Local Government Role Assessment Final Report

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Local Government

Role Assessment

Final Report

August 2014

08 Fall

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Eight roles of local

government

SENSE OF PLACE - Councils facilitate and work with their communities to develop a sense of place through

branding, promoting and enhancing local identity, and promoting social cohesion and health and wellbeing. COMMUNITY ENGAGEMENT - Councils engage with their communities, sharing information about community,

council and government business, and where appropriate, provide opportunities for constituents to influence and/or participate in council decision making.

STRATEGIC LEADERSHIP - Councils provide strategic leadership through understanding current and future

operating environments, identifying opportunities and risks and making decisions which align with long-term strategic plans and corporate plans.

LAND-USE PLANNING - Councils are strategic land-use planners who work with communities to create an

environment that guides the use of land to balance economic, environmental and community/social values, and to support the health and wellbeing of their communities.

ECONOMIC DEVELOPMENT - Councils facilitate the economic development of communities by working with

the business community to attract and retain investment and support sustainable economic growth. SERVICES AND ASSETS - Councils are responsible financial managers who deliver cost effective, equitable and

efficient services and assets which reflect local needs and expectations and are guided by council’s long-term corporate planning objectives.

LEGISLATION AND BY-LAWS - Councils enforce relevant state and national legislation and create by-laws and

policies as required to support the efficient and effective functioning of council to support the community. REPRESENTATION AND COOPERATION - Councils engage with each other and other spheres of government

to represent and advocate the needs of their communities, and where appropriate, cooperate and work in partnership to generate the greatest benefit for communities.

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Role of Local Government Project

Local Government Role Assessment – Final Report

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1. Executive summary

The Role of Local Government (RoLG) project is a collaborative project between the Tasmanian

Government and local government. The project was established in 2012 by the Premier’s Local

Government Council (PLGC) in response to the ongoing public debate about the current and future role of local government. The objective of the project is to establish a clear understanding of the role and

capabilities of local government, identify strengths and capability gaps, and develop actions to build a sector that is sustainable, efficient, effective and responsive to community needs.

The project is underpinned by the belief that for solutions to be fully owned and supported they must come from within the sector because that is where the expertise lies. The key difference between this project and other interstate reform projects is that local government is both the subject of the review and a reviewer itself. Both sectors recognise there is a need for change and both have agreed to take

responsibility for identifying the gaps and to jointly be responsible for implementing reforms. This reform agenda is not something that is being imposed by the State onto local government; it is rather, a process in which councils are integral partners. The collaborative approach taken in the RoLG project has been possible because of a long-standing and positive relationship between the two spheres of government. The Local Government Role Assessment Final Report builds upon the Local Government Role Assessment Interim Report which was released for targeted consultation in December 2013. The Interim Report presented a comprehensive assessment of the capacity of local government to deliver the eight roles of local

government. The eight roles of local government were established through a collaborative process between the Tasmanian Government and local government. The roles describe the key functions of local

government that are common to all councils and provided the basis for the local government

self-assessment survey undertaken by all councils in 2013. The Interim Report recommended the establishment of four PLGC working groups to develop strategic action plans for each of the priority areas; governance, legislation, collaboration and economic development.

The Final Report provides an overview of the sector’s performance across the eight roles of local government, an overview of some of the factors driving reform and proposes a range of reform opportunities. The Final Report will be considered by the four PLGC working groups which will be established in mid-2014 when determining their work plans.

In the main, Tasmanian councils are delivering an extensive range of services and managing their assets very well. They are also doing a good job of listening and responding to their communities, keeping them well informed and to varying degrees providing them a role in influencing strategic decision making.

Both spheres of government agree it is essential the local government sector is well-equipped to fulfil the multiplicity of roles entrusted to it and is able to create a unified vision for its communities and ensure a sustainable future. The RoLG project is fundamentally about assisting councils to become high performing, high capacity councils and this means working together to identify and implement the practical steps necessary to reach that goal.

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This means all councils having a strong focus on operational effectiveness and financial sustainability, having elected members and staff who are skilled and experienced together with a commitment to good

governance and community engagement.

Local government roles and functions have expanded in response to community expectations and a changing regulatory environment, and this, coupled with an extremely tight budgetary climate across all spheres of government, means they need to become smarter and more agile in order to be high capacity sustainable councils.

