Victoria's plan to keep struggling local councils from failing

By Harley Dennett

March 16, 2016

As the screws turn on Victorian local councils, with an upcoming rate cap and additional reporting obligations, smaller councils are calling out to the state bureaucracy for help. Those calls will be answered, says the new boss of Local Government Victoria.

It’s not a bail-out, nor a free-for-all exemption to the state’s Fair Go Rates cap, but support is available for local councils to keep up with administrative, financial and planning tasks required of them — particularly for smaller rural councils without the largess for a bustling bureaucracy of their own.

Local Government Victoria, part of the Department of Environment, Land, Water and Planning — which recently launched the Know Your Council website — have made the offer to assist struggling local councils with their obligations to fellow agencies, such as the Essential Services Commission, which is administering the rate cap.

DELWP deputy secretary Terry Garwood and LGV’s new executive director Graeme Emonson outlined the safety net to the state parliament’s Environment and Planning Committee, saying small rural councils had quite real sustainability issues.

“It is all very well for the larger metro councils that have got significant resources and capacities at their fingertips, but that is not the case for small rural councils,” Garwood said.

“So when you ask them to do X, Y and X, actually the CEO will be doing X, Y and Z or nobody else will be doing it because everybody else has got some sort of other more general task not associated with administration. We are cognisant of that, and if we get requests for assistance, we will respond and react because we want those small rural councils to be sustainable and to deliver services.”

” … any council in setting a budget should be addressing these criteria irrespective of rate capping … ”

The support on offer is largely strategic and planning expertise, such as helping develop long-term asset management plans and to identify infrastructure gaps. It may involve bringing in DELWP-funded consultants or big accounting firms, or it could involve existing public servants with expertise to work out of the council officers for the duration of a particular need. Garwood cited recent examples where support was given to Colac Otway and Buloke Shire councils following natural disasters in those regions.

More pressing than a theoretical natural disaster though is the looming Victorian rate cap, due to commence on July 1. Earlier the committee had heard from the local government peak body that councils were concerned about their ability to seek a variance from the standard 2.5% rate cap.

So far, 21 councils have indicated they intend to seek a higher cap. Emonson said councils have until March 31 to make those applications.

“Councils have to bring forward their case for the reasons for seeking a higher cap,” Emonson said, which involves satisfying five criteria set out in legislation around being a responsible, responsive council with appropriate financial controls. The ESC is the point agency for that process and has been consulting extensively with the local government sector.

After the first year, the system will change again to allow for variance groups, which may make it easier for councils in obvious difficulty to get the rates they need to be sustainable. “We have, it is fair to say, an immature system that we are looking to mature,” Garwood added.

‘Useless bit of paperwork’

Not everyone is convinced that support from one department, for obligations imposed by another is all that efficient. Opposition MLC Richard Dalla-Riva, who represents the wealthier Eastern Metropolitan region, objected to bureaucracy for its own sake:

“On the one hand the government is saying, ‘we want you to be more efficient’, yet on the other hand [ESC] are putting in a very bureaucratic process that is going to take people away from doing service delivery to filling out some useless bit of paperwork to satisfy your requirements.”

But DELWP’s executive director for Local Infrastructure Policy and Partnerships, Mark Curry saw the five criteria as a relatively simple matter:

“You could argue that any council in setting a budget in any given year should need to be addressing these criteria irrespective of rate capping,” Curry said. “The question of priority setting, of engagement with ratepayers and the community, the question of alternative funding sources, the question of appropriate use of debt — all of those issues you would think would be normal run of the mill business for a competent council in setting a budget, so I would not have thought these were brand-new considerations that required great and complex extra work for councils to do.”

Nonetheless, the offer of assistance from the department is there if councils need it.

The Essential Services Commission is due to appear before the rate capping policy inquiry on March 22.

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