News and resources

Issue 44 August 2015

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

Issue 44, August 2015

This month the MAV's Rate Capping Taskforce met to review the draft Rates Capping and Variation Framework from the Essential Services Commission. The Taskforce confirmed that the sector has considerable concerns about the proposed framework and its potential long-term effect on the sector. The meeting and discussions had helped inform MAV's submission to the ESC.

The MAV and the taskforce identified several major concerns around the framework. It is concerning that the ESC's description of how the model will operate appears substantially different from the description in their draft paper. We have requested that the final paper is clearer around how the variations framework will operate, including the level of evidence required to support a variation.

There are also technical issues of concern regarding the proposed cap. We believe population is a more relevant driver of council costs therefore the best base for measuring rates increases rather than the recommended rates per assessment. There are also some concerns about consolidation of assessments in municipalities leading to a reduction in the quantum of rates collected. Also the index used for the rate cap does not reflect significant variations between councils, and includes CPI as an indicator, despite consumer prices not being relevant to councils' input costs.

The rationale for the inclusion of an efficiency factor appears questionable. The use of the consumer price index and wage cost index to establish the rates cap includes an inherent productivity factor, since wage prices do not include the effects of band changes or the composition of councils' workforces and consumer prices have little relationship to council input costs. Further, a majority of councils' non-employee costs are subject to market competition, further limiting the opportunity for persistent efficiency factors without resulting in a diminution of councils' service levels.

We have concerns that the framework will have a substantial detrimental impact on small rural councils. This is due to their strong reliance on external funding for infrastructure renewal and replacement and their capacity to undertake the extensive work necessary to request an increase above CPI.

We have also commissioned ACIL Allens to undertake an independent economic assessment of the draft framework, and this work will inform further advocacy efforts the MAV will undertake.

Review of the Local Government Act

As you may be aware the Minister for Local Government Natalie Hutchins released her Ministerial Statement on Local Government this month.

Many of the actions outlined in the document should naturally fall under the Victoria State Local Government Agreement which was signed with the former State Government last year.

We will be seeking urgent advice from the State about the role of the VSLGA in this process.

Our biggest challenge will obviously be ensuring the needs of the sector are reflected in the government's Fair Go Rates system.

We will keep you informed as more details of the process become available and keep you updated on our progress.

Royal Commission into Family Violence

The MAV was asked to provide evidence at the Royal Commission into Family Violence. We spoke about the important leadership role councils have in demonstrating their commitment to gender equality across their policy and program areas. Local Government was also shown to be a progressive employer by the significant number of councils that have already introduced family violence leave into their EBAs. An MCH coordinator from the City of Greater Dandenong also provided evidence talking about the diverse demographic within their municipality and how they deliver the MCH services.

MAV Rural and Regional Forum recap

I was very pleased to see the rural forum so well attended by members who were very keen to participate. The day included a presentation by the Essential Services Commission on its proposed Rates Capping Framework as well as a Q&A session. This resulted in a very robust discussion about the proposed cap and what will will really mean for the future of regional and rural councils.

The Metropolitan forum is on 10 September and I urge all those councils who are yet to register their attendance to do so soon.

MAV Work Care Self Insurance Scheme

Given the number of councils asking for further information on MAV's Workcare Self Insurance Scheme, further presentations are scheduled to be held in September.

MAV Technology Conference award winners

I was pleased to open this year's two-day MAV Technology National Conference, which featured a range of inspiring and informative presenters from across the country and around the world. I was also impressed with the winners of this year's MAV Technology Awards for Excellence, including the collaboration between the Cities of Ballarat, Greater Geelong and Melbourne that resulted in the bestowing of the first ever Exemplar Award for their entry Local Government Open Data and Fellowship. This project involved the councils adopting and working with three Code for Australia fellows to expand the number of open data sets available for a community event run by volunteers that draws people together to innovate with Open Government Data to address challenges set by government.

There are certainly a great number of innovative projects happening in this space throughout the sector as evidence by the very high level of the entries we received for the awards.

Financial Assistance Grants

Victorian councils will soon receive a further $269.6 million in Financial Assistance Grants from the Federal Government. This is the second half of the 2015-16 grant allocation – the first was received by councils last financial year.

These grants are crucial to helping councils undertake a variety of projects for their communities, particularly infrastructure and local road renewal. As you would be aware the MAV has partnered with the Australian Local Government Association as part of a national advocacy campaign to have the indexation of these grants restored. The campaign is also calling for the Federal Government to consider the adequacy of the quantum of Financial Assistance Grants, and the indexation methodology in future. Already more than 50 per cent of Victorian councils have passed a motion in support of the campaign, and I would like to encourage those that haven't done so yet to do so.

This funding is particularly crucial for rural councils and I would appreciate help in supporting this campaign.

Best wishes
Bill