07/08/2015 - 06:21

State puts councils on notice, again

07/08/2015 - 06:21

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After failing to implement its council amalgamation plan, the government is targeting funding arrangements.

BIG STICK: Tony Simpson is not convinced councils are delivering value for money. Photo: Attila Csaszar

The state government is on safer ground over its latest move to demand more accountability from the local government sector, including over the setting of annual rates. And it would need to be, after the fiasco over the failed attempt to slash the number of metropolitan councils.

The problem with the council rationalisation move was that it lacked a precise timetable. While promoted as a good idea, it lacked compelling evidence to support the change. And the councils mounted an effective defence of their patch.

The issue of council rates is different. Rates go right to the hip pocket nerve of all property owners; and the one thing they notice is that rates increase annually, regardless of the location of the council and the services that are provided.

In fact some metropolitan councils have approved rate increases of up to 8 per cent for the new financial year –more than double the forecast rate of inflation. So what’s going on?

It might be the third administrative tier, and therefore considered a minor player, but councils are big business. According to Local Government Minister Tony Simpson it’s a $2 billion a year industry, and growing. Rates raise more than $1.9 billion annually, and almost $300 million extra is provided through the Local Government Grants Commission.

But the minister is not convinced councils are delivering value for money.

“I am concerned there is a mindset in local government where desired expenditure is determined and then rates set accordingly, rather than working out the council’s potential revenue first and then setting expenditure,” Mr Simpson told the WA Local Government Association recently.

“I have asked my department to commence dialogue with the sector about local government rates and what options are available for putting downward pressure on rates.

“Part of that discussion may be whether there should be a role for an independent third party to have oversight of rate setting by councils, such as the Economic Regulation Authority. I want there to be cooperative dialogue and no blame games.”

Good luck with that; but there’s more. Mr Simpson accused some councils of being less than accountable and transparent over the setting of their rates, fees and charges, and their ongoing sustainability. Enter the Office of the Auditor General, which is answerable directly to parliament, rather than the government.

“The auditor general’s role is to audit the finances and activities of the Western Australian public sector and scrutinising the public sector for potential instances of wastage, inefficiency or ineffectiveness,” Mr Simpson said.

“As I consider local governments are also servants of the public, it is my intention to extend the powers of the Office of Auditor General to include the auditing of local governments.”

And then, for good measure, he threw in the Corruption and Crime Commission.

“The CCC has identified local governments as being at high risk of misconduct and corruption in a report which provided an overview of the findings of the 2014 misconduct intelligence assessment – a risk assessment of the inherent corruption and misconduct risks within the public sector,” the minister said.

“Increasing the independent oversight of the local government sector through the appointment of the auditor general as the auditor for local governments is consistent with the recommendations from the CCC.”

Despite speculation that the government was considering an arbitrary cap on rate increases, it has  (from a political perspective) wisely downplayed that prospect. It would have given some councils and ideal stick with which to retaliate.

Councils would have had a perfect excuse for not being able to provide a wishlist of services. The arbitrary cap on rate increases imposed by the government means less revenue, and that means certain services can’t be delivered.

There’s no requirement as to how councils spend ratepayers’ money. After funding essential services, there nearly always seems to be a little largesse to hand around, which often seems to overlap with state activities.

One inner-city council has the ludicrous situation where street signs are duplicated, with different names of course. There are the official names from the directory, then names like ‘Affordable Housing Program Street’ on the same pole. What’s going on?

Councils explain this generosity away by saying it’s helping various community groups provide services, or entertainment, for residents; and that’s often the case.

But there’s another side. Councillors are elected, and most like to be re-elected. Funnily enough that means they start behaving like politicians. And where they can influence a few handouts here and there, they will be hoping that the gesture is remembered at election time.

Local government has traditionally flown below the radar when it comes to the issue of accountability; it seems that’s no longer the case. If Mr Simpson’s initiatives achieve better value for money for ratepayers, they will have proved worthwhile. We live in hope.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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