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Reforming Local Government in SA By Natasha Jones
NATASHA JONES, LAWYER, KELLEDY JONES
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Very rarely these days, does a day go by where The Advertiser fails to include a story about a council. Whether it is about investigation into the conduct of council employees, allegations about behaviours of elected members, a dog attack, recycling and landfill reduction programs, lobbying to retain trees or the revitalisation of local and regional areas that have been affected by drought or bushfires. Councils have been and will continue to be, in the media spotlight.
This is, in part, due to the fact that councils, as the level of government closest to their communities, operate within a prescriptive integrity framework that subjects them to significant oversight and scrutiny, both by their communities and by external oversight bodies. Much of the oversight is well intended - let’s face it, councils are public authorities and are trusted with the expenditure of significant public funds. This is at a time when the well debated and agitated topic of State Government not being subject to the same level of accountability mechanisms is also a regular media topic, but that is a discussion for another day!
Local government reform does not occur frequently. It is therefore, both topical and important that the current proposed reforms not be understated and, certainly not, underestimated. The last time the local government framework was subject to real significant legislative change was in 2000. This was when the Local Government Act 1934 was revoked and the Local Government Act 1999 (the Act) was introduced. So, 20 years on, we are now facing significant local government reform, much of which is to be considered in the context of the paternalistic care of the State.
On 5 August, 2019, the former Local Government Minister, Stephan Knoll, released the Reforming Local Government in South Australia, Discussion Paper. This was developed following the Reforming Local Government Survey from earlier 2019. Reform suggestions focussed on four key areas: • Stronger Council Member Capacity and
Better Conduct • Lower Costs and Enhanced Financial
Accountability • Efficient and Transparent
Representation; and • Simpler regulation.
At this time, Minister Knoll stated that the foundation for proposed reform to local government was to achieve the support needed for councils, appropriate oversight and that each community enjoy certainty that their council makes good decisions, understands local needs and operates efficiently and sustainably. 1
The consultation process led to the Statutes Amendment (Local Government Review) Bill 2020 (the Bill) being introduced to Parliament on 17 June, 2020. The Bill maintains the same four key reform areas.
STRONGER COUNCIL MEMBER CAPACITY & BETTER CONDUCT
These reforms have their genesis in asserted high community expectations about behavioural standards and conduct of council members and community leadership. Amongst other things, it recognises integrity standards and issues of corporate and individual reputational damage from the behaviours of a few. The proposed framework focusses on council member behaviour and the measurement, judging and sanctioning thereof. This framework will sit alongside the balance of the public integrity framework, under the Ombudsman Act 1972 and the Independent Commissioner Against Corruption Act 2012.
It is considered that a new conduct management framework will establish a much clearer hierarchy of conduct that separates defined ‘behavioural matters’ from defined ‘integrity matters.’ This is to create clearer responsibilities and pathways so council members and the public can understand which body is responsible for managing different aspects of council member conduct.
The current Code of Conduct for Council Members will be abolished, replaced with Behavioural Standards, established by the Minister. This will be supported by council behavioural support and behavioural management policies. Whilst the Minister will regularise council member conduct broadly, there will remain some discretion for councils to introduce individual behavioural support policies.
The most significant proposed change is the establishment of a new corporate entity, the Behaviour Standards Panel. Its members will be appointed by the Governor, as nominated by the Minister and the Local Government Association. Its primary function will be to assess and deal with complaints alleging misbehaviour, repeated misbehaviour or serious misbehaviour by council members. Each term is defined.
The Panel will have various coercive powers to conduct an inquiry into conduct where failure to comply carries a maximum penalty of $10,000. The Panel will have power to suspend a member from office for a period not exceeding three months, with or without their allowance and may direct the council to lodge a disciplinary complaint with the South Australian Civil and Administrative Tribunal.
This area of proposed reform also introduces improved conflict of interest provisions. These will simplify the current system by reducing the current three ‘categories’ of conflict of interest (material, actual and perceived) to two - ‘material’ and ‘general’ conflict of interest.
