Essential Service Commission (ESC) is the state government agency for overseeing compliance to the Fair Go Rates System (FGRS) aka rates capping policy. It called for an independent review of its implementation of the FGRS, which was conducted by Peter Brown. The review was completed in October 2016, with the publication of a review report.
ESC has responded to this review report, see http://www.esc.vic.gov.au/document/local-government/36176-escs-response-peter-brown-report/. The conclusion is:
“The community consultation required for applications should not be a standalone process to satisfy a higher rate cap application but rather part of councils’ ongoing planning and consultation processes outlined in the current Local Government Act and further expanded within the proposed new Act”.
Synopsis of RV Response
(Click here for the full report):
Ratepayers Victoria has reviewed both reports and agreed with most of ESC responses. We also highlighted additional recommendations to:
- Include a representatives of the community in any pre-application submissions, especially to verify with evidence that community engagement was satisfactory
- The provision of a model chart of account should be a first and high priority for improvement.
- Councillors and officers should have to attend compulsory training on the subject of participative democracy and their community engagement performance be monitored by LGV
- There is a need to define and measure value for money, to improve compliance to the best value principles in the LG Act
- Participatory budgeting should be a future mandatory, to enable collaboration with the community in planning council budgets.
RV disagrees with several responses, notably we see no value but more risks if:
- Councils are advised of ESC’s decisions regarding the rates application before public release of the final decisions
- Councils are provided a copy of the final decision and an opportunity for a debrief and comment prior to public release
- ESC presumes that if a mayor signs off that the criterion concerning community consultation on the higher rate cap has been undertaken in accordance to the framework
- Councils are given at least 2 opportunities within the calendar year for Councils to apply for a higher cap.
Whether it is an oversight or politically incited process, the current legislative inquiry into the rates capping policy has allowed more opportunities for councils and their peak bodies to engage in political leverage to:
- bag the policy’s implementation;
- justify publicly service cutting in councils and
- winch about laborious cost-benefit justification and compliance effort in apply for rates variation.
Ratepayers Vic, via one of our members, presented insights of why do we have rates capping. The key contributing reason comes from councils’ common budgeting approach, which discourages collaborative community engagement and participation in budget planning. It is no wonder why ratepayers have no confidence that their councils are making the right financial decisions every year. This is how the budget planning process typically work in your council:
This process is the primary reason we have rates capping today. Moving to a participatory and zero based budgeting process will improve community confidence in council’s financial planning, while removing the need for rates capping.
- RV’s presentation to the legislative inquiry into rates capping, please click here.
- The official transcript of the presentations and Q&A dialogue is presented, please click here.
Today’s press release from the Minister of Local Government is signaling the coming of many reform wins for ratepayers. This is the first in ratepayers’ advocacy history that a State Government has not only enabled but actually EMPOWERED the ratepayers community to play an important and effective role in contributing to developing the ESC’s rates capping solution. We highly commend Minister Hutchins for setting this first empowering precedent in ratepayers engagement.
RVI’s participation in Minister’s Fair Go Rates Reference Group has helped to ensure the draft ESC rates capping solution is ratepayers/community centric, through the governance principles underpinning it. We are also most pleased to see that the draft solution had included our earlier submission’s proposal to include setting transparent efficiency forecasts in the rates capping solution and when Councils varies from these efficiency measures, they will have to justify with sound business case evidence and get consensus support from their ratepayers.
RVI, working with other collaborating ratepayers groups, will continue to support and contribute value add to the development of reforms being planned by the Minister and LGV.
RVI will review the report in greater depth and share our findings online.