Draft Report Inquiry Into Local Government Costs and Efficiency
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Inquiry into Local Government Costs and Efficiency Draft Report Inquiry into Local Government Costs and Efficiency 30 August 2019 Page | 1 Local Government Costs and Efficiency Draft Report Inquiry into Local Government Costs and Efficiency © Government of South Australia. Published 2019. All rights reserved. No part of this publication may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968 (Cth), without prior written permission from the South Australian Productivity Commission. Disclaimer The views expressed herein are those of the South Australian Productivity Commission and do not purport to represent the position of the Government of South Australia. The content of this draft report is provided for information purposes only. Neither the South Australian Productivity Commission nor the Government of South Australia accepts any liability to any person for the information (or the use of such information) which is provided in this draft report or incorporated into it by reference. The information in this draft report is provided on the basis that all persons having access to this draft report undertake responsibility for assessing the relevance and accuracy of its content. South Australian Productivity Commission GPO Box 2343 Adelaide South Australia 5001 AUSTRALIA Telephone: 08 8226 7828 Email: [email protected] Website: www.sapc.gov.au An appropriate citation for this publication is: South Australian Productivity Commission 2019, Inquiry into Local Government Costs and Efficiency – draft report, August 2019 Page | 2 Local Government Costs and Efficiency Draft Report Inquiry into Local Government Costs and Efficiency Preface The release of this draft report gives interested parties the opportunity to comment on the Commission’s analysis in relation to its inquiry into local government costs and efficiency. The Commission will consider comments received prior to developing and presenting its final report to government. In preparing this draft report, the Commission invited public submissions and consulted widely with a range of individuals, businesses, organisations and government agencies. The Commission invites further written submissions on the draft report. These submissions may address any of the issues covered by the terms of reference. The Commission will hold further consultations as necessary, to gather further evidence and hear views on the draft report. At the conclusion of consultation on the draft report, the Commission will prepare a final report to be presented to the Government of South Australia on 22 November 2019. The Commission looks forward to receiving feedback on the draft report. We would like to thank all those who have participated in this inquiry to date which includes state government departments, local government associations, councils, professional bodies, academics and the public. In addition, we would like to acknowledge and thank the Office of the South Australian Productivity Commission staff for their work in researching and preparing this draft report. Dr Matthew Butllin Jeff Tate Prof Christopher Findlay CHAIR AND CHIEF EXECUTIVE COMMISSIONER COMMISSIONER Date 30 August 2019 Page | 3 Local Government Costs and Efficiency Draft Report Inquiry into Local Government Costs and Efficiency About the South Australian Productivity Commission The Commission provides the South Australian Government with independent advice on facilitating productivity growth, unlocking new economic opportunities, supporting job creation and removing existing regulatory barriers. The Premier and Cabinet Circular PC046 sets out the objectives and functions of the Commission; how inquiries are referred to the Commission, undertaken and reported on; and how the Commission and public sector agencies work together. The Commission was established to assist the government to: i. improve the rate of economic growth and the productivity of the South Australian economy in order to achieve higher living standards for South Australians; ii. improve the accessibility, efficiency and quality of services delivered or funded by government; iii. improve South Australia’s competitiveness for private sector investment; iv. reduce the cost of regulation; v. facilitate structural economic changes while minimising the social and economic hardship that may result from those changes; vi. take into account the interests of industries, employees, consumers and the community; vii. increase employment; viii. promote regional development; and ix. develop South Australia in a way that is ecologically sustainable. The Commission is supported by the Office of the South Australian Productivity Commission (OSAPC). The Chair of the Commission also serves as the Chief Executive of the OSAPC. For more information on the Commission, including Premier and Cabinet Circular PC046, visit the website at www.sapc.sa.gov.au. Disclosure The Commissioners have declared to the South Australian Government all personal interests that could have a bearing on current and future work. The Commissioners confirm their belief that they have no personal conflicts in regard to this inquiry. Page | 4 Local Government Costs and Efficiency Draft Report Inquiry into Local Government Costs and Efficiency Terms of Reference SOUTH AUSTRALIAN PRODUCTIVITY COMMISSION INQUIRY INTO LOCAL GOVERNMENT COSTS AND EFFICIENCY I, Steven Marshall, Premier, hereby request that the South Australian Productivity Commission (the Commission) undertake an inquiry into local government costs and efficiency. Background The South Australian Government is concerned that the rising cost of living has put undue pressure on South Australian households and businesses. Every level of government has a duty to ensure service delivery is as efficient and effective as possible to contain costs to taxpayers and ratepayers and ease cost of living pressures. South Australian councils collectively manage a budget of $2 billion and maintain infrastructure and other physical assets worth almost $23 billion. Effective local government can be the mainstay of a strong community. It is responsible for aspects of everyday life from roads and infrastructure, to well-maintained libraries and community services. Consequently, sustaining good financial and performance management practices and seeking to continually enhance productivity and efficiency are critical factors for councils as they aim to continue to improve the services they provide to their local community. Improved performance monitoring by councils, combined with meaningful data analysis and reporting, will improve public accountability as well as provide evidence and opportunities for councils and the South Australian Government to drive and support continuous improvement. Further, effective performance reporting by councils is essential for ensuring accountability to residents and ratepayers as to how public money is being spent and the quality of services delivered. An SAPC public inquiry process would enable full engagement with local councils and other stakeholders, as well as providing to both local and state governments some independent and objective analysis and advice on the issue of local government costs. Terms of Reference The Minister for Local Government has developed a 12-month plan for local government reform to improve council efficiency and effectiveness and restore confidence in council decision making. The reform elements address: • Stronger council member capacity and better conduct • Efficient and transparent local government representation • Lowering costs and enhanced financial accountability in the local government sector • Simpler regulation. The South Australian Government is seeking independent advice on the third element regarding cost and financial accountability. This requires consideration of the key determinants of costs, or “cost drivers” of local council budgets; options to lower council costs; and how to ensure lower costs flow through to ratepayers. Any interpretation of changes in local government costs, or comparisons between councils, would need to be able to take account of the impacts of factors likely to affect costs such as Page | 5 Local Government Costs and Efficiency Draft Report Inquiry into Local Government Costs and Efficiency council size/scale, quality standard and mix of services provided, size of population and geographical area served and urban versus outer metro versus rural and remote locations. Scope The Commission is asked to consider and report on the following matters regarding local government costs and efficiency: 1. Analysis of the information on local government costs and the key drivers of costs including: • Identify trends in local government activities and costs of local government operations • Identify the drivers of local government costs and assess their impacts. 2. Develop and analyse measures of local government efficiency and productivity. 3. Identify mechanisms and indicators that could be used by the local government sector to measure and improve performance over time. 4. Consider recent reforms in South Australia and other jurisdictions to policy, governance and management practices in the local government sector and their potential to improve council performance. 5. Provide advice on possible options to guide and assist councils to improve efficiency and create capacity to pass on cost reductions to rate payers. 6. Provide recommendations on actions by the South Australian Government to lower local government costs and enhance local government