LOWER COSTS AND ENHANCED FINANCIAL ACCOUNTABILITY
South Australian councils annually manage a collective budget in excess of $2.2 billion and more than $24 billion of
infrastructure and other assets. 2 To do so, they raise funds through council rates, fees and charges. This is the core of the public perception, aided by adverse media commentary, that councils lack adequate financial management.
Various amendments to the Act have occurred since 2000 to improve the financial management and accountability of councils, to improve accountability, financial governance, asset management, rating practices and auditing arrangements. This included long term financial plans, mandatory audit committees, consistent and improved reporting format and annual financial statements and measures to strengthen the independence of external auditors. Further amendments have focussed on audit and reporting requirements and Auditor-General powers to examine the efficiency, economy and effectiveness of activities.
The Bill centres on three main reform proposals – rate monitoring, the role of audit committees and, finally, expanding the role of the Auditor-General consequential upon the 2019 South Australian Productivity Commission inquiry into local government costs and efficiency.
A rate monitoring system is proposed to be introduced with councils being required to receive, consider and publish independent advice on proposed changes to general rate revenue, as received each year from a designated authority (which the Bill does not identify but is thought likely to be ESCOSA). The annual business planning and budget processes will be subject to reporting requirements to the designated authority.
Concerns regarding council decision making and accountability have led to the proposed expansion of the audit committee to an audit and risk committee, to reform governance standards and decision making and to improve financial reporting and public accessibility.
Expanded powers of the AuditorGeneral are also proposed together with changes to the external auditor requirements to impose obligations that exceed those that currently apply under the Corporations Act.
EFFICIENT & TRANSPARENT REPRESENTATION
Every four years periodic elections determine the membership of each council. At the moment, these coincide with State Government elections. In 2018, the State election was held in March and council elections were held in November. To avoid voter ‘fatigue’ it is proposed to change the timing of the election cycle. It is proposed that the periodic election scheduled in November 2026 be deferred until November 2027 (a five-year term) then reverting to the four-year terms.
It is agitated from time to time that councils are over-represented, causing additional cost to the community. A proposed change is that councils be compromised of no more than 12 members. Whilst this will affect only a few councils, it is indicative of the Government’s position on driving down costs in maintaining a locally elected membership base.
SIMPLER REGULATION
This reform area aims to improve and streamline legislative rules and processes, also associated with council decisionmaking. Councils have been subjected to overly prescriptive public consultation obligations which the proposed amendments will address to ‘modernise’ community engagement. This is, at least in part, recognising that current requirements commenced before smart phones, tablets and the widespread use of social media - at a time when postal services were considerably quicker and people read newspapers in broadsheet form!
Section 270 of the Act currently requires councils to have a process for community members to apply for internal review of council decisions. Some proposed amendments include a six month time limit to apply for a review, subject to extension on a case-by-case basis. This will probably present further avenues of challenge against a council that makes a decision which is not favourable to the applicant.
A streamlined process for councils to revoke community land status is also proposed by way of a more tailored approach that caters for an administrative process as a limited option against the more significant revocation requiring Ministerial approval.
WHERE TO NEXT?
There is no doubt that the Bill is (and is intended to be) a catalyst for proposed wide-scale reform to local government operations. Unfortunately, the word restrictions for this paper do not permit the many more examples of proposed change that could be given. It is, however, simply a Bill at this stage and what is ultimately enacted, if anything, might be substantially different from what is currently proposed. There is also a number of areas where the detail is not yet known or further change to subordinate legislation is required. There is, therefore, a substantial element of “wait and see”, as is becoming more common with modern approaches to the introduction of new or amending legislation. B
Endnotes 1 Reforming Local Government in South Australia,
Discussion Paper, August 2019, page 2. 2 Reforming Local Government in South Australia,
Discussion Paper, August 2019, page 33.
