Economic and Finance Committee: Inquiry into Local Government rate capping policies

Mr DULUK (Davenport) (11:38): I also rise today to add my comments in support of the minority report on the rate capping inquiry and, of course, to make a contribution on that. In recent years, I believe that we have seen an unhealthy habit develop within local government, and that is to impose annual rate increases well above CPI and the Local Government Price Index on ratepayers.

My electorate of Davenport overlaps two councils: the City of Mitcham and the City of Onkaparinga. The average annual increases for the past five years have been slightly under 5 per cent for the City of Mitcham council and slightly over 5 per cent for the City of Onkaparinga. This is a year-on-year increase with a compounding effect, and it is increasing beyond the reasonable measures of the people's ability to pay, as the member for Bright put so well in his contribution.

These 5 per cent annual increases have been so habitual within these two councils that they have become quite the norm. When Mitcham council was considering its budget for 2016-17, local councillor Karen Hockley described a proposed 2.95 per cent increase as 'manageable'. Let us be clear: a 2.95 per cent proposal that is deemed to be 'manageable' by councillor Karen Hockley is indeed no small amount. It is more than double the current inflation rate. The inflation rate for the June 2016 quarter was just 0.4 per cent, and to have a 2.95 per cent rate rise on an average 2015-16 rate bill of $1,581 is an increase of about $32 per annum.

To some of us in this chamber $32 per annum might not be seen as a big increase for those council rates. I do not believe our constituents who are on fixed incomes or who are senior residents in our community would share Councillor Hockley's view that a $32 increase in their council rates is manageable, especially when they themselves do not necessarily see the tangible benefit of that rate increase.

A $32 increase, on average, in the City of Mitcham is compounded when we have the costof-living pressures that have been imposed by this Labor government. We have seen ESL increases year on year, and we have seen surging cost-of-living expenses in recent times, particularly in water and electricity costs. Those are set to rise. At the moment we have the Treasurer engaging in a paper bag war about electricity prices and who has been responsible for the increases. He is blaming the privatisation of ETSA by the previous Liberal government in the last century; of course, he always fails to mention that the Olsen government took the decision to privatise ETSA on the back of the State Bank debacle. We never hear those opposite talk about that.

Those on this side of the chamber are committed to reducing cost-of-living pressures for South Australians because we understand that many households are indeed in financial distress. We understand that there are record numbers of households seeking emergency government payments just to keep their lights on. We understand that surging power prices are crippling businesses and, of course, consumers are once again hit with higher prices as businesses look to recoup their power cost increases.

South Australians do need help, and we on this side of the house believe that rate capping would be a very positive step towards alleviating some of the financial pressures confronting residents. First and foremost, the introduction of rate capping would force local governments to examine their own cost structures. It would force councils to sit back and ask, 'Are we providing the services that we should be providing, or are we providing services that are out of our mandated scope?'

In private enterprise, profitability underpins your survival. If you spend more than you make you will not be in business for too long. Too often, local councils do not face this burden. If they cannot balance their books, there is an easy answer to raising more revenue: rate increases. Rate capping would remove that safety net and compel financial discipline. Local councils would be motivated to review their spending decisions and review their role and responsibilities. That is not a bad thing in and of itself.

I agree with the member for Hammond's previous comments on this topic. He said that local governments appear to have lost their way from their core responsibilities and are now involved in a whole range of matters that are perhaps beyond the original or intended scope of councils. Recently we saw the City of Adelaide commission a toilet block for, I think, well over half a million dollars. One would hope that it is a very nice toilet block in our Parklands; that is certainly a lot of good sewage.

As the member for Schubert also noted in his contribution on this debate, rate capping would start a necessary conversation about reforming local government. I think this is the most important part of the debate we are having. Councils should not fear a debate about their role. They should have conversations about reforming government and seeing how they can be more efficient in what they do. We at the state level of government should always review our operations and be as efficient and lean as we can. Ultimately, it is not our own money we are spending as arms of government; it is the people's money.

So the conversation needs to start, and I think it is starting. I know many councils and councillors have contacted me and many on this side to talk about this proposal. The conversation could be about the need for improved efficiencies, efficiencies that will deliver council services in the most cost-effective manner and efficiencies that will ensure households and businesses are receiving value for money.

The member for Schubert also noted that part of this conversation should include the ways in which state government can help local governments lower their cost structure, in particular reviewing the impact state government has on increasing local government costs through the rubble royalties program, increased NRM levies, the solid waste levy, of course the ESL that some councils are also responsible for collecting, the cost of red tape and the legislative imposts, all of which have a significant cost to councils and their operations.

That is the way in which state government and this parliament can help local governments improve efficiencies within their operations. Indeed, the member for Goyder highlighted that the submission by the District Council of the Copper Coast asked that we 'look at removing red tape and make it easier for councils to service our communities'. Indeed, that is something we should all be doing. Increasing council rates out of proportion to inflation simply are not fair, and councillors should look long and hard when they go through their budgets year on year.

They should not just scoff and say anymore that another 5 per cent council rate rise, well above CPI, is an appropriate tool. If the state government sees fit to cap Public Service wage growth, then it seems reasonable that council rate increases should also be capped to prevent increases above inflation. Rate capping would help drive improvements in service delivery to South Australians, improve efficiencies within local government and remove excessive cost to businesses and households—all of which are fundamental to growing our state's economy.