By Corey Everitt
A state inquiry into local government was secured last week that will look into the finances and delivery of service at a municipal level.
The enquiry was put through last week with the support of the Liberal and National Parties, despite opposition from the State Government.
The motion called on the Economic and Infrastructure Committee to look into local government and outlined five propositions to guide it.
The effects of cost shifting by state and federal governments, whether councils are delivering their service objectives, revenue structures of local government, whether exisiting revenue structures are appropriate and, finally, any other related matters.
The State Government opposed the motion.
MP for Southern Metropolitan Region Michael Galea questioned the basis of interfering in local government.
“The motion would prefer to see councils deliver on a list of highly defined authorised services dictated by the State Government,” he said.
“It is actually ratepayers that fund councils, and it is residents that elect councillors and whom councils are there to represent.
“Different areas have different needs, and it is appropriate for councils to represent their communities in the decisions that they make and in the priorities that they put forward.”
A government spokesperson reiterated similar points.
“We value the critical role councils play in delivering services to their communities,” they said.
“Dictating to councils what services they are and are not allowed to provide to their communities would be totally inappropriate.
“We continue to work with all councils to ensure they have the support they need.”
While some see it as the State Government interfering in local government, some elements of the inquiry may seek to judge the existing influence of the State Government on councils, such as rate-capping and cost shifting.
The raising of council rates is capped by the State Government, as part of the Fair Go Rates system.
The Cardinia Shire Council will raise the total rate revenue to the limit of 3.5 per cent for the coming financial year.
The council acknowledges the strain the rate cap puts on raising revenue in its executive summary of the latest draft budget for 2023-24.
“Neither the 3.5 per cent rate cap or CPI for 2023/24 accurately reflect increases in costs faced by local councils, including Cardinia, because they have a significantly different composition of expenditure compared to households,” the document said.
“The overall financial impact of the lower rate environment has led council to review it services and capital works program and to source alternative funding.”
While cost-shifting is a regular problem for local governments.
Cost-shifting is when a council asset or program, assisted by recurring State or Federal Government funding, becomes more costly for the council as costs rise over time, while higher government funding stays fixed.
Cardinia Shire Council consistently has trouble with cost-shifting, currently with the management of state-owned Crown land.
“Council continues to play a significant role in developing and maintaining Crown land reserves for the benefit and enjoyment of the community and consequently has exposure to infrastructure owned by and is the responsibility of other state authorities,” the executive summary explained.
The inquiry into local government is required to report on its findings by 30 June 2024.
