Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation A draft report for further consultation and input April 2010 © State of Victoria 2010 This draft report is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968 (Cwlth), without prior written permission from the Victorian Competition and Efficiency Commission. Cover image of Castlemaine Town Hall reproduced courtesy of the photographer, Peter Dunphy. Cover image of Lygon Street reproduced courtesy of VicRoads. ISBN 978-1-921697-25-8 (paperback) ISBN 978-1-921697-24-1 (PDF) Disclaimer The views expressed herein are those of the Victorian Competition and Efficiency Commission and do not purport to represent the position of the Victorian Government. The content of this draft report is provided for information purposes only. Neither the Victorian Competition and Efficiency Commission nor the Victorian Government 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. Victorian Competition and Efficiency Commission GPO Box 4379 MELBOURNE VICTORIA 3001 AUSTRALIA Telephone: (03) 9092 5800 Facsimile: (03) 9092 5845 Website: www.vcec.vic.gov.au An appropriate citation for this publication is: Victorian Competition and Efficiency Commission 2010, Local Government for a Better Victoria: An Inquiry into Streamlining Local Government Regulation, draft report, April. About the Victorian Competition and Efficiency Commission The Victorian Competition and Efficiency Commission, which is supported by a secretariat, provides the Victorian Government with independent advice on business regulation reform and opportunities for improving Victoria’s competitive position. VCEC has three core functions: • reviewing regulatory impact statements, measurements of the administrative burden of regulation and business impact assessments of significant new legislation • undertaking inquiries referred to it by the Treasurer, and • operating Victoria’s Competitive Neutrality Unit. For more information on the Victorian Competition and Efficiency Commission, visit our website at: www.vcec.vic.gov.au Disclosure of interest The Commissioners have declared to the Victorian 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 of interest in regard to this inquiry. Opportunity for further comment You are invited to examine this draft report and provide comment on it within the Commission’s public inquiry process. The Commission will be accepting submissions commenting on this report and will be undertaking further consultation before delivering a final report to the Government. The Commission should receive all submissions by 22 June 2010. Submissions may be sent by mail, fax, audio cassette or email. By mail: Local Government Regulation inquiry Victorian Competition and Efficiency Commission GPO Box 4379 MELBOURNE VICTORIA 3001 AUSTRALIA By facsimile: (03) 9092 5845 By email: [email protected] Terms of reference I, John Lenders MP, Treasurer, pursuant to section 4 of the State Owned Enterprises (State Body — Victorian Competition and Efficiency Commission) Order (‘the Order’), hereby direct the Victorian Competition and Efficiency Commission (‘the Commission’) to conduct an inquiry into streamlining local government regulation. Background Local government authorities in Victoria have a significant impact on businesses, both through the regulations they impose and/or administer on behalf of the State, as well as through direct engagement with business. In recognition of this, the Victorian Government’s $4.7 million Councils Reforming Business initiative was launched in 2007 with the aim of supporting councils to improve services, reduce costs and reduce red tape for businesses through best practice law making and smarter procurement practices. Reforms across the local government sector are consistent with the Victorian Government’s broader commitment to promoting efficient and effective regulation by removing unnecessary administrative requirements through the Reducing the Regulatory Burden initiative. In the current challenging economic situation, these initiatives are increasingly important in promoting Victoria’s competitiveness and economic prosperity over the medium term. It is now timely for a comprehensive inquiry to examine the scope for further streamlining of regulation and processes administered by local government and that impact on business. This inquiry will build upon - and examine the scope for further rolling out of - existing reform initiatives, with a view to continuing to improve Victoria’s regulatory system. Scope of the inquiry The Commission is to inquire into and report on: 1) impacts of regulations administered by local government on business, including small businesses such as home based businesses; 2) scope for streamlining and harmonising the practices adopted by local government to administer State Government regulation, and options for both levels of government to support best regulatory practice; 3) inconsistencies between councils in local government regulations and in practices for their administration, and options for greater streamlining and harmonisation of regulations and their administration; IV 4) regulatory impediments to small and medium enterprise (SME) access to procurement associated with major infrastructure projects and options for removing these impediments; 5) the extent of costs incurred by local government in administering regulation, and options for councils to reduce these costs; and 6) an estimate of overall economic impact (including reductions in the regulatory burden on business) of options identified in this inquiry, including any incremental benefits to existing reforms being progressed at Commonwealth or State level. The emphasis in the inquiry should be on administration of regulations by local government rather than on a direct evaluation of legislative frameworks themselves. The structure of local government and performance of individual local governments are outside the scope of this inquiry. The Commission should take into account any substantive studies or developments undertaken in Victoria and elsewhere — including by the Commonwealth and other States, and international best practice — that may help it provide advice on this Reference. Inquiry process In undertaking this inquiry, the Commission is to have regard to the objectives and operating principles of the Commission, as set out in section 3 of the Order. The Commission must also conduct the inquiry in accordance with section 4 of the Order. The Commission is to consult with key interest groups and affected parties, and may hold public hearings. The Commission should also draw on the knowledge and expertise of relevant Victorian Government departments and agencies. The Commission is to release an issues paper at the beginning of the inquiry process and produce a draft report, outlining proposed recommendations for consultative purposes. A final report is to be provided to me within twelve months of receipt of this reference. JOHN LENDERS MP Treasurer 24 August 2009 V Preface The release of this draft report gives interested participants the opportunity to comment on the Commission’s analysis in relation to its inquiry into streamlining local government regulation. The Commission will consider comments received prior to developing and presenting the final report to government. In preparing this draft report, the Commission invited public submissions and consulted widely with a range of individuals, businesses, organisations, government departments and local councils. The Commission invites written submissions on the draft report. These submissions may address any of the issues covered by the terms of reference. In light of the submissions received, the Commission will hold further consultations as necessary. At the conclusion of consultation on the draft report, the Commission will prepare a final report to be presented to the Victorian Government by 24 August 2010. The Order in Council establishing the Commission says that the Treasurer should publicly release the final report and that the Victorian Government should publicly release a response to the final report within six months of the Treasurer receiving the report. The Commission looks forward to receiving feedback on the draft report. Dr Matthew Butlin Graham Evans AO Robert Kerr Chair Commissioner Commissioner VII Contents Opportunity for futher comment III Terms of reference IV Preface VII Contents IX Abbreviations XV Glossary XIX Key messages XXI Overview XXIII Draft recommendations and information requests XLVII 1. Introduction 1 1.1 Background to the inquiry 1 1.2 Scope of the inquiry 2 1.3 Past and current reform initiatives 2 1.4 Conduct of the inquiry 4 1.5 The Commission’s approach 5 1.6 Structure and focus of the report 6 2. Regulatory and institutional framework 9 2.1 Introduction 9 2.2 Local government in Victoria 9 2.2.1 Councils are a distinct level of government 10 2.2.2 Councils are diverse 10 2.2.3 Councils provide many services 11 2.3 The challenges facing councils as regulators are