Mark Henderson Natasha Jones Michael Kelledy Victoria Shute Cimon Burke Chris Woodward Tyler Johns Philippa Metljak Chris Woodward Tracy Riddle Emily Nankeville HTML Map

Lawyers for local government

Recasting Council Boundaries in South Australia – the Spectre of Council Amalgamations (October 17th, 2016)

Local Government reform is currently a ‘hot topic’ in South Australia, evidenced by the recent Economic and Finance Committee’s inquiry into rate capping being tabled in Parliament, the release of the draft Local Government (Boundary Adjustments) Amendment Bill 2016 (“the Boundary Adjustment Bill”), and now the release of a report commissioned by the Property Council of Australia (SA) titled “An Economic Assessment of Recasting Council Boundaries in SA” (“the Report”).

The Report was commissioned by the Property Council to assess potential financial benefits and costs of a statewide reduction in the number of local councils.

Ultimately, the Report proposes that South Australian councils be reduced by more than 50%, from 68 to 32, with the proposed breakdown of this number being a reduction in metropolitan councils from 19 to 9 and a reduction in regional councils from 49 to 23.

The Report compares the experience of Local Government in SA to that of other States and makes a substantial (an, arguably, unjustifiable) comparison with the Brisbane City Council, where that Council area is approximately the same size as the combined area of the SA metropolitan councils (excluding the Adelaide Hills and Gawler).

The main findings in the Report are that:

  • A reduction in councils from 68 to 32 would deliver savings to councils and the community of $65 million per annum.

These savings are suggested to arise from the reduction in the number of Mayors (68 to 32) and elected members (647 to 329) across the State, a reduction in the total number of executive employees (576 to 330 after year three (3) years) and speculative benefits from economies of scale, such as reduced costs associated with the procurement of materials and contracts.

  • Adelaide metropolitan councils are more reliant on rate revenue than the state as a whole with rates accounting for 76% of their total revenue base.

The 2013-14 figures utilised in the Report indicate the reliance of Adelaide metropolitan councils on rate revenue is higher than that of regional councils. The statewide average reliance on rate revenue for councils is 63% (as compared to 76% for the metropolitan councils). This figure is still significantly higher than the National average reliance of councils on rate revenue, which is only 38%.

  • Rates per person in SA are the highest in the country and increasing at a faster rate.

The Report suggests that South Australians pay almost $150 more per capita towards their council rates than the Australian average, with the State average in 2013-14 being $774.16 and the National average being $627.40.

According to the Report, the reason rates are increasing at a faster rate in South Australia can be attributed to our over reliance on rates and a lack of diversification with respect to other revenue streams.

However, KelledyJones would suggest that insufficient investigation was undertaken in the preparation of the Report, in order to determine the services that South Australian councils are required to provide as compared to their National counterparts, particularly in an environment where we have a State Government increasingly retreating from its traditional areas of service delivery. The recent introduction of legislation such as the Local Nuisance and Litter Control Act 2016 serves only to increase the regulatory burden and hence, the costs borne by councils.

The timing of the release of the Report is particularly interesting, against a background where council’s are currently considering, and providing feedback on, the Boundary Adjustment Bill.

Importantly, the Bill, if enacted in its current form, will fundamentally change the process for council boundary adjustments. It makes several significant amendments, which, if passed, will substantially affect the input councils have in an amalgamation process, should the Minister of Local Government (or Parliament) so desire to implement the provisions. (See our September 2016 LG Leader for more information lg-leader-september-2016).

Under the proposal, not only can the Minister be a proponent of a reform proposal, but also the ultimate decision-maker. Relevantly, affected councils will no longer have to agree, or consent, to the boundary reform proposal, prior to the submission proceeding further.

All of the proposed amendments to the manner, in which a council boundary adjustment can be achieved, would serve to result in council amalgamations being easier to accomplish.

Accordingly, and we suggest that, by design, the findings outlined in the Report may stand to have a significant impact, at least upon the basis of it being extrinsic ‘in principle’ support for the Minister (or the Parliament) moving to utilise the new statutory powers that will be introduced if the draft Bill is passed in its current form.

If you have any questions regarding the above please contact Tracy Riddle at triddle@kelledyjones.com.au or on 8113 7106 or Tyler Johns at tjohns@kelledyjones.com.au or on 8113 7108.