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Local Government Act Review Local Government Act Review Imagining Local Government in the 21st Century YEHUDI BLACHER December 2015 Purpose of this paper This paper has been prepared for the Local Government Act Review by Mr Yehudi Blacher who, as the Director of the Office of Local Government between 1991 and 1995, oversaw the major restructuring of local government in Victoria that occurred during this period. As a departmental Secretary between 2002 and 2011 Mr Blacher was responsible for Local Government Victoria which was then a division in the Department for Victorian Communities (2002- 2007) and the Department of Planning and Community Development (2007- 2011). Page 2 of 16 Introduction The last major review of the core legislation regulating the conduct and operations of local government in Victoria occurred over 25 years ago. In the intervening period Victoria’s population has increased from 4.3 million to 5.5 million and Melbourne’s population from 3 million to 4.2 million and current population projections have Melbourne growing to between 7 million and 8 million people and Victoria’s to between 9 million and 10 million people over the next 35 years. To put this in perspective whilst it took around 170 years for Victoria to reach a population of 5 million it is projected to grow nearly that much again in only the next 35 years. The coming three decades will present significant challenges for all levels of government; none more so than for local government. Since the Second World War there has been a seemingly inexorable trend in intergovernmental relations, transferring financial and policy- making influence and power from the State Governments to the Commonwealth Government. In addition the place of local governments in the Federation has always been uncertain. Their legitimacy as democratic institutions is constrained by the fact that they are creations of State Parliaments and can be dismissed by those Parliaments. Furthermore their role as service providers is also limited by their dependency on other levels of government for a significant proportion of their revenue and the narrow basis of self sourced revenue. These limitations notwithstanding, as Victoria’s population grows over the coming decades, the need for local democratic representation reflecting the needs and aspirations of diverse communities will become more not less important. The challenge for local councils will be to find a balance between their role as democratic representative institutions whilst at the same time ensuring they can efficiently and effectively deliver the services for which they are responsible. Since the passage of the Local Government Act 1989 Victoria’s system of local government has itself gone through major change; the most significant of which was the structural transformation of local government which resulted in the number of councils being reduced from 210 to 78. The impetus for this transformation was the Kennett government’s view that the structure of local government was no longer fit-for-purpose; a view, incidentally, shared by the Cain government which in the mid-1980s presided over a failed attempt to restructure local government and all previous reviews of local government going back to the 1860s. In addition to restructuring, local government has been subject to numerous other changes. These include changes relating to accountability, transparency, operational requirements, governance, franchise arrangements and election procedures. Since 1989, there has been at least one local government amendment act in all but four years. The Act, which when passed in 1989 comprised 136 pages, has grown to over 450 pages. Page 3 of 16 There are two reasons to welcome a review of the Act; to bring the Act back to a manageable size and to position local government for the challenges of the coming decades. Reviews of legislation usually take one of two forms. Firstly, a tidying up of parts of an act which have become redundant, have not achieved their intended objective or are just badly worded. Secondly, a ‘first principles’ examination of the purposes of the legislation to assess whether it is fit- for- purpose in view of changing circumstances and future expectations. This paper is written with the latter in mind. It will attempt to ‘imagine’ some key aspects of what a system of local government could look like if it was being established today having regard to the future trends and challenges as they are currently understood. It is of course not possible to literally construct local government anew. However as a starting point, to tease out some key issues, it is worth a brief look back to the actual beginnings of Victoria’s system on local government. Past attempts at reform Peculiar beginnings The first embryonic ‘municipal’ institutions in what was to become Victoria were established in 1840 when the then colonial government of New South Wales created two ‘counties’ Bourke (covering Melbourne) and Grant (covering Geelong) in the District of Port Phillip. The purpose of these creations were to establish an administrative vehicle through which the growing populations 1 of the new counties could be made to financially contribute to the provision of key services (road, water sanitation) needed by these rapidly growing urban centres.2 The two new counties were conceived not as a form of local self- government but as a local taxation district administered by agents appointed by the colonial government in Sydney. The first institutional form of what could be called local self-government occurred in 1841 following a meeting in Melbourne to authorise the creation of a market. New South Wales legislation required the election of commissioners for this purpose. Melbourne was divided into four wards each required to elect two commissioners. Electors comprised those with either annual income from property of 20 pounds or ownership of property to the value of 200 pounds. 3 From its very outset local government in Victoria was the creation of an act of parliament of another level of government and has remained so ever since. 1 By 1840 Melbourne had a population of approximating 10,000. 2 David Dunstan ‘A Long Time Coming’ , in Brian Galligan (ed) Local Government Reform in Victoria , State Library of Victoria, 1998, pp. 3-30. 3 Ibid p. 8. Page 4 of 16 The market commission was the progenitor of the creation in 1842 of the first Melbourne City Council (MCC) with the authority to carry out broader municipal functions. In addition to its municipal functions the MCC provided a political forum for pressure to create a colonial authority separate from New South Wales. This occurred in 1851 through the creation of a new colonial authority, the Legislative Council of Victoria. The establishment of a colonial authority in Melbourne put paid to whatever aspirations the council may have had independently to undertake broader functions. The legislative primacy of the Legislative Council and its need to respond to a rapidly growing population as a result of the gold rush lead to a centralisation of functions with the Colonial government, leaving little space for municipal government. The passage of the Municipal Institutions Act 1854 provided for the creation of municipal districts resulting from petitions “from at least 150 householders in areas not exceeding 9 square miles and containing a population of 300 people”.4 They were to have responsibility for functions including roads, wharves and water supply and to operate markets, cemeteries and museums and were able to take measures to protect the poor and the sick.5 A decade later the Road District and Shires Act required new rural shires to cover at least 100 square miles and have revenue of at least 1000 pounds. The Local Government Act was legislated in 1874 bringing together rural and metropolitan councils under a single piece of legislation. The ease with which councils could be established meant ‘by the latter half of the 19th century Victoria had over 200 boroughs and shires.” 6 This structure remained largely unchanged until the reforms of the early 1990s. As the number of councils grew, the breadth of functions they undertook narrowed. By the end of the 19th century, and into the early 20th century, Victoria had both a fragmented system of local government and a plethora of government departments, boards and agencies responding to the need to plan, fund and provide services such as health, water, energy, sewerage and public transport at a metropolitan level, rather than to leave them to the vagaries of municipal decision making. Three themes emerge from this short historical overview. Firstly, the role of local government as part of Australia’s federal system of government. Secondly, the desirable functions which councils should perform. Thirdly, the appropriate balance between local government understood as service funder and provider and local government as an institution of democratic governance. These themes are not just of historical interest but continue to shape current public debate about the structure, role and functions of local government in this State. 4 Board of Review, 1979, Local Government in Victoria: role, structure and administration (The Bains Report), Local Government Department, p9. 5 Ibid, p9. 6 Ibid, p9. Page 5 of 16 Tilting at windmills The first formal review of Victoria’s system of local government was the 1863 Stuart Commission. At the time Victoria had 54 municipal districts. The review found that Victoria had too many small councils with rate-bases too limited to undertake functions
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