On the whole, Tasmanian councils are performing reasonably well, with the recent Auditor General’s report concluding they have a moderate financial sustainability risk from a financial operating and asset management perspective. But while the Auditor-General’s report is relatively positive about the sector, there are many councils that are currently experiencing financial stress and will continue to do so in the future with the likelihood of having to introduce significant rate increases or reductions in service levels to maintain viability. The impact of continuing constrained budgetary climates, population decline and ageing communities, ageing infrastructure, increasing community expectations and potential climate change impacts will create a

challenging external environment for councils to manage and will be the drivers of future reforms.

The changing external environment is also generating a need for councils to set aside parochial self-interest and act regionally, both in terms of planning and delivering services and infrastructure, and making decisions that are in the best interests of the region.

Councils are also under significant pressures to improve governance to become more strategically focussed in the short and long term. Local government is being asked to become more professional, more business-like, more accountable and transparent. While these are all positive developments they present councils with a degree of complexity that was not there 20 to 30 years ago and for some councils this has presented challenges in acquiring appropriately qualified staff and ensuring elected members are fully equipped to perform their responsibilities. Councils are now being asked to be more than just a deliverer of services. They are being asked to provide a strategic leadership role which requires a different mindset, different expertise and a very different skillset. This shift from an operational focus from roads, rates and rubbish to a more forward looking, interventionist and strategic focus present a significant challenge for many councils. There is strong support for councils from communities within Tasmania. The RoLG community survey clearly demonstrated that, in the main, constituents are happy with the level of services, value the accessibility of local representatives and the role that council plays in creating a central focus/hub within their communities. The pivotal role of councils in providing essential services, supporting community cohesion and employment, and providing local accessible representation in smaller rural communities is particularly evident.

The local government role assessment revealed a significant concern regarding the strategic capacity,

operational effectiveness, governance and the ongoing financial sustainability of councils. These issues will be addressed progressively through existing reform agendas and the new reforms to be developed through the four PLGC working groups. The project seeks to enhance and build upon existing reforms and aims to set the direction of projects in years to come to ensure that there is a structured approach to reform which is ‘owned’ by the sector and strengthens the capacity of councils to prosper in a rapidly changing world.

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2. About the project

The RoLG project was established in 2012 and is being overseen by the Premier’s Local Government Council (PLGC). A Steering Committee comprising membership from both spheres of government and the private sector was established in 2012 to provide direction and support to the project.The broad

objectives of the project are to:

 build a shared understanding of the roles of local government in Tasmania;

 build an understanding of the capabilities required of local government and identify sectoral gaps and sustainability issues;

 investigate opportunities to address significant capability gaps and sustainability issues; and

 recommend actions to improve sustainability, effectiveness and efficiency of the local government sector.

The RoLG project is being delivered in two phases. All reports and documents are available from the project webpage at www.dpac.tas.gov.au/divisions/local_government/role_of_local_government2.

Phase 1

Phase 1 commenced with the launch of an initial discussion paper, a consultation period and a series of regional workshops held throughout Tasmania. Phase 1 concluded in December 2012 when the PLGC endorsed eight role statements that describe roles that are common to all Tasmanian councils.

Phase 2

Phase 2 of the project was launched on 14 May 2013 by the then Minister for Local Government, Bryan Green, and the President of the Local Government Association of Tasmania, Cr Barry Easther. Phase 2 commenced with the release of a discussion paper authored by local government practitioners and experts and a five-week public consultation period.

Local government self-assessment survey

The roles and components established in phase 1 of the project and the phase 2 consultation provided the basis for a local government self-assessment survey. The self-assessment survey, developed by independent consultants Stenning and Associates, gathered a local government perspective on the capability strengths and gaps across the sector. Views were invited from elected members and senior officers and were analysed at a whole-of-sector, elected member, senior officer and council classification level. The Local Government Capability Analysis Report, Stenning & Associates (October 2013) was released to councils in 2013.

Community survey

A community survey was undertaken to test community views on councils’ performance in each of the eight roles. The survey also gathered community views on the overall performance of councils, councils’ strengths and the opportunities that existed to improve the local government sector.

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Local Government Role Assessment Interim Report

The Local Government Role Assessment Interim Report (Interim Report) was endorsed by the PLGC at its 10 December 2013 meeting. The Interim Report provides a comprehensive assessment of the capacity of local government to deliver the eight roles of local government. The report builds upon the findings from the council self-assessment survey and a range of other data sources to provide an assessment of each of the eight roles as well as suggestions as to how both spheres of government might work together to address capability gaps and impediments.

