has provided quite a significant assessment of the bill and raised a number of issues with regard to inappropriate delegation of legislative power and a number of issues with regard to the charter. They have written to the minister, and the minister has responded. I simply make the observation that I think the minister’s response effectively dispatches those issues, so I have no concerns there.

The issue with regard to the delegation of legislative power is around the rather long tail to the proclamation of the operational aspects of various stages of the bill, but given the nature of the beast I think that is entirely reasonable, and I am sure SARC will accept the minister’s view on that.

I sought views from the Municipal Association of Victoria (MAV), the Victorian Local Governance Association (VLGA) and 79 councils on the draft bill. I obviously did not have time to speak to and seek the views of the councils on the final bill, but 69 councils were able to respond to me. I do want to thank them all for providing that advice to me because it gave me a very good feel for the issues in the bill. I also had valuable feedback from the Australian Services Union (ASU) and from Ratepayers Victoria.

The MAV have come out publicly today — and obviously I have had ongoing discussions with them — and expressed concern about a number of issues, the first being the compulsory or forced transfer to capital improved value valuations.

Their point is that while rates obviously will not go up because of the reapportionment of rates given the change in the valuation methodology, some residents in four municipalities — Maribyrnong, Port Phillip, Whittlesea and Yarra cities — could be facing rate rises of as much as 10 per cent. The contention of the MAV is that the rates burden will shift from non-residential properties to residential properties. They consider it to be an unexpected and unfair tax hit that families simply cannot afford.

They have also expressed concern at the proposal to lower the municipal charge from 20 per cent to 10 per cent — that is, 20 per cent of total rates is the maximum that a municipal charge can be set to raise. Particularly in regional and rural councils — probably more in regional councils — there is a concern that by lowering the cap from 20 per cent to 10 per cent the application of that flat charge, which is essentially a flat charge on each rateable property in the municipality, will again have a big hit, in this case, on the farming community.

I have no idea what the Rural City of Horsham or Northern Grampians shire are doing in terms of municipal charges, but if you look at those two councils as an example of the scale of rates coming in, Horsham in 2015–16 had rates come in at $23.72 million, with Northern Grampians at $15.9 million. A 10 per cent shift at Horsham, for example, would be nearly $2.4 million which, given probably the relatively limited number of ratepayers in the broadacre category, is potentially going to have a significant impact. The MAV again have expressed their concern about that, and particularly the potential impact on farmers in terms of their rate contribution.

They have also expressed concern with the proposal to limit the mix of possible options in terms of representational structures into either unsubdivided or subdivided but equal wards. I think there are certainly some concerns with the current system. I am not at all convinced that what is suggested is the best possible fix. It is a possible fix and it would be, in my view, much better than what we have got now, but I am not sure that it is the best possible fix.

Not surprisingly, they also would like to use this opportunity to do something about the rate capping legislation. I think that is a discussion for another day.

The VLGA have identified three issues that they wish to raise. They have expressed concern about rate capping and, as I was saying, in my view it is a discussion for another day. They are proposing optional preferential voting, which is something that I personally would think is probably a good thing. I suspect the government would not share that view, but it is worth exploring.

Perhaps the most substantial of all these three, from my perspective, is the changes that are proposed to the specific powers for the mayor.

The mayor will have an enhanced leadership role and will have to report to the community in terms of the implementation of the four-year strategy, but it is also proposed that the mayor will have the capacity to appoint the chairs of council committees.

That may not sound like a big thing if you have never been a member of a council, but it creates the potential for some divergence of opinion and potentially friction between the mayor and councillors because the mayor may well appoint members of the council to chair council committees that do not have the confidence of their own colleagues, but may be allies or colleagues or the preferred candidate — whatever — of the mayor. So it does create the possibility of friction.

It is an issue that I was certainly well and truly aware of when we were experimenting with Greater Geelong City Council and I would approach this one with caution, I think.

As I mentioned, the ASU also provided some input. Their initial submission was very comprehensive, and I thought they made some very valuable points. With regard to the final bill, their main priority there was, again, with regard to rate capping.

There is one aspect of the bill that I want to pick up directly, and that is the good practice guidelines. Proposed section 82 says the minister may issue good practice guidelines. They need to be published on an internet site and compliance by a council with relevant good practice guidelines can be used as evidence that the council has complied with the corresponding requirement under the act or regulations.

I am a little bit — not a little, a lot — concerned about this because it is, from my perspective in any case, effectively a delegation of the legislative authorities of the Parliament. Normally we obviously have regulations which are done by a disallowable instrument, but they are subject to being overridden by either house of the Parliament. The guidelines that are proposed would not be subject to that recourse, and I think that is a concern because it is essentially subordinate legislation that is beyond the scope of the Parliament to have some influence in. It would set, in my view, a very nasty precedent.

There are a number of other issues with regard to the move from standards to an enabling legislation. There is the potential, for example, to have 79 different procurement arrangements for councils, and I am not sure that is really the best possible outcome. While I have picked up some of the detail in the bill — as I mentioned it is a big document, it covers a lot of ground and I could not possibly begin to cover all that ground in half an hour, probably even half a day, and I am certainly not going to suggest I should take the Parliament’s time to do that — I think it is important that we do actually have that discussion, because there is a lot here that will not otherwise be considered.

Local government derives its authority — and it is considerable authority — from the Parliament. The bill before the house proposes a significant change to the manner in which that authority is delegated, and it suggests a significant change to the constraints that have historically been placed upon it.

As I said, it is a major and complex piece of legislation — 409 sections. It repeals or significantly amends four principal acts and makes consequential amendments to a further 119 acts. It is a big piece of legislation and I do not think it is there yet. It, in my view, needs significant further work before it will be fit for purpose.

Had that further round of consultation occurred, which I talked about earlier, perhaps the final bill would have been serviceable. I think that is unlikely, but in any case I understand why that did not occur and I understand why we are where we are at.

But given the significance of this bill, I think proper scrutiny is required. I do not believe that the normal process for second readings and even consideration in detail in this house would provide sufficient opportunity for full scrutiny by the Parliament, and I certainly do not propose to come into the house with a list of 20, 30, 50, 200 amendments to the bill, which would have potentially been on the cards had the opportunity been there to, as I say, consult more broadly.

I do think the bill would benefit from that scrutiny, so I would suggest that the appropriate action for the opposition to take, and what we intend to do, is to not oppose the bill in this debate and to allow the bill to proceed to the Legislative Council. We do believe that the appropriate course would be for the Legislative Council to refer the bill to a committee so that there is the opportunity for some further discussion.

We do not want to throw the bill out. We do not want to waste the effort. There has been a lot of time and effort and money and commitment put into this bill, but there are a lot of things in there, I think, that do need further exploration and would be well served by referral to a committee in the other place, so I will certainly be speaking to the crossbench and speaking to the Greens with a view to having the bill referred to a committee for further consideration.

Legislative Assembly 19 June 2018