Speech - Rate Capping
I want to start off with a quote because this is a topic that I have canvassed before and it is a topic that the member for Kaurna and I have canvassed before in the public square in relation to how councils operate and conduct their business. In 2013, the
government undertook a Local Excellence Expert Panel into local government. In speaking about councils, the Hon. Greg Crafter AO made the following statement:
To make no decisions and trying to continue in the same way as today will simply set local government onthe path of steady decline.
Basically, what he was saying was that if we make no change to the local government sector, we are going to see that sector on a steady decline in the way that they provide services and their ability to go about and conduct their everyday business. That statement very clearly says that the status quo cannot be allowed to continue. I am very proud to be a part of a party that has a proactive plan to look at how local government undertakes its business and ways that it can do that better.
Decisions are best made when they are made as close as possible to the people affected by the decision. That is why I am a committed federalist and why I sit in the state parliament, as opposed to aspiring to any federal parliamentary representation, because I believe that here at a state level we are much closer to the people whom we serve, and local government are even closer again within the remit that they have. A fundamental tenet of the Liberal Party is decentralisation. Again, that is where state and local government are very important to us. We are the key custodians of it, realising that they are important sectors that need to be looked after.
We have set out a very clear mechanism by which we would like to help councils improve the way they operate. We want to give ESCOSA the ability to set rates for councils, doing so cognisant of the cost pressures that councils face, and doing so cognisant of the transfer of responsibilities that seems to have happened under this government in relation to litter and nuisance, in relation to pets and in relation to costs around e-planning and costs in a whole host of areas, such as rubble royalties. All these pressures that the state government has put on local government go towards the cost of how local government operates, and our mechanism takes those costs into account.
Those on the other side are not clean when it comes to looking at council rate increases. I think that, when we look at who needs to take responsibility for council rate increases, we have to look at the mayors of councils. We have a couple with us in this chamber at the moment. The member for Light was formerly mayor of the Town of Gawler. Over his time as mayor, rates increased by an average of 6.1 per cent. This is against a backdrop of inflation running at 3 per cent. The member for Light had rates increase at twice the rate of inflation over his time as mayor. We go to the Independent member for Frome, who was formerly the mayor of Port Pirie Regional Council. Over his time as mayor, rates had an average increase of 6.76 per cent against an inflation average of 3.1 per cent— over double.
It is definitely mayors who need to be held to account for this, and those two mayors stand condemned. If you are in favour of rate capping, as we on this side of the house are, then you are at least willing to help be part of the solution rather than just be part of the problem. When the member for Light and the member for Frome have previously voted against our push to have council rate
capping, they, too, have continued to be part of the problem.
This is where I think the system needs to change, because rate capping is not an end in itself. Rate capping is only one half of the equation that is trying to put constraints on the increase in taxation placed by councils upon households in South Australia. Rate capping, to my mind, is actually a way to start a conversation about how councils undertake their business. Rate capping provides
the impetus, it provides a line in the sand to start to say, 'Instead of simply increasing your rates year after year, how about we look at how you do business.'
Let's work together—state government and local government—and look at how we can fundamentally reform the sector so that it can become more effective and more efficient and keep within its remit of the powers that it should undertake. I think that discussion will only be taken seriously against the backdrop of a council rate cap.
At the federal level, the federal government is constrained by economic activity. Corporate taxation and personal income taxation goes up and down in line with employment and in line with company profits, so there are natural balances in the federal budget that cap the real revenue growth
of the federal government.
At state level, we have the same thing. Our taxation, based around payroll tax and increases to payroll tax, relies on increased employment growth. Taxation around land tax or the emergency services levy relies on increases to land valuation. Stamp duty relies on economic activity in the property sector and other transactional sectors to be able to provide increased revenue. When the
economy is doing poorly, there are natural limiters to the state government's revenue base. Similarly with the GST, we see that lower levels of growth in retail spending and economic activity lead to lower levels of taxation.
At a local government level, this does not happen to that extent. At a local government level, councils are able to set budgets by figuring out how much they want to spend. They then work out how much money they need and by how much they need to increase their rates, knowing that their taxation base is there, it is fixed and easily collected. That is unlike the other two tiers of government where we have to look at what we get and then at how much we can spend. Local government is more able to look at how much it wants to spend and then figure out how much tax it needs to collect.
I think that rate capping is a fantastic first step to being able to look at the way the local government sector goes about its business because we need that financial impetus. We see how federal government is dealing with budget deficits and the fact that it has to rein in spending. We hear conversations about the huge difficulties they are having with that, especially the multitude of
ideas that the Coalition has brought forward that the crossbench, the Senate and the Labor Party have sought to oppose. When we look at this place, there probably should be greater fiscal restraint. Again, there are some natural limiters in there, but it does not happen at a local government level.
The other reason I say that rate capping is a good idea is that at both the federal and state level there are natural structures in our system of government that provide greater levels of scrutiny over these two tiers of government. There is a huge amount of media interest in federal and state budgets. There is a two-party adversarial system that provides scrutiny of state and federal budgets. I look at us sitting in this chamber with one party sitting across from the other, where an opposition's job is to scrutinise the spending of the government and the executive. That manifests itself in the estimates process and through FOI and constant media scrutiny. We see that at a federal level with Senate estimates committees and their two-party adversarial system.
However, that does not happen at a local government level where there is no government and there is no opposition. Technically, every elected member of a council is part of the government. Because we are talking about a range of smaller entities, we do not see the same level of scrutiny. In fact, the only time we really see scrutiny is when some outrageous bit of spending pops up, such
as we have seen at the Onkaparinga council, or when there is a really unfair rate increase, such as we have seen in the Playford council in their desire to increase agricultural rates, and you see the community stand up and push back against that.
In closing, I would say that, yes, there are problems in local government and, no, we cannot continue to see average increases of 5-plus per cent when inflation is running at about half that level. I believe that rate capping is a great idea to start a conversation that will lead to true reform of the local government sector so that it can be more efficient, more effective, more cost-effective for
households to deal with the cost of living pressures that we know exist in the community because we have had low wage growth since the GFC.
In the words of the Hon. Greg Crafter, we should not sit back and allow local government to stay on a path of steady decline but instead see a vibrant, controlled and constructive local government sector in South Australia.