The Interim Report was released for targeted consultation in December 2013 to provide local government and Tasmanian Government agencies with the opportunity to provide feedback on the report findings and input into to the proposed work plans for the PLGC working groups.

Local Government Role Assessment Final Report

The Final Report incorporates feedback received on the Interim Report and provides a summary of key issues raised by the sector and Tasmanian Government agencies in relation to the four PLGC working groups. The Final Report will be presented to the PLGC for endorsement at its first meeting in 2014.

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3. Next steps

The PLGC at its meeting in December 2013 accepted the recommendation made in the Interim Report to establish four PLGC working groups in 2014. The working groups are: governance, legislation, collaboration and economic development.

The PLGC working groups will be established in mid-2014 and will be tasked with collaboratively

developing a range of short-term to long-term strategies and actions designed to remove impediments and build local government capability in the priority areas. The membership of the working groups will comprise Deputy Secretaries and officials from relevant Tasmanian Government departments, council general

managers and other stakeholders or specialists as required.

The Final Report provides a proposed work program for each of the four working groups based on ideas submitted by Tasmanian Government agencies, councils and community members. The suggestions are not exhaustive and the working groups may decide to investigate a different range of options. See Chapter 8 for the proposed work program for each of the working groups.

The PLGC working groups will meet on a monthly basis and it is anticipated they will report back to the PLGC in December 2014 to seek endorsement of a strategic action plan which will set the reform agenda for the next three years.

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4. Local government

landscape

Local governments throughout Australia are undergoing similar pressures of managing constrained revenues, changing demographics, increased community expectations and global economic shifts which increase the pressure to become more adaptive and resilient. Councils are also operating in increasingly complex regulatory environments both as complex businesses and as implementers of Australian and State Government legislation.

In response to this rapidly changing economic and social landscape, local government is being asked to become more professional, more business-like, more accountable and transparent. The pressures on

councils will continue to intensify and to manage these shifts we will need adaptive, high capacity councils to be able deliver now and into the future.

The key issues which will continue to exert pressure on Tasmanian councils and drive reform are a continuing tight fiscal outlook, population ageing/movements, ageing and inadequate infrastructure, skills shortages, increasing service delivery costs combined with increasing community expectations as well as potential impacts of climate change and extreme weather events. An overview of some of these external factors impacting on councils is presented for consideration.

AUSTRALIAN CLASSIFICATION OF LOCAL GOVERNMENTS (ACLG)*

Rural Agricultural Small and Medium (RASM) Rural Agricultural Large (RAL)

Rural Agricultural Very Large (RAVL) Urban Small (US)

Urban Medium (UM)

* Please refer to Appendix D for a full description of the ACLG.

Demographic changes

As Table 1 below illustrates many Tasmanian councils are small and have declining and/or ageing

populations. This will have significant implications for their future sustainability, as a declining and/or ageing population directly affects a council’s ability to grow their rate base. Furthermore, the services required and expected by an ageing population will differ greatly to those currently provided. Within a climate of

economic restraint, pressure will be on councils to plan and prepare for the projected population changes within their communities.

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Table 1. Demographic change by council class

Class 2014 Population (est. current) Projected 10 year Population Growth 2014 to 2024

0-14 15 - 64 65 - 84 85+ All Ages UM 256097 9% -1% 36% 14% 7% US 108453 0% -1% 31% 30% 5% RAV 87212 0% -3% 35% 44% 4% RAL 57279 -3% -5% 35% 45% 3% RASM 11711 -6% -13% 28% 52% -1% Tasmania 520752 4% -2% 34% 25% 5%

Source: DHS (Australian Government) Population Projections base year 2011.

Tables 1 and 2 indicate that as the population of people over 65 in the Tasmanian community will continue to increase, the working-age population that will provide most of the income to support these people is projected to decrease, as is the youth population. Referring to Table 1, we can see that RASM councils are likely to experience a drop of 13 per cent of their working population, yet their over 65 population will increase by 28 per cent.

Table 2. The projected change in population proportions of working age and those aged over 65, now and projected in 2024.

