In this post, I just want to follow up one of the hot issues – rate pegging – I touched upon last week in a little more depth and I’d love to hear your thoughts.
How do we pay for our plans?
From the start of the IPR consultations, Councils have pointed out that it lacks logic to increase responsibility for effective long term financial planning while denying local government any financial autonomy. In other words, we are back to the debate on rate pegging, which is a system unique to NSW.
As State Government has been committed to rate pegging, the Department of Local Government (DLG) has only been able to reply in platitudes, that Councils will put themselves in a stronger position to seek approval for special rate variations by “robust community engagement and direction supported by long term planning and financial planning”. There were no guarantees of a better system.
One specific question raised was whether the Planning Reform Fund or ‘Plan First’ revenue could be accessed to support the IPR transition. I am not aware that this was ever directly answered by Government. However, there are already instances of a less obvious source, the Urban Sustainability Program grants, being used for IPR-related planning around sustainability frameworks.
Meanwhile, the under-funded DLG has struggled to resource the IPR process over the past four years and to get it onto the Government’s priority list for legislation. Despite all the barriers to IPR, it has survived and will shortly be statutory.
The IPART review – will it be a breakthrough?
Earlier this year, the Government established the Independent Pricing and Regulatory Tribunal (IPART) review of local government revenue, giving hope of a circuit breaker on the rate pegging stalemate. At this stage, we have a draft report with two main options. While this has been welcomed by the Local Government and Shires Associations of NSW (LGSA), on the ground opinions are still very much divided on whether this will lead to a breakthrough or to ‘shuffling the deckchairs’.
IPART’s Option A sees the continuation of rate pegging, based on a more objective “Local Government Cost Index” from 2010-11. Councils would also be able to apply for “a rate path over four years, which might exceed the rate peg” (directly linked by IPART to the IPR cycle).
Option B has the intent of “mak[ing] democratic accountability to the community sufficiently effective to ensure that rates rise commensurate with the community’s demand for services and its preparedness to pay for them”. A radical experiment in local democracy! This option would require councils to demonstrate to the Minister that they have “a track record of sound financial management” and “broad community support, rather than pockets of support for their fiscal strategy”.
How would this be judged? Some of the “clear guidelines” which are mooted look more like naïve attempts to impose impracticable governance standards. IPART proposes that where councils rely upon community surveys, at least 25-30 per cent of ratepayers (e.g. up to 90,000 people for Blacktown) would have to participate in the survey with 50-60 per cent support (50,000 positive respondents to a proposal to increase rates?). The Council concerned will need to get a rate rise just to pay for this exercise.
Fortunately, there might be a more feasible alternative allowed: where a four year financial plan was “adequately debated in the run-up to a council election, and supported by the incoming council, that could be considered to provide a mandate from the community for that plan”. We will watch with interest to see what mechanism is put in place to judge the quality of political debate.
Do you agree with either of the IPART Options? If not, what would you suggest as a better way?
By Ross Kingsley, Senior Consultant Performance Planning, TechnologyOne
Tags: beyond compliance, community strategic plan, DLG, independent pricing and regulatory tribunal, integrated planning & reporting, IPART, IPR, New South Wales local government, performance management, performance planning, planning reform fund, rate pegging, reforms, ross kingsley, software, strategic planning, technology, technologyone, urban sustainability program
15/09/2009 at 9:10 am |
[...] There has been no objection from local government to the principle that a documented strategy for community engagement should be part of IPR, but there have been plenty of misgivings about how far engagement is supposed to go and the practicalities for smaller councils. This is understandable, especially when we see government bodies, such as IPART float unrealistic options about how to gauge community views on rates. [...]
09/09/2009 at 9:38 am |
Ross,
One of the things that I am curious about is the question, ‘is this a good thing’? I can see how, as a ratepayer, there appears to be an obvious benefit of better engagement with the community and holding elected officials up against their promises of delivery. But from a Council perspective, how do you think this is being perceived? I have heard some comments that there is a fear that minority interest groups may get an even more heavily swayed influence, but I’m not so sure about that. I think that a holistic and transparent approach like this will give the community much better visibility as to what is being planned and as a result there will be a better balanced and more broadly representative community plan put in place. I know that we have discussed this face to face but I would appreciate your thoughts for all to hear.
Peter Gill, GM BI and Performance Planning TechnologyOne
14/09/2009 at 2:03 pm |
Peter,
Some of the issues that you raise are touched on in my post on Community Engagement (out later today hopefully). I certainly agree with the spirit of what you are suggesting; that councils and the community have a lot more to gain than lose (if we can all overcome our natural cynicism!). IPR provides a driver for councils to break out of their old ways of consulting; new options that come to mind are new media (online forums etc) or better thought-out practices.
On the ‘squeaky wheel syndrome’, I note that in response to submissions on the draft legislation, the NSW Dept of Local Government strengthened the Community Engagement Strategy provisions to reflect social justice principles. The program must address ‘target groups’ in the community and try to ensure that representative views help develop the Community Strategic Plan and other plans.
More reliance on evidence-based decision making would also help. Many councils struggle with this in terms of good data and systems, and Government could help with this a great deal more than it does, both in NSW and nationally.
Cheers, Ross