VICTORIA GRANTS COMMISSION ANNUAL REPORT 1985 VICTORIA Annual Report of the VICTORIA GRANTS COMMISSION for the Year ended 31 August 1985 Ordered by the Legislative Assembly to be printed MELBOURNE N0.45 F D ATKIN SON GOVERNMENT PRINTER 1985 VICTORIA GRANTS COMMISSION ANNUAL REPORT 1985 The Hon. J. L. Simmonds, M. P., Minister for Local Government, 480 Col/ins Street, MELBOURNE. V/C. 3000. As Members appointed under section 3 of the Victoria Grants Commission Act 1976, we have the honour to present the ninth Annual Report of the Victoria Grants Commission, in accordance with section 17 of that Act. D. V. MOYE, Chairman L. F. CHEFFERS, Member W. A. Phillips ~ecretary November, 1985 VICTORIA GRANTS COMMISSION MEMBERS D. V. Moye, B.Ec., H.D.A. (Hons). Chairman L. F. Cheffers, L.G.E., M.I.E.Aust., F.LM.M., M.B.S., O.A.M. Vacant (Hon. J. M. Walton, to 31 January 1985) STAFF W. A. Phillips,B.Bus,B.Sc(Hons), GradDipl.D.P.,Ph.D., Secretary A. Bashtannyk Assistant Secretary J. Chow, B.Ec. B. C. Paule, B.A. (Hons) C. T. Quinn,B.Sc.,Grad. Dip. DataProc., Computer Systems Officer L.Johnston Confidential Secretary LOCATION The Commission's offices are on the 15th floor, State Insurance Building, 480 Collins Street, Melbourne (postcode 3000). TABLE OF CONTENTS Page No. ROLEOFTHECOMMISSION ............................................................ IX CHAPTER 1. THEYEAR'SACTIVITIES ........................................................... 1 General Revenue Allocations for 1985-86 . 1 Inspections .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 2 Submissions . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 2 AnnualReturnofinformation ........................................................ 3 Structure of Local Government .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 3 National Inquiry into Local Government Finance . .. .. 5 Conference of State Grants Commissions . 5 Members .................................................................................. 6 Staff ........................................................................................ 6 2. THEBASESOFTHEDETERMINATIONS ...................................... 7 As-of-RightEntitlement . ..... ... ... ..... ... ..... ............ ........... .... 7 General Equalisation . .............. ....... .. ... ... .. ... .. .. .... ... .... ... 8 Revenue Raising Needs . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 9 ExpenditureNeedsandDisabilities ................................................. 11 Determining the Individual Allocations . 15 NaturalDisasters ........................................................................ 15 Comparisons between Years ....... ......................... .... .. ............. .................... 16 Acknowledgements . 16 APPENDICES I Transmittal Memorandum and Determinations . 18 11 Municipalities Inspected ............................................................... 25 III CategoriesofMunicipalities ................................................ · · ....... · 26 IV Formulae ...................................................... · · · · .. · · · · .......... · · .... · · V Distribution of Rateable Property, Rate Income, 28 Rating and Population 1975-76to 1983-84 .. ..... ..... .. .. ... .. .. ........ .. .... 33 VI Tax Sharing Funds for Local Government Authorities 1974-75 to 1985-86 . 35 ROLE OF THE VICTORIA GRANTS COMMISSION The Commission consists of a Chairman and two other members, appointed by the Governor in Council for a period of not more than five years. At least two members of the Commission shall have a knowledge and understanding of local government and members are eligible for re-appointment at the expiry of their terms of appointment. The principal role of the Commission is to determine, on or before 31 August each year, the allocation to municipalities in Victoria of general revenue grants from the Commonwealth to the State for local government authorities under the provisions of the Commonwealth's Local Government (Personal Income Tax Sharing) Act 1976 and under the Victoria Grants Commission Act 1976 which complements it. To assist the Commission in this role. the Victoria Grants Commis­ sion Act provides that: "10, (1) Each municipality shall supply the prescribed information to the Commission - (a) on or before the day fixed by the Commission by notice published in the Government Gazette; or (b) in the case of a particular municipality on or before such later date as is fixed by the Commission for that municipality. (2) Where a municipality has not complied with sub-section (1) the Com­ mission shall nevertheless allocate to the municipality its' As-of-Right Entitlement'." The Act also provides that: "13. The Commission or any member thereof may carry out such