Council

Class Council

2014 Population

2024 projected change in the proportion of: 15 to 64 years old 65 and older

RASM Central Highlands 2 428 -14% 38%

Flinders* 802 - -

Glamorgan-Spring Bay 4 378 -13% 30%

King Island 1 655 -12% 37%

Tasman 2 448 -12% 37%

RAL Break O`Day 6 425 -12% 31%

Circular Head 8 583 -6% 33% Dorset 7 145 -8% 26% George Town 7 019 -8% 32% Kentish 6 431 -9% 38% Latrobe 10 283 -6% 27% Southern Midlands 6 341 -7% 49% West Coast 5 052 -8% 35%

RAV Huon Valley 16 096 -7% 35%

Meander Valley 19 774 -7% 31% Derwent Valley 10 187 -7% 30% Northern Midlands 12 839 -6% 29% Sorell 13 866 -8% 32% Waratah-Wynyard 14 450 -8% 26% US Brighton 16 578 -6% 45% Burnie City 20 562 -6% 23% Central Coast 22 430 -6% 27% Devonport City 25 963 -5% 15% West Tamar 22 920 -7% 32%

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Notes: * Population projections within Flinders Council have limited accuracy due to small population size and are not calculated. Source: DHS (Australian Government) Population Projections base year 2011.

Referring to Figure 1, the map indicates that from 2014 to 2024, there will be a higher concentration of people aged 65 years and over in the eastern coastal councils. This is consistent with a national trend for the migration of retirees to coastal areas, attracted by comparatively lower living costs or by lifestyle opportunities.

Councils in Tasmania will need to plan for this strong growth in their ageing populations because it affects their rating base and alters the service delivery needs of the community. Practical examples of how this could impact on council operations include:

 Considering the location, choice, affordability and design of housing for the elderly (such as self-contained units) and their carers (nurses, allied health professionals, domestic staff) and their proximity to support services and infrastructure in these areas.

 Taking into account the mobility needs of older people in building and town design, in facilitating access to medical services, shops and other facilities and to enable older people to socialise. Local government can use its public places to bring people together and overcome the social isolation of many retirees.

 Ensuring that the types of services provided match those actually needed. Evidence suggests most people prefer to age in their own home, therefore there will be an increase in the demand for home and community care services, meals-on-wheels and assistance with home maintenance, laundry, gardening, shopping etc.

Simultaneously, councils may develop strategies to retain and/or grow the youth and working age populations as a way to offset the ageing of their population.

Sustainable population growth strategies are as contentious as they are complex. However fundamental issues, such as housing affordability and employment opportunities, have been identified to explain the movement of working-age populations away from particular communities.

Council

Class Council 2014 Population

Projected change in the proportion of: 15 to 64 years old 65 and older

UM Clarence City 54 254 -6% 22% Glenorchy City 46 717 -6% 16% Hobart City 51 309 -9% 30% Kingborough 35 578 -5% 33% Launceston City 68 239 -7% 24% Tasmania 520 752 -7% 27%

Key More than 40% increase or more than 10% decrease in proportion 30% – 40% increase or less than 10% decrease in proportion 20 – 30% increase

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Figure 1 – Proportion of those aged 65 years and older – 2014 and 2024 (DHS, 2011)

Economic landscape

Local government plays a major role in the economic development of the State. Through the provision and maintenance of both social and built infrastructure local government can create a climate conducive to sustainable economic development.

By supporting opportunities for sustainable economic development, local government creates the basis for population growth, which in turn provides an economic stimulus to industry sectors such as retail and construction, and assists in defraying the costs of infrastructure development.

All spheres of government are increasingly working together to plan and deliver the infrastructure and other services needed to facilitate business activity and place-based investment, and thereby build skills capacity, promote social inclusion and build and support a stable workforce.

By building stronger linkages with state government initiatives and the private sector local government will be able to tailor their land use and business attraction strategies and infrastructure delivery to make the most of opportunities and ensure they are investment-ready.

To assist in regional economic planning, it is useful to consider the major industries in each region, along with employment figures. Table 3 shows the three largest industries within each local government area, and the percentage of people employed in these industries. Table 4 outlines the unemployment rates, and employment figures for each of the councils.

For example, in Circular Head, 2,000 people, or over 50 per cent of the workforce, are employed in

Agriculture, Forestry and Fishing, Manufacturing or Retail Trade. Whereas, in Hobart City, 10,000 people, or 40 per cent of the workforce, are employed in Health Care and Social Assistance, Retail Trade, or

Education and Training. Naturally, the economic strategies for these two councils will vary, because not only is the total number of employees larger in Hobart, the mechanisms to address downturns or emerging

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opportunities within Agriculture, Forestry and Fishing will differ significantly from those within the Health Care and Social Assistance Industry.

