News and resources

Issue 53 May 2016

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

Issue 53, May 2016

Rate capping – ESC decisions released

The ESC has just released its decision on rate cap variations sought by nine municipalities. Five rural shires have been granted full exemptions - Pyrenees, Moorabool, Buloke, Horsham and Towong, while Murrindindi has received a partial exemption to increase its rates 1.8 per cent above the cap. Casey, Wyndham and Ballarat councils have had their variation applications rejected, with a variety of ESC reasons cited including a view that they have
…‘adequate overall financial flexibility to manage their identified short-term needs’.

The MAV is disappointed with the ESC’s reasons for rejecting variations sought by Casey, Wyndham and Ballarat. We believe it is a short-sighted, economically rationalist approach to address complex and sophisticated issues facing these municipalities. It is also concerning that State funding of $2.5 million provided to Casey through the Interface Growth Fund has been used, in part, to justify the rejected variation with absurd reasoning that the funding effectively …‘frees up funds equivalent to $2.5 million’. Even the State Government clearly recognises the need to inject funding into our metropolitan growth areas, where services and infrastructure are unable to keep pace with population growth, and high-value short-term projects are necessary to provide long-term services to these communities. Ballarat, Wyndham and Casey councils also undertook extensive community consultation, and the democratic decision-making which informed their variation applications has not been given sufficient weight by the ESC.

Councils have had to navigate through unchartered waters. There was little practical guidance and councils were largely operating in the dark about whether it would be simple or onerous to meet ESC expectations. Similarly, the ESC’s variation process was untested, and has proven costly and time consuming for councils. It proved to be more convoluted and onerous than councils or the MAV had anticipated, including extensive additional information requests made by the ESC.

With the first year now complete, and the ESC’s decisions made, we call on the Minister to support a review of the ESC variation process including the rationale underpinning their decision-making. The MAV will reconvene our Rate Capping Taskforce to review the ESC decisions and inform our next actions. We believe a review of the ESC variation process is needed so that improvements to their approach can be implemented before March 2017. Any review conducted should include the MAV and councils who sought variations so their insights and experience can inform a better, more transparent system going forward.

Cost shifting advocacy – SES and school crossings

Following on from the MAV’s successful advocacy to restore maternal and child health funding for councils to a 50:50 State-local government funding partnership (read more about our win), several other cost shifting priorities are currently keeping us busy.

These include reviews of how the Victorian State Emergency Service and the school crossing supervisors program are funded to develop more sustainable models.

The SES and school crossings both have vital safety roles within our communities. Their value and continued roles are strongly supported by councils. However, decades of under-funding by the State Government has left these services in a dire position, relying on council goodwill and ratepayers subsidising the growing service costs that the State has failed to pay as required under joint funding agreements.

Under the State’s new rate capping regime, it is no longer an option for councils to prop up State service responsibilities where the State maintains a healthy surplus, yet still fails to meet its funding obligations.

We’re seeking a more secure model to ensure the continuation of both services. The SES deserves to be recognised as a key emergency service organisation by the Government and funded from the State Budget in the same way all other emergency services agencies are resourced. As pointed out in this opinion editorial by Susie O’Brien published in the Herald Sun, this outcome should not be questioned by the State.

Similarly, school crossings are a shared responsibility between the Department of Education, VicRoads and councils, yet councils’ funding share has grown to 80 per cent as the State fails to meet its half of service costs. We’ve arranged a member briefing with VicRoads to hear about its current review into the school crossing supervisor program. It will take place at the MAV on Thursday 16 June from 3pm and you can register online to attend. We’ve also called for expressions of interest to join a MAV technical advisory committee on school crossings. Members interested in participating can email Kevin Peachey by 10 June.

In addition to these cost shifting priorities, we’re also working to secure an increase in planning fees to better cover councils’ planning costs (see more on this below); and advocating for funding from the Landfill Levy to be allocated to councils for local resource recovery initiatives and assistance with legacy landfill rehabilitation costs. Unspent landfill levies collected by the State has been detailed in two stories covered by The Age this month (17 May and 21 May), after first being raised as a concern by the MAV last October.

