Ministerial Statement: Local Government

HUTCHINS (Minister for Local Government) — I wish to make a ministerial statement.


I acknowledge the traditional custodians of the country on which we stand, the Kulin nation and I pay my respects to their elders past and present and elders from other nations who may be here today.

The Andrews Labor government has nailed its colours to the mast when it comes to local government. Our vision is clear.

Fairness, transparency, responsiveness, and investing in the things that matter to local communities.

We demonstrated this through our $50 million Interface Growth Fund to invest in the spaces that communities in our growing outer suburbs need.

A record investment in libraries and their resources.

Our commitment to make council rates fairer for Victorian families and to undertake a comprehensive review of the Local Government Act — the first since its inception 25 years ago.

It has been a hallmark of the Andrews government that we have hit the ground running — and the local government portfolio is no different.

The challenge — why local government matters

I want to begin by talking a bit about why councils matter to Victorians.

Melbourne is often referred to as the ‘cultural capital of Australia’, and proudly so, and continues to be ranked as one of the world’s most livable cities.

But more essentially our capital is a city of suburbs.

Beyond the central city, Victoria is made up of hundreds of towns, each with its own sense of community and local character that have developed and grown over time.

Councils are central to the character and liveability of those places, and I have seen that firsthand in my visits around the state.

While our key population centres remain desirable places to live, pressures in some parts of the state are increasing.

The health of our towns and suburbs and their capacity to sustain connected and inclusive communities is essential.

The ability to adapt to future needs is critical.

And high functioning councils are integral to this.

These are just a handful of the reasons why local government plays an indispensable role within our federated system of government.

We are unique in Victoria in recognising local government in our constitution as a distinct and independent tier of government.

Council responsibilities are complex and dynamic and we need to make sure the systems and structures which support them keep pace.

From the state government’s perspective, councils are critical partners in improving the wellbeing, prosperity and lives of all Victorians.

That is why we have recommitted to the Victorian state-local government agreement, the principles of which will continue to strengthen our partnership as we implement our reform agenda.

The agreement ensures a genuine partnership between the state and local governments, an important tool to ensure good public policy.

But more than this, councils are governments — they provide a vehicle for local democracy.

This dynamic role as an economic force, service provider and the level of government closest to the people creates challenges for local councils.

While local government functions have evolved to reflect some of these challenges, there is real scope to achieve further efficiencies, modernise the legislative framework and bring councils and their activities in line with the expectations of communities now and into the future.

The ministerial statement on local government

The local government reform directions in this statement establish a clear agenda for the Andrews government to deliver the government’s key commitments in this area to:

comprehensively review and modernise the Local Government Act 1989;

implement a Fair Go rates system; and

establish an infrastructure fund to fill the gaps faced by interface councils.

Beyond this the reforms will drive ongoing improvements in the performance, capability, integrity and value for money delivered by local councils for Victorian communities.

The local government reform agenda proposed here would be delivered within a framework provided by three strategic areas for action:

1.   strengthen integrity and good governance;

2.   improve capacity and performance; and, most importantly,

3.   deliver for communities.

Integrity and good governance

The overarching review of the Local Government Act 1989 sits within the first of these strategic areas for action — integrity and good governance.

Given the diverse and evolving role and function of local government, it is not surprising that the Local Government Act has been extensively revised and altered over the 25 years it has been in place.

Since its inception in 1989, the act has been the subject of over 94 amending acts.

Many amendments have simply addressed specific issues as they have arisen in the sector.

This has led to parts of the act becoming unclear, ambiguous and inconsistent.

Some sections are now poorly structured and unbalanced, with some parts unnecessarily prescriptive while others obscure meaning and lack critical legislative detail.

For example, the act prescribes in detail how to conduct a meeting, but provides little guidance on executive decision-making.

The act also contains historic and redundant provisions that impede efficient administration by councils.

In response, councils have been seeking a comprehensive review of the act for some time, and I am proud to say we will deliver it.

Given the history of amendments, the intention of this review is not to embark on a series of further renovations to the existing legislative edifice.

Instead we will create an entirely new legislative structure, fit to accommodate a modern, mature relationship between councils and the state.

Work has already commenced on a discussion paper, and it will shortly be released for public comment.

This will be followed by a directions paper next year.

Extensive input from councils, peak bodies and the community will be sought at each stage before we present a reform bill to the Parliament in 2017.

Because this review will take some time, it is clear that there is a need for more immediate improvements.

This will ensure that we have better procedures for dealing with councillor misconduct.

First, by giving councils more power to deal with governance matters internally.

Secondly, by improving the powers of councillor conduct panels to make findings about misconduct.

Finally, by giving the minister more tools to intervene early so that the actions of a single councillor do not result in suspension or dismissal of an entire council.

These reforms will be coupled with some changes that will improve integrity, participation rates and the efficient conduct of the 2016 elections.

These include: mandating the Victorian Electoral Commission as the statutory election services provider; codifying uniform caretaker requirements; and making the enforcement of penalties for failure to vote consistent across councils.

I intend to move quickly on these legislative reforms, which will then be integrated into the revised act.

Capacity and performance

Under the second strategic area for action of improving capacity and performance, the government will implement Australia’s first mandatory performance reporting framework for local government.

By November 2015 Victorians will have the most comprehensive overview of the performance of the state’s councils ever assembled.

Victoria’s local government performance reporting framework and its Know Your Council website will provide a comparison of council performance and capacity.

This new, transparent information will allow Victorians to clearly see how their council is performing and provide the basis for targeted improvements to all aspects of council business.

As a government, we will seek opportunities to match less efficient councils with leaders in the sector to achieve administrative efficiencies.

We will extend the Victorian Common Funding Agreement to the sector and then rationalise unnecessary reporting and compliance requirements, which are sometimes placed upon councils.

The work in this area will create new incentives for more sustainable business practices, improved productivity measures and stronger cost controls.

The bundle of measures will also reduce council costs and assist councils to contain future rate increases.

In addition, the government will embed a council impact statement in our cabinet submission templates, ensuring future policy proposals in all portfolios are harmonised with the government’s reform program.

Local government plays a critical role in emergency management, not only through support of response agencies but also by providing information to local communities, coordinating emergency relief and working to rebuild affected communities. I have seen that myself firsthand.

The government will institute a major review of the municipal emergency resourcing program in partnership with the Municipal Association of Victoria.

Delivering for communities

Central to our third goal, delivering for communities, is the government’s strong and unequivocal focus on transparency and rating discipline.

The Fair Go rates system will be in place by the end of the year, well in time for next year’s council budgets.

The Essential Services Commission has released its draft directions, and its rigorous policy process will ensure we get this system right.

Victorian ratepayers want a better understanding of their councils’ budgets.

They want a more transparent budget so they can have a stronger voice in budget priorities.

And they want a rigorous discipline applied to justifying rate rises that councils consider.

Rates are the second biggest bill households receive each year after their mortgage payments.

With many households on fixed incomes and with wages and CPI rising slowly, it is simply unsustainable for rates to be growing year on year at over 6 per cent, as they have on average in Victoria for the past 15 years.

Routine rate rises of this magnitude are both unsustainable and unacceptable to most Victorians.

Our commitment to fiscal discipline in this sector is complemented by the government’s determination to tackle the infrastructure deficit, particularly in interface council areas. We have established the Interface Growth Fund through a $50 million investment in the 2015–16 budget.

This funding will deliver critical, urgently needed and shovel-ready infrastructure projects, which will make an immediate difference to residents in our fastest growing suburbs.

We will also provide greater support for rural councils doing it tough.

The greater dependency of rural councils on commonwealth and state grants makes them highly vulnerable to shifts in policy at higher levels of government.

The government will continue to work with rural councils to explore a range of strategies to address the challenges they face as their populations age and their rate bases decline.

As a start we have extended funding for Rural Councils Victoria to innovate and implement sustainable business practices.

The government will also be ramping up our efforts to make sure the infrastructure investments made by councils and the state government are complementary across the state.

Councils invest around $2 billion in infrastructure annually.

Until now little effort has been made to harmonise state government investments with those made by councils.

Better aligning our investments will bring a greater return for Victorian communities.

In addition to this, public libraries are an important example of where better integrated work can deliver a better result.

In this information age, libraries are at the heart of our community.

That is why I am pleased the government has committed to undertake a critical review of Victorian libraries.

This review will determine the best way forward for future funding arrangements that can deliver greater local access to books, DVDs and knowledge resources in all their forms now and into the future.

The Andrews government will also undertake a series of actions linked to our equality agenda — both in terms of councils and communities.

We want to lift employment outcomes and engage communities across the state to help make sure that every Victorian receives a quality service from their council, regardless of their background or where they live.

Metro, suburban, regional and rural residents all deserve responsive and accessible local government services, but equality does not just mean equity in service delivery.

And just as with our federal and state parliaments, local governments should reflect the make-up of the communities they serve.

Aboriginal Victorians, women, younger people and people from culturally diverse backgrounds continue to be under-represented as councillors.

Diversity in representation ensures a greater mix of insights and experience.

As a flagship for this approach, this year I will be establishing an Aboriginal local government action plan.

Jointly convened by the Office of Aboriginal Affairs Victoria and Local Government Victoria and chaired by the Municipal Association of Victoria, the steering group will include councils already undertaking outstanding work and build upon partnerships with Aboriginal communities.

This work demonstrates what goes to the heart of the Andrews Labor government’s agenda — achieving councils that truly represent their local communities.


In this context, the ministerial statement on local government is not just about one set of budget announcements.

Nor is it simply a list of election policy commitments.

The strategy I have articulated today provides a basis for improvements in the performance, sustainability and integrity of Victorian local councils over the long term. There are many people in local governments across Victoria who do a fantastic job: from councillors to administrative staff; from CEOs to garbage collectors; from the staff at the local libraries to the staff at councils who run the most important health and education services.

But Victorians, and ratepayers in particular, have said they expect better from their councils, and many of them voted for an Andrews Labor government last November because we promised to help deliver better local government.

This is an ambitious yet achievable program which places Victoria at the forefront of reform.

Our strategy is rigorous, strategic and fair.

It provides the basis for an effective platform to deliver for Victorians and their communities.