12/12/2006 - 22:00

Local government reforms afoot

12/12/2006 - 22:00

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With local government coming under close scrutiny, WA Business News invited some of the leading figures in the sector to discuss key challenges and propose solutions.

Local government reforms afoot

Local councils have long been regarded as the struggling poor cousins of state and federal governments in Australia, but two reports this year are helping to build a head of steam for reforms that could put the sector on a much stronger footing.

The Local Government Advisory Board concluded earlier this year that “there is an urgent need for structural reform of local government in WA”.

It found that many councils do not generate enough revenue to be viable and struggle to recruit appropriate staff to sustain their services.

A systemic sustainability study, commissioned by the WA Local Government Association, was even stronger in its findings, concluding that more than half the councils in WA are financially unsustainable.

A quick look at the numbers explains why.

In all, 67 local councils in WA have less than 2,000 residents, and 42 local councils earn less than $1 million per year from rates.

The sustainability study, released last week, said 83 local councils require revenue increases of more than 10 per cent to eliminate their operating deficits (see next page).

Debate about the future of local government invariably turns to the issue of amalgamations.

This possibility has met widespread resistance from a sector that does not want change forced upon it (see page 16).

The participants in WA Business News’ boardroom forum agree that amalgamations are warranted, but emphasise they must be implemented the right way.

They also believe amalgamations are just one of the changes needed to ensure local government can operate effectively.

The Local Government Advisory Board, which recommended that the state government legislate to force mergers, agreed that structural reform “will not be a panacea for the sustainability issues faced by local governments”.

“This would take perhaps a combination of managerial, functional, jurisdictional and financial reform,” the report said.

There is no shortage of serious issues facing local government.

The negative perceptions of the sector were illustrated by sustainability study group member George McCullagh, who referred light-heartedly to “the ABCD of local government: amalgamations, bad decisions, corruption and deficits”.

Participants in the boardroom forum agreed that a deep lack of planning expertise was a major concern (see page 17).

Political consultant Peter Clough, who was appointed deputy chairman of commissioners when the state government sacked the City of Joondalup, was amazed by what he discovered.

“The first thing that amazed me, particularly having come from an industry background, was just how petty some of the issues were,” Mr Clough said.

“To find that there was an ongoing battle with City of Wanneroo over who held the (ceremonial) chains to me was just ludicrous.”

Mr Clough also found that the appointed commissioners were able to pursue changes that elected councilors may not have been able to push through.

“I am 100 per cent confident that the decisions we took were in the interests of the wider community.

“The view very strongly was that if it had been an elected council, they wouldn’t have had the guts to do it.”

He said a third major concern was the lack of a thorough financial plan.

Hames Sharley executive chairman William Hames was one of several participants who said potential workers would be deterred by the antics of local councilors.

“There doesn’t seem to be a career path, and you don’t seem to attract the young MBAs to run local government,” Mr Hames said.

“Having sat in council chambers on numerous late nights, I can see why.”

Another common theme was that local councils can be captured by narrow interest groups.

City of Fremantle Mayor Peter Tagliaferri said “many people get elected because they are passionate about a particular issue”.

City of Perth Lord Mayor Peter Nattrass believes critics of local government have lost perspective on the sector.

“To sit around and criticise the talent and experience of people going into local government stirs me up a bit,” Dr Nattrass said.

“I hope that nobody would think for a minute that (issue) is unique to local government; you only have to look at the state government and state opposition.

“What I see in question time in Canberra is a damn site worse than what you see at the City of Perth.”

City of Cockburn Mayor Stephen Lee expressed frustration that critics made it harder for the sector to develop.

“We spend a great deal of money on conferences and training and visiting other cities to find out what they are doing, to find out what works best so we don’t have to reinvent the wheel,” Mr Lee said.

“Yet how often does The West Australian and the local rags pump out stories about trips costing ten thousand or twenty thousand dollars, when we have got infrastructure worth hundreds of millions of dollars.”

Looking ahead, Mr McCullagh sees positive signs for the sector.

“I think we’ve found a story that paints a reasonably confident picture,” he said.

“There is a great sense of the role local government can play. There is passion for change.”

There was wide acceptance in the sector that greater regional cooperation was needed.

“We need regional thinking and we need to form partnerships with the state instead of fighting each other,” City of Wanneroo chief executive Charles Johnson said.

“A huge issue for us is the lack of joint decision making. Regional partnerships are critical.”

This view was echoed by WALGA state president Bill Mitchell, who said “regional groupings of councils are the future”.

Local Government Minister Jon Ford has been pushing a similar theme, stating that more cooperation and sharing of assets and services was the way of the future for many local councils.

Not surprisingly, the agreement does not extend to funding.

Mr Mitchell would like the state’s regional development commissions to be scrapped and their budgets allocated to regional councils.

For its part, the state has provided $3 million under its Connecting Local Governments program, which supports regional service provision.

A spokesman for the minister said the government would look favourably at increased funding if there was strong demand for the money.

Equally unsurprising is that the state government and local councils agree the federal government is not pulling its weight.

Mr Ford said local councils in WA had missed out on about $17 million since the federal government stopped adjusting its grants for population growth and only adjusted for inflation.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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