News and resources

Issue 32 May 2014

MAV President's Update - occasional report from Cr Bill McArthur, President of the MAV

Issue 32, May 2014

It has been a big month for our sector dominated by the State and Federal budgets, a shock rate capping policy announcement by the Victorian Labor Party, and the long-awaited release of Plan Melbourne.

Councils unanimously opposed both rate capping and the cuts to Federal financial assistance grants at State Council and we will be campaigning hard against these measures. It was pleasing to see such productive engagement and debate at State Council, and all endorsed resolutions are now available, see: Resolutions from membership (Word - 109KB).

Federal budget cuts

The federal budget had lots of pain for many in the community and local government was no exception. We were quick to respond with a statement condemning the indexation freeze to Financial Assistance Grants, which will have a likely $134 million impact on Victorian councils. Ed Gannon, editor of the Weekly Times had another cracking opinion editorial in the Herald Sun articulating the pain facing councils, and rural communities in particular, as a result of the federal funding cuts.

While all councils will be adversely impacted by the indexation freeze, a $38 million loss for rural shires over three years will be a devastating blow to communities that rely so heavily on financial assistance grants to fund the provision of services and infrastructure. In many cases this is well over 20 per cent of the council’s total revenue, and in once case it is as high as 31 per cent.

Details of other federal budget cuts are also emerging as further analysis is undertaken. The Community Support Program provides funding to family day care (FDC) schemes, but from 1 July 2015 all providers will need to reapply for funding under a tightened criteria. As many as 50 Victorian councils are providers of FDC, which could adversely affect council services and lead to fee increases for families. A funding cut to pensioner concessions such as transport, electricity and rates is likely to impact Victoria by $18.5 million, however we understand the Premier has committed to continue providing the full concessions to pensioners and health care card holders.

No federal funding was committed beyond December to cover operational costs for the additional five hours of kindergarten introduced in 2013 under national reforms. However provision was made in the budget’s contingency reserve for additional funding in 2014/15 and 2015/16 subject to negotiations with the states. We urge councils to continue contacting local MPs, Federal Minister and Shadow Ministers as part of our No Kinder Cuts campaign to seek their support for the continuation of preschool funding in the lead up to the completion of the National Partnership Agreement review in late June.

Rate capping

On 4 May the Victorian Labor Party announced a populist but misguided election policy to cap council rates at the Consumer Price Index (CPI) and require increases above this to be justified to the Essential Services Commission for approval. We issued a scathing response the same day.

This policy has been overwhelmingly opposed by local government. It is short-sighted, fails to recognise that council costs move by the Local Government Cost Index, not by movements in common household goods and services like bread, milk and electricity. It fails to acknowledge the consequences of ongoing cost shifting from other levels of government, and funding that neglects to adequately cover council costs to implement and enforce state and federal policy. It fails to ensure councils can undertake capital works programs that address the growing asset renewal backlog as recently highlighted by the Auditor General. And most importantly, it fails to recognise local government’s democratically elected status and respect our autonomy to decide our own budgets that meet community service and infrastructure needs, in consultation with our communities.

The Government has repeatedly stated it does not intend to introduce a rate capping policy, preferring instead to focus on its performance reporting regime and funding support such as through the Country Roads and Bridges program and Regional Growth Fund initiatives. Jeff Kennett, speaking at MAV’s Future of Local Government Conference last week, also voiced his opposition saying that it denies councils the ability to represent their community, and labelling the combined impacts of federal funding cuts and rate capping as ‘local government’s Armageddon’.

As we have repeatedly pointed out, no other level of government is as transparent as councils with their budget development and consultation. Respecting the autonomy of local government will be championed in our state election Call to Parties, where we will seek commitments from political parties prior to election day.

State-Local Government Agreement inches closer

It was pleasing to see a revised Victorian State-Local Government Agreement (VSLGA) endorsed at our May State Council.

Following significant consultation and negotiation between the MAV, councils and the Government, the agreement has been strengthened in a number of ways including by making the Premier a signatory to the Agreement and support for the introduction of a new Cabinet process to assess the impacts of policy on local government. Other notable changes include ensuring references to continuous improvement capture both State and local government, inclusion of consultation on changes to funding agreements, and quarterly meetings between the MAV and the Minister to discuss how the VSLGA is working.

We appreciate all the feedback received from members to help inform our negotiations. The VSLGA went to Cabinet this month and we are hopeful it will be signed by the Government and the MAV very soon.

Performance reporting and the MyCouncil website

The State commenced its performance reporting framework project for local government back in 2012. At that time, a discussion paper highlighted their intention to have comparable council performance data published in two ways: council annual reports and in an aggregate form by the State for access by communities.

Councils have progressively participated in several pilot rounds of the State’s performance reporting project, with all 79 municipalities involved in the most recent pilot. Legislation was passed in February, a Regulatory Impact Statement (RIS) process undertaken during March and the State Budget this month announced funding for a new MyCouncil website.

The MAV has long supported the concept of transparency and greater accountability in measuring councils’ performance for the community. It is important that people have a better understanding of how and where their rates dollars go. However, we have raised concerns through our RIS submission, and direct with the Minister and Local Government Victoria about a number of concerns with the framework.

Firstly, we do not support the ambitious scope of the performance indicators, and have reservations about the meaningfulness of some data proposed. We believe a smaller number of high quality measures would be a better starting point that can be built on and expanded over time. Our RIS response requested an alternative statutory instrument be used - such as gazettal - however 71 service performance measures were prescribed in regulations, along with 24 measures in a governance and management checklist. Any changes will now require the Minister’s support.

It is critical that robust explanatory notes are developed that provide context to the performance measures and ensure the public understands what the data means and its context. We have sought the State to consult with the MAV, councils and responsible line departments in undertaking this work as part of the MyCouncil website development.

Plan Melbourne release

Last week Plan Melbourne, the Government’s future vision for our state was released and Minister Guy provided a briefing to councils at an MAV forum. We have previously welcomed a hard urban growth boundary for Melbourne, the independent Metropolitan Planning Authority (MPA) to oversee implementation, and an increased emphasis on transport initiatives.

We will be seeking urgent clarification from the government, and hope to finalise a partnership agreement with the MPA in coming weeks on how councils and the Authority will work together to implement Plan Melbourne. A report on the proposed agreement will go to our June Board meeting for consideration.

Plan Melbourne and regional growth plans will form part of the State Planning Policy Framework (SPPF) and will be operational in planning schemes from 30 May. As Minister Guy advised councils attending our forum last Friday, all of the planning tools needed to implement the new strategy have been progressively rolled out ahead of the new plan including residential and other zones reforms, development contributions, and VicSmart. It remains unclear how the introduction of Plan Melbourne at the end of this month will affect the current SPPF review, which proposes to bring together state and local planning policy under a single framework. We are seeking guidance from the Department about this and other transition arrangements.

Please get in touch if you would like to discuss any of these issues, or other matters with me.

Best wishes