inspec­ tions, conduct such hearings, take such evidence and generally make such investigations as the Commission thinks necessary for the pur­ pose of properly carrying out its functions under this Act." In relation to proceedings before the Commission the Act stipulates that: "15. A municipality may be represented in proceedings before the Com­ mission by Councillors or the municipal clerk or the municipal engi­ neer or full-time officers of the municipality and not otherwise .. , The Act also provides that the Minister for Local Government may "on his own motion or at the request of the Commission make written submissions to the Commission as to any factors which appear to the Minister to be of special sig­ nificance in relation to all or any municipalities in the relevant financial year" (section 14). In so doing, the Minister is required to publish notice of a submission in the Government Gazette, to lay copies of the submission before both Houses of Parliament and make copies available to the public. No submission has been made under this provision to date. In addition, the Commission is required to ''enquire into and report upon any matter relating to local government finances which is referred to it by the Minister" (section 16). Such a reference was made to the Commission in November 1984; it was concerned with the prospective financial advantages of restructuring local government in Victoria. The Commission reported to the Minister on the matter in July 1985 (see paragraphs 1.18 to 1.21 for further details). The Commission was convened on ninety-six days during the year ended 31 August 1985. Section 17 of the Act requires the Commission to report to the Minister by 30 November each year on the activities of the Commission during the preceding year ended 31st August. This Report is in compliance with that requirement. Chapter 1 THE YEAR'S ACTIVITIES General Revenue Allocations for 1985-86 1.1 Since 1980-81, the basis for determining the amount to be made available by the Commonwealth to the States as general revenue grants for local government has been 2 percent of personal income tax. However the basis for determining the amount for allocation for 1985-86 was altered as a consequence of the Common­ wealth Government's expenditure reduction policies announced on 14 May 1985 by the Commonwealth Treasurer in his statement on 1985-86 Budget Initial Expen­ diture Savings Measures. 1.2 The Local Government (Personal Income Tax Sharing) Amendment Act 1985 provides that the amount available for allocation for 1985-86 will be an amount equal to that allocated in 1984-85, adjusted to provide for a 2 percent increase in real terms, based on movements in the Consumer Price Index for the relevant period. The estimated increase in the Consumer Price Index, as published in the Commonwealth of Australia Gazette, No. S342, of 28 August 1985, is 7.8 percent. The application of the formula thus provides an amount of $136,157,634 for allocation to local government in Victoria as general revenue grants for 1985-86. This is an increase of 9.956 percent over the amount provided for allocation for 1984-85. If the formula had not been amended, the increase would have been about 15.6 percent, which would have provided an additional $7 million for local govern­ ment in Victoria. 1.3 The Local Government (Personal Income Tax Sharing) Amendment Act 1985 also provides for adjustments to be made to the allocations in the event of there being any difference between the estimated increase in the Consumer Price Index for the relevant period and the eventual actual increase. Therefore, the amount of $136,157,634 that has been so far provided is an estimated total for Victoria for 1985-86, subject to adjustment when the March 1986 Consumer Price Index increase is known. Any adjustments are to be made to all allocations (exclud­ ing special factor allowances) in proportion that each municipality's allocation as determined by the Commission on 22 August 1985 bears to the total estimated allocation for the State of $136,157,634 (less the total amount allocated for special factor allowances in Victoria's case). 1.4 The amended basis applies for the 1985-86 allocations only as the revenue sharing arrangements are to be reviewed in the light of the recommendations of the Commonwealth's National Inquiry into Local Government Finance. The Report of the National Inquiry is expected to be available early in October 1985. 1.5 The total amount available to the six States for allocation to local govern­ ment authorities in 1985-86 is $534,973,200, an increase of 9.956 percent over the amount for 1984-85. The apportionment to the six States is set out in the Common­ wealth Act and is based on recommendations bv the Commonwealth