Table 3. Top three industries for employment and their percentage contribution

Class Council Top three industries for employment Employed in _{top 3 (%)}

RASM Central Highlands Agriculture, Forestry & Fishing; Public Administration and Safety; Accommodation

and Food Services 49

Flinders Agriculture, Forestry & Fishing; Public Administration and Safety; Construction 45 Glamorgan-Spring

Bay Accommodation and Food Services; Agriculture, Forestry & Fishing; Retail Trade 44 King Island Agriculture, Forestry & Fishing; Manufacturing; Retail Trade 60 Tasman Agriculture, Forestry & Fishing; Accommodation and Food Services; Arts and

Recreation Services 40

RAL Break O`Day Agriculture, Forestry & Fishing; Retail Trade; Health Care and Social Assistance 35 Circular Head Agriculture, Forestry & Fishing; Manufacturing; Retail Trade 51 Dorset Agriculture, Forestry & Fishing; Retail Trade; Manufacturing 42 George Town Manufacturing; Retail Trade; Health Care and Social Assistance 45 Kentish Manufacturing; Retail Trade; Agriculture, Forestry & Fishing 33 Latrobe Health Care and Social Assistance; Retail Trade; Manufacturing 33 Southern Midlands Agriculture, Forestry & Fishing; Health Care and Social Assistance; Manufacturing 36 West Coast Mining; Accommodation and Food Services; Retail Trade 52 RAV Huon Valley Agriculture, Forestry & Fishing; Health Care and Social Assistance; Retail Trade 35 Meander Valley Retail Trade; Health Care and Social Assistance ; Manufacturing 33 Derwent Valley Health Care and Social Assistance; Retail Trade; Manufacturing 37 Northern

Midlands Agriculture, Forestry & Fishing; Manufacturing; Retail Trade 34 Sorell Health Care and Social Assistance; Retail Trade; Construction 34 Waratah/Wynyard Health Care and Social Assistance; Manufacturing; Retail Trade 36 US Brighton Retail Trade; Health Care and Social Assistance; Manufacturing 35 Burnie Retail Trade; Health Care and Social Assistance; Manufacturing 38 Central Coast Manufacturing; Health Care and Social Assistance; Retail Trade 35 Devonport Retail Trade; Manufacturing; Health Care and Social Assistance 36 West Tamar Health Care and Social Assistance; Retail Trade; Education and Training 34 UM Clarence Public Administration and Safety; Health Care and Social Assistance; Retail Trade 37 Glenorchy Health Care and Social Assistance; Retail Trade; Public Administration and Safety; 37 Hobart Health Care and Social Assistance; Public Administration and Safety; Education

and Training 40

Kingborough Health Care and Social Assistance; Public Administration and Safety; Education

and Training 36

Launceston Health Care and Social Assistance; Retail Trade; Education and Training 36 Source: ABS Table Builder, 2011 Census

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Table 4. The labour force and unemployment in each local government area

Source: Small Area Labour Market (SALM) Australia, December Quarter 2013, Department of Employment (Aus)

Infrastructure Funding and Coordination

Efficient public infrastructure plays a key role in building a competitive and productive economy and the ongoing funding and financing of infrastructure by the three spheres of government is of critical importance to communities. Deficiencies in public infrastructure can retard economic growth, through creating

blockages, slowing down economic growth, as well as affecting the amenity of municipalities.

Investment in infrastructure has a multiplier effect throughout the economy, generating economic, social and environmental benefits to local communities and regions. At the federal and state government levels there is a renewed focus on addressing infrastructure backlogs and improving strategic planning and delivery of infrastructure projects.

Tasmanian local government has committed to the development of long-term financial planning which will be underpinned by asset management plans covering all classes of council assets. The component parts of these plans with respect to condition reports, intervention strategies and renewal regimes will greatly improve the management of council assets and infrastructure.

Class Council Unemployment rate Number unemployed Number employed

Dec-08 Dec-13 Dec-13 Dec-13

RASM Central Highlands 5.3 12.5 134 941

Flinders 1.8 2.2 11 507

Glamorgan-Spring Bay 3.3 7.9 156 1 822

King Island 1.7 3.4 36 1 027

Tasman 3.8 7.6 79 955

RAL Break O`Day 6.3 11.4 272 2 110

Circular Head 3.0 5.3 230 4 114 Dorset 3.8 8.1 282 3 205 George Town 9.1 19.4 561 2 330 Kentish 7.9 10.3 280 2 437 Latrobe 11.3 16.4 711 3 623 Southern Midlands 5.1 10.9 312 2 554 West Coast 6.7 9.2 245 2 418

RAV Huon Valley 4.1 9.2 606 5 978

Meander Valley 6.5 13.1 1 236 8 197 Derwent Valley 11.0 23.7 1 061 3 415 Northern Midlands 6.4 12.5 749 5 240 Sorell 6.5 12.9 767 5 177 Waratah/Wynyard 10.2 17.3 1 097 5 246 US Brighton 6.4 10.7 658 5 487 Burnie 13.1 18.8 1 724 7 446 Central Coast 11.8 16.5 1 655 8 373 Devonport 7.2 10.2 1 179 10 380 West Tamar 6.0 12.4 1 295 9 148 UM Clarence 3.3 5.7 1 496 24 757 Glenorchy 5.5 10.6 2 303 19 421 Hobart 6.3 10.4 2 925 25 202 Kingborough 3.8 8.1 1 340 15 207 Launceston 11.6 21.9 6 920 24 679 Tasmania 5.0 7.7 30 320 211 396

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Real benefits in the area of infrastructure are likely to accrue where all levels of government are working together. There must be coordinated and cohesive planning across the spectrum to ensure that benefits to local communities and broader economic growth actually flow.

Councils, as owners of road networks, airports and other infrastructure, have an important role to play in working closely with both levels of governments. Councils can address their own infrastructure backlogs and through involvement in regional processes improve the strategic planning and coordination of infrastructure projects.

The need for partnerships and collaboration in the planning and delivery of infrastructure is a key finding in the recent Productivity Commission’s draft report on Public Infrastructure. The report notes that the lack of long-term planning and coordination of public infrastructure provision across all spheres of government is contributing to poor infrastructure outcomes across Australia.

Local government has potential to align their infrastructure investment with national and state government investment programs. The cluster delivery of government funded projects has the potential for benefits in terms of cost savings, efficiencies and improved community outcomes. Councils can add value to major projects delivered by the Australian or Tasmanian Governments through funding small projects to address particular bottlenecks and help improve the efficiency and outcomes of major projects. However this will only result if there is improved integration and communication.

The aggregation of water and sewerage in Tasmania and the efforts of councils in other jurisdictions in relation to regional and network approaches to road management highlight the benefits and improvements in infrastructure delivery and planning and the capacity to realise real cost savings.

There are a number of major infrastructure commitments at both the Federal and State level that will impact on local government in Tasmania. For example, the Australian and Tasmanian Governments recently announced that they will spend $560 million on transport infrastructure projects across Tasmania over the next five years (see Table 5. below).

Table 5. Australian and Tasmanian Government Infrastructure projects – 2014-15 to 2019-20

Infrastructure investment projects in Tasmania Council Project cost* $M

Brooker Highway Glenorchy City 32.0

Domain Highway Planning Hobart City 4.0

Freight Rail Revitalisation Various 239.2

Huon Highway Kingborough 21.9

Midland Highway Various, primarily Northern and Southern Midlands 250.0

Tasman Highway Clarence 13.0

Westbury Road Traffic Management Meander Valley 0.50

Total 560.6

Notes: * Project cost includes both the Australian and Tasmanian Government contribution. Source: Department of Infrastructure, Energy and Resources

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Climate Change and Natural Disasters

Tasmania is likely to experience climate change impacts which will affect communities and major industries. How all three spheres of government respond to these challenges now and in the future will be crucial to ameliorate the impacts on communities.

In general terms, average temperatures are projected to rise across Tasmania. Already, there is an emerging pattern of increased rainfall over the coastal regions and reduced rainfall over central Tasmania and the Northwest. As a result, runoff is projected to increase in important agricultural regions. Tasmania will face other impacts as well, including sea level rise, greater storm surges and erosion, a hotter and drier climate, and increased numbers of extreme weather events.

The effects of climate change will vary across the State. Communities recognise that their council is well placed to understand their local environment and mobilise their preparedness and response. Council-owned assets will be exposed to various climate change impacts and this will be a driver of change in councils’ operating environment going into the future. A key consideration for councils, is how to identify, solve, adapt, and manage climate change risks, and their potential liabilities through action or inaction. Natural disasters have the potential to cause significant social and economic disruption, environmental impact and loss of life. Emergency response is the final option available to councils to manage extreme natural hazard events in their area. There is an ongoing shift towards integrated land-use planning that reduces the exposure and vulnerability of our communities to natural hazards.

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5. The case for change

The RoLG project was established in 2012 in response to an ongoing public debate regarding the future of local government in Tasmania which revealed a wide range of divergent views and concerns about long-term financial sustainability. The lack of agreement on what the ‘issues’ are combined with the diversity of stakeholder perspectives has led to limited success in defining the way forward. The RoLG project has sought to build a solid foundation upon which stakeholders can clearly identify the nature of the ‘problem’, and discuss and explore their aspirations for local government.

There is a need for cultural change within local government to encourage councils to move from a focus on compliance and financial dependency to being an innovative and financially sustainable sector. The RoLG project supports this objective by encouraging councils to take ownership of their performance and to use their own expertise to generate and share solutions for change.

LOCAL GOVERNMENT IN TASMANIA – SNAPSHOT

There are 29 Councils in Tasmania with an average population of 17,156. The council with the largest area is West Coast Council with 9,598 km2. Launceston City Council has the largest population with 67,146.

There are 263 councillors, and 3,400 employees.

In 2013, the 29 councils combined reported operating revenues of $754 million, operating expenses of $688 million, invested $222 million in new assets and managed physical infrastructure recorded at more than $8.6 billion.

Local government performs a wide range of roles within Tasmania many of which are driven by statutory or regulatory requirements and others which are more discretionary and have evolved out of its unique

relationship with their local communities. The way councils deliver on these roles differs from council to council depending on aspects like size, geography, culture, demographics and community involvement. Councils also have different ways of perceiving their overarching role. One council may consider their primary role as the enabler who sets the strategic agenda for their municipality and will look to outsource some of their functions whereas another council may see their primary role as being a traditional service provider with a primary focus on roads, rates and rubbish. The relationship the council has with its

community will also shape the way it delivers the roles in terms of community input into strategic planning processes and levels of involvement in community governance.

While many local government reviews focus primarily on the financial sustainability of councils this project has taken a broader view in order to capture the full scope of local government roles. The project has attempted to meld the views of councils and other stakeholders into an assessment which seeks to identify what is working well as well as identifying deficiencies. An essential first step was to identify the key roles for

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local government and then drawing on council expertise, further parse the eight roles of local government so as to provide a more precise description of what each role entails. The eight roles of local government and their attendant components have provided the framework with which to review local government in Tasmania. For many councils this provided a tool with which to broaden their understanding of what each role entails so they could map their capability across all elements and a provide a more objective

assessment of their capability. For many of the eight roles there is no one ‘right’ approach for a council to take.

The role of the PLGC working groups will be to combine local and state government expertise to generate a sectoral reform agenda some of which may not be uniformly accepted by the sector, but will nonetheless be critical in addressing structural inefficiencies and strategic capacity gaps. The project recognises there is not a unified position within the sector on many of the issues and challenges the sector faces. Within the Tasmanian local government sector, there is unsurprisingly, no agreement on the need for reform or the foci of reform agendas. The remarks made on the polarised views within the sector in the South Australian report Strengthening South Australian Communities in a Changing World, are applicable here:

“[There are] two divergent attitudes towards the state of local government in South Australia held by councils themselves. One view is that local government does need to change and improve its structures and processes in order to be more financially sustainable and more accountable and relevant to the communities it serves. The other view, prevalent amongst some councils is that everything will be fine so long as they continue to receive grants and other forms of support from State and Federal Governments.”

The Local Government Role Assessment provided an assessment of councils’ current capability as well as presenting an aspirational view of how a high capacity council would deliver the roles. Many of the submissions received highlighted the need for the sector to look beyond the current status quo to future challenges and highlighted the need for a more aspirational approach.

The NSW Independent Local Government Review Panel developed a useful aspirational but eminently achievable list of what the system of local government could aim to achieve over time. A modified version is provided here:

 Councils with the scale, resources and ‘strategic capacity’ to govern effectively and to provide a strong voice for their communities.

 Maintenance of a strong sense of local identity and place.

 Councils with an adequate revenue base (own source or grants) relative to their functions, healthy balance sheets, and sound financial management.

 Councils renowned for their efficiency and focus on outcomes.

