News and resources

Issue 52 April 2016

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

Issue 52, April 2016

2016 State Budget

This week’s State Budget included welcome spending on public transport and education infrastructure, more than $500 million to help prevent family violence, and a number of funding programs for community infrastructure in growth and regional areas. It is disappointing, however that the Government failed to address its chronic under-funding for core community services delivered in partnership with councils. My media release responding to the State Budget addresses this matter further.

The exception to our concerns is maternal and child health funding, which received $133 million in the State Budget - an increase of 15.8 per cent. This outcome was achieved following extensive work undertaken by the MAV to analyse costs data and negotiate a new output price with the Minister and Department of Education and Training. As a result of our successful advocacy, councils will receive an increase in the output price from $95.25 per hour to $110 per hour from 1 July. We’ve also received confirmation that annual indexation of 2.5 per cent will be provided into the future, which is another great win we achieved for our members.

A members brief was circulated to councils with further details on what was included in the budget for local government. Notable observations on the Victorian Government’s budgetary position include a 15 per cent increase in State property taxes over the past year (rising from $6.97 billion in 2015-16 to $7.99 billion in 2016-17); and estimated State employee expenses forecast to increase by seven per cent to $21.3 billion. It’s also worth highlighting that the Victorian Government’s defined benefit liability is $47 billion, of which $27 billion remains unfunded, while councils’ are required to ensure our closed scheme remains fully funded.

Federal election campaign

Last week the ALGA launched their federal election plan (PDF - 1.44MB) on behalf of local government nationally. The MAV provided significant input to the ALGA’s federal election plan, which identifies six priority commitments sought from political parties ahead of the federal election, These include restoring indexation for financial assistance grants, and increasing transport and local infrastructure investment to build economic resilience in communities across Australia.

It is important that common messages are delivered by councils nationally to local candidates and sitting MPs to provide a valuable groundswell of support filtering back up to party leaders about the importance of investing in local government priorities that can add an estimated $7.46 billion to national GDP and create 19,300 jobs over three years.

We will be preparing campaign resources and templates for councils in the coming weeks, outlining how you can get involved and support the ALGA and MAV federal election advocacy efforts. These will be circulated to all members in late May.

Infringement Regulations

Earlier this month the MAV advised councils that a Regulatory Impact Statement (RIS) had been released for the proposed Infringement Regulations and we encouraged councils to closely review whether the RIS activity-based costings data represented full cost recovery.

The MAV responded to the RIS by the tight deadline of 18 April. Our submission (Word - 34.7KB) highlighted that the proposed regulations will have a significant negative financial effect on councils and raised concerns that more extensive consultation was not undertaken to better understand the cost impacts facing councils. The regulations are based on full cost recovery but, if implemented as proposed, will see a rise in council enforcement costs and a reduction in council revenue received through the issuance of penalty reminder notices.

Based on the Department of Treasury and Finance’s Cost Recovery Guidelines, the MAV submission has strongly prosecuted a case for retention of the current penalty reminder notice and lodgement fees in unit terms until the next iteration of the regulations are developed.

Victoria’s water future

Several significant water-related plans have been released by the State Government in recent weeks outlining Victoria’s future water needs, and seeking to clarify water management responsibilities. The challenges are great, with increased demand for water from Victoria’s population which is expected to almost double by 2051, amid forecast dryer conditions due to climate change.

Our submission to the Water for Victoria discussion paper is currently being drafted with member input, and we are pleased that the State Government agreed to extend the due date for our response to 13 May. In April we hosted a briefing and workshop for member councils on the discussion paper, and we have also been advocating sector views through our membership on the Water for Victoria stakeholder group.

The Victorian Floodplain Management Strategy, released last week, seeks to take a more mitigation-oriented approach to improve flood mitigation and preparation. The MAV supports its intent in achieving greater clarity about roles and responsibilities of the various state, water and local government agencies involved in floodplain management.  For some communities there will be potentially significant consequences for councils in trying to manage the issues raised in the strategy, with both liability and cost implications for local government that will require clarification and negotiation if new roles end up being required of councils, such as who should bear responsibility for maintenance of levees and flood gauges.

A common theme across both the water and floodplain management documents appears to be a shift of responsibilities from other water authorities onto local government.  We will be advocating for these issues to be resolved utilising the Victorian State-Local Government Agreement.  We’ve been gratified so far by the State’s open and receptive response to many issues raised by the MAV and councils during the development of these strategies, so we are hopeful this constructive dialogue will continue with the Department to resolve outstanding issues.

MAV governance and State Council

Last week I circulated an update to Mayors, councillors and CEOs detailing our progress implementing all recommendations from last year’s report by the Victorian Auditor General: Effectiveness of Support for Local Government. The next phase following on from improvements made to our governance and performance management practices is to ensure ongoing compliance, which includes an independent review of our frameworks and audit of their implementation.

I will provide an update to State Council on 13 May in relation to the recent independent review of our governance framework conducted by Deloittes, including 30 related MAV policies and procedures.

State Council will also consider our proposed Strategic Work Plan for 2016-17, which was circulated to councils for feedback earlier this month following extensive member consultation at eight strategic planning sessions. Our new-look plan establishes improved performance measures and an evaluation methodology, as recommended by VAGO and with expert advice provided to us by Ernst Young.

We also recently called for expressions of interest to establish a new MAV Act and Rules Review Taskforce so members can guide preparation of a discussion paper on the MAV’s role, structure and legal framework to feed into the Minister’s review of the Municipal Association Act this year. We believe that current members should drive any reform agenda for the MAV, not have it decided by the State Government. The first Taskforce meeting will be scheduled for May.

I look forward to catching up with many of you at State Council in a couple of weeks. Please get in touch if there are any matters you would like to discuss in the meantime.

Best wishes
BILL