Planning Fees Review

Following long-term MAV and sector advocacy to the Minister for Planning, we successfully secured a review of planning fees last July. Since then, we’ve been working closely with Port Phillip, Wyndham, Glen Eira and Greater Shepparton councils and the Department to progress the review. A further 15 councils have also been involved in an activity-based costings exercise to inform the Regulatory Impact Statement (RIS), released last week for consultation.

Three fee structure options are proposed in the RIS, with the MAV supporting option three as the preferred outcome. This option would deliver full cost recovery across the suite of fees, with the exception of VicSmart permits, single dwellings less than $2 million and other development greater than $100,000.

Given that current fees only recover 20-30 per cent of actual council planning costs, the total proposed fees to be collected under option three represents around $80-90 million – an estimated increase of around $40 million per annum.

We have circulated a members’ brief on the RIS and arranged a briefing session for member councils next Monday, 6 June from 10am at the MAV offices. Our draft response will be circulated for feedback ahead of the 24 June submission deadline.

Federal election advocacy underway

Our federal election advocacy kit was circulated to all Mayors, CEOs and MAV Representatives last week. Eight priority commitments are sought from all political parties ahead of the federal election, including six national local government commitments.

As well as restoring indexation for financial assistance grants and increasing the total quantum of funds, we’re also seeking a dedicated community infrastructure fund; permanent Roads to Recovery funding; a national freight strategy and funding for local climate change plans. In addition, the MAV seeks all parties to commit enduring funding for 15 hours kindergarten universal access, and to honour the tripartite aged care reform transition plan through to 2019 and beyond.

Full details of our federal election advocacy are available on our dedicated campaigns page, and our regular federal election newsletter will keep you updated on all the latest news. Two editions of the newsletter have been published since the election was called, and you can sign up to receive it online.

I also look forward to attending the ALGA’s National General Assembly in Canberra on 19–22 June. Taking place just a couple of weeks before the election, this event is a timely opportunity to continue our advocacy efforts, and to hear from each of the parties in relation to their commitments to local government.

State Council

It was pleasing to see such constructive debate at our recent State Council meeting, and voting to support a broad range of significant issues currently facing the sector. Fifty four resolutions were adopted by State Council and these can be viewed on our website.

We welcomed members of the public, ratepayer groups and the media for the first time. The resulting media reporting on issues debated at State Council has been a positive outcome.

The Board will consider reports from MAV staff at our July meeting outlining proposed actions to progress each resolution within the context of our recently endorsed strategic work plan and ensuring an effective allocation of MAV resources.

Insurance update

After considering the advice of an independent review of the Liability Mutual Insurance scheme’s limits, MAV Insurance will be raising the scheme’s limits to ensure members are adequately protected in the event of a major or catastrophic incident.

As you may recall, MAV Insurance engaged KPMG Actuarial to undertake the review based on potential catastrophic events facing members as identified by MAV Insurance staff and councils. Potential catastrophes identified were a major bushfire in which a council was heavily implicated in causation, a major fire in an apartment in which council was a planning authority or building surveyor, issues surrounding contaminated land, and major public events organised by council. The review recommended raising the limits for both public and products liability and professional indemnity to ensure they reflect the insurance needs of members. On top of this MAV Insurance is also monitoring general climatic exposures as a consequence of climate change – in particular sea level rises.

MAV Insurance is currently negotiating new limits with reinsurers to provide better protection limits for members. We do not expect this increase in limits to have a significant impact on member premiums for 2016/17 and we will update you further on the outcomes of our discussions shortly.

As you can see there’s plenty of issues currently occupying the MAV’s small team. If there are any matters you’d like to discuss with me please don’t hesitate to get in touch.

Warm regards
BILL