 Regional groupings of councils that share resources on a large scale and jointly plan and advocate for their regions.

 Councils that have highly skilled mayors, councillors and executive teams; and are respected by the State government and community alike.

 Mayors who are recognised leaders both within the council and throughout the local community, and enjoy a positive reputation for that leadership.

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 An electoral system designed to ensure that as far as possible councils are representative of the make-up and varied interests of their communities.

 A Local Government Act that minimises prescription and provides a range of options for the way councils and regional bodies are structured.

 Effective mechanisms for State-local consultation, joint planning, policy development and operational partnerships.

 A local government association that is focused on strategy; a well-informed, dynamic advocate; a leader in reform; and a trouble-shooter.

 A constructive relationship between employers, employees and employee organisations, focused on improving productivity, performance and rewards.

The Australian Centre for Excellence in Local Government (ACELG) report, Consolidation in Local

Government: A Fresh Look highlights the shift in local government reform agendas from a focus on reducing costs and improving efficiencies to a more far-reaching agenda which is driven by the desire to:

“…strengthen local government’s strategic capacity to play an expanded and more prominent role has emerged as a key variable in programs of local government reform. This developing view of the role of councils requires that they are not just financially robust but also have the skills and resources ‘to be high capacity organisations with the requisite knowledge, creativity and innovation to enable them to manage complex change.”

The recent raft of electoral reforms and financial and asset management reforms together with the reform agenda to be delivered through the PLGC working groups will support councils to build their strategic capacity as well as reduce costs over time. This will be achieved by the combination of the Tasmanian Government working with the local government sector to provide the necessary legislative and policy frameworks, and through the sector’s commitment to implement reforms at an individual council level, regionally and at a state-wide level through the Local Government Association of Tasmania (LGAT).

Expanding roles

Councils have expanded their roles and responsibilities and are delivering more than they were 20 or 30 years ago. Councils are delivering an increasing range of social services and community infrastructure to address the needs of their communities as well as playing a greater role in shaping the economic and cultural fabric of communities. The Commonwealth Grants Commission provides the following explanation for increased functions:

 Devolution: where Australian or state/territory governments require local government to take responsibility for services.

 Raising the bar: where the complexity/standard of a local government services is increased by other tiers of government.

 Cost shifting: is the withdrawal of federal/state funding support to local government to provide a service previously provided by another level of government, or where local government steps in to provide a service withdrawn from another tier of government.

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 Increased community expectations: where the community demands improvements in existing local government services.

 Policy choice: is where councils voluntarily choose to expand their service provision.

Not all councils are in a position to be able to deliver this enhanced range of services. Some councils will struggle to deliver their basic statutory obligations and may well be unable to take on this broader scope of activities. This can lead to significant differences between municipalities in terms of service scope and

standards as councils who are struggling financially are forced to cut back and/or dramatically increase rates. The changing role of local government has also highlighted the need for high calibre elected members to be able to represent their communities, create a strategic vision and contribute to the efficient operation of council. The most recent local government reviews (NSW, South Australia and Victoria) have highlighted concerns about the performance of elected members and proposed a range of initiatives to improve both governance and the professionalism of members. Some councillors are seen to lack the necessary

professional and personal skills required to perform their functions appropriately and as is often the case, a few through their behaviour call into dispute the whole sector. There are also instances where councillors do not have the financial acumen or ability to understand complex planning documents or make well-informed decisions on budgets and strategic planning. For some councillors this can be as a result of lack of understanding of what their role entails prior to running for office and a failure to ensure they are fully equipped to deliver their responsibilities when elected. There is a widespread view within the sector that in order to attract suitably qualified people into local government it is necessary that remuneration reflect the growing levels of complexity of the role and the requisite need for a sophisticated skill set and business acumen.

The steady stream of complaints received by the Department of Premier and Cabinet’s Local Government Division, the number of code of conduct complaints, and incidences of bad behaviour reported in the media indicates there is a systemic problem across the sector. The interim report highlighted a range of concerns relating to governance throughout the role assessments. The council self-assessment survey reveals across all roles that political leadership, strategic development and corporate leadership, were assessed by council respondents as capabilities in need of some development, with between 70 per cent to 75 per cent providing a score of less than 4 where 1 is significantly inadequate and 5 is currently adequate. The importance of having elected members who are appropriately qualified and understand the

contribution they can make to local government will become more critical as local government is faced with increasingly complex challenges to manage. Many within the sector have expