Local councils: More than roads, rates and rubbish

31 October 2018 | Posted In: 134 - Spring 2018, Local Government, | Author: Maire Sheehan

Local councils In Australia were set up in the second half of the 19th Century to raise funds and manage rural and outer urban roads. Maire Sheehan explores how council responsibilities have changed and how councils are organised to meet their increasing responsibilities.

In 1919 a local government act was passed in NSW. It outlined the responsibilities of councils. It was the beginning of the idea that councils are responsible for ‘roads, rates ‘n rubbish. Councils had the power to raise rates using a formula included in the Act.

The federal government included road grants for local councils in its budgets. In the 1970s the Whitlam government expanded the funds to include ‘general purpose grants’.

From the 1970s the responsibility to provide physical infrastructure such as roads, bridges and sewerage expanded to include administering compliance with state legislation such as town planning, companion animals etc. Councils were also made responsible for an increasing number of community services in what has been called ‘cost shifting’ where the cost is moved from state to local councils. The increasing responsibilities have put significant pressure on council budgets.

As councils were handed more and more responsibilities they began to increase rates to meet the cost of the extra services. The Wran Government intervened and introduced rate capping in 1977. The cap is on the total amount of rates a council can raise. It is not a cap on individual property rates. Councils use a formula to allocate the total rate cap amount across properties in the council area.

Prior to 1993, the mayor and councillors employed the staff and could get involved in day to day operations. Councillors also had autonomy under the Act to decide how, where and on what it spent council funds. Councils also held closed meetings – members of the public were not allowed to attend meetings.

Three items in the 1993 legislation changed this relatively free decision making power councillors had.

  • Separation of powers – This separated the role of the main decision makers (the councillors) from the administration (the staff).The Town Clerks became general managers (GM) or Chief Executive Officers (CEO) and they employ and manage the staff. Councillors make the policy decisions and the administration under the GM/CEO implements the decisions
  • Open meetings – Councils are required to hold meeting open to the public. Many councils now live cast their meetings.
  • Integrated Planning and Reporting Framework (IP&R) – The law requires councils to develop a 5-10 year community plan, annual budgets and reports to the state government using the IP&R process included in the Local Government Act.

Do councillors make decisions about every activity in the local community?

No. For example decisions about utilities such as electricity, gas, the NBN, state roads, and services such as schools and hospitals are not made by local councils. Decisions for residential and commercial developments have been moved to the state government or state managed planning panels.

So what are councils responsible for?

The state government gives council responsibilities to them. Some responsibilities such as roads, rates and rubbish have been with councils for many years. Administering compliance with state laws has increased significantly in recent times. For example regulating state laws covering companion animals, food safety in bars, restaurants, take-aways, parking, swimming pool safety, managing contaminated land, controlling noxious weeds and managing flood controls are all done by councils. All these compliance roles are administered by the staff under the supervision of the GM/CEO and take up a significant amount of council resources and funding.

Councils are also responsible for maintaining a range of assets such as roads, buildings, parks, sporting fields, swimming pools etc. Most of these assets do not generate income and most such as roads and heritage buildings are costly to maintain.

Councils are finding that the governments are shifting more and more of the cost of services from state and federal government (mainly state) to local councils. Research by Local Government NSW over eight plus years found cost shifting was increasing. The shift was highest in urban councils. Councils get no extra funding to manage and carry out these activities. If councils want additional funds for essential services, they must apply to the state government for a Special Rate Levy and meet certain requirements.

Councils were once responsible for making development decisions. Now they are responsible for assessing and preparing reports on development applications before handing over to a decision maker outside of council. New planning bodies set up under state laws, like the Greater Sydney Commission, will rely on councils to resource the implementation of their plans.

Where do councils get their funds?

Councils collect revenue from rates, service fees, investments and a decreasing amount of government grants.

Council rates were capped more than 40 years ago. It means that the total revenue from rates in a council area is capped and can only increase by the amount determined by the Independent Pricing and Regulatory Tribunal (IPART). To divide up the rate cap and set the rates for individual land lots councils use a formula which includes the Valuer General’s land valuations. If the land lot has multiple dwellings, the rate amount is divided amongst the various dwelling owners. Rates are not paid by government or by religious groups.

Research done by the Local Government Association NSW found that rates go nowhere near meeting the cost of council’s obligations to administer state government functions and deliver community services. The gap is increasing as councils are given more administrative and service responsibilities – cost shifting – without additional funding.

Councils also raise revenue from fees that councils set like pool entry, gym fees, use of council facilities such as halls, parks for events, cafe footpath tables and chairs.

The state government sets other fees. This includes multiple fees for development applications, building certificates, compliance certificates etc. Councils do not control these fees.

Government grants are a diminishing source of revenue as governments cut or cap grant funding.

Council revenue from investment is minor and comes mainly from term deposits with a slightly better return than a cash account.

What do councillors do and what are the limits on their decisions?

Councillors make decisions about where the council will put its resources and spend funds. The state government sets the rules and limits (apart from grants from the federal government) on these decisions. The state government sets financial targets that councils must meet.

The rules on how councils must plan and allocate resources are in the IP&R in the Local Government Act NSW. The IP&R includes a Community Strategic Plan (CSP), required by state law. Once the five to ten year CSP is adopted by council, all decisions on resources and budgets must fit within the plan. The council can change the CSP but must consult with the community. The assumption is that the CSP is endorsed by the councillors on behalf of the community. The mayor and councillors have a role in engaging with the local community when the CSP is being developed and are expected to abide by and promote the plan when it is adopted. The council administration organise the process and write the CSP for endorsement at a council meeting

The CSP can include issues that are not direct council responsibility. Examples include schools, health services, affordable housing, green spaces and other social infrastructure essential for a livable community. Council can advocate for adequate and better state services and infrastructure for its community.

Councillors employ the GM/CEO who employs and supervises all other staff. The councillors review and make decisions on reports provided by the staff. The reports may be written by staff or by a contractor with specialist knowledge. The GM/CEO guides and advises councillors and council staff in developing the processes and documents for IP&R and all reports to the councillors. When a decision is made the GM/CEO supervises the implementation by the staff.

You can see how the NSW Local Government Act sets out the roles and responsibilities of mayor, councilors and general manager on page 27

Councillors can also bring forward their own ideas for action as a motion to a council meeting. Councils usually have a policy that requires councillors to lodge motions by a certain date, so that the administration can provide advice on its legality and any impacts it may have on the CSP or the budget. All report recommendations and motions are put to the vote and passed or rejected by a majority of councillors.

What makes a well run and democratic council?

Many factors affect how well a council functions. The working relationship between the governing body (the councillors) and the administration, the working relationships between the councillors and the expertise and capacity of the administration are key.

The mayor is the main communication link between the governing body and the administration, between the council as a whole and the community and also chairs council meetings. The role of the mayor has been expanded and detailed in recent changes to the Local Government Act.

A person who is clear on the behaviour expected of councillors, is open and transparent, understands and abides by the governing rules, is a good listener, negotiator and problem solver will likely have the leadership abilities and skills of a good mayor.

Similarly, councillors will perform best if they understand the behaviour expected of councillors, are open and transparent, understand and abide by the governing rules, are good listeners, negotiators and problem solvers when working with fellow councillors and the community. This is especially important when a councillor is promoting a new initiative or idea. Discussing it with fellow councillors to ensure they have a clear understanding of the intent and the potential impact is key.

Councils, like the community, can include people who have biases, are opinionated, not open to new ideas or won’t talk with particular people. A councillor does not choose the councillors who are elected with them; the people choose them. The challenge for councillors is to open communication links with fellow councillors so common understandings are developed and differences respected.

In some councils, the councillors split into groups. Some groups are political party based but not all. Metro councils generally have more councillors elected from a political party ticket than regional and rural councils. Some councillors are members of political parties but run for council as independents.

Many newly elected councillors are surprised by the demanding workload, the challenges in developing positive working relationships with some of their fellow councillors and the technical complexity of the many papers they have to read when preparing to make a decision. It is not unusual to find council meeting papers up to 500 or 700 pages of engineering, finance, development and other technical documents.

How much are mayors and councillors paid?

Mayors and councillors are not paid a wage. They are paid a stipend that is generally well below the average wage and varies depending on the category the Remuneration Tribunal puts the council in. The highest is the City of Sydney where councillors are paid up to $38.5k and the Lord Mayor up to $212k. Metro councils are on a scale depending on whether they are large, medium or small. For mayors the stipend is between $84k and $43k and for councillors $29k to $18.5k. The same categories apply to regional and rural councils. The highest are major regional centres such as Newcastle and the lowest are in rural councils which range from $25.25k for the mayor to $9.3k for councillors.

Challenges

For the vast majority of councils trying to deliver all the services a community needs or wants is a challenge, especially when state government requirements and cost shifting take up a large chunk of the budget.

The challenge of making decisions for the whole community when there are strongly held and differing views within the community is not new but is growing as budgets are limited and many social, economic and environment changes are happening. Collaborating with the community on where council should spend it funds and put its efforts is of growing importance.

Many decision directly impacting communities do not sit with or are being taken from councils. As a result, collaborating with and advocating for communities to other levels of government is becoming increasingly important.

Knowing and understanding how the system works and collaborating with the community is increasingly part of effective leadership for councillors. Councils have come a long way from the old style closed council meetings culture.

Maire Sheehan was Mayor of Leichhardt between 1999 and 2004. She provides candidate briefings as well as induction and governance sessions for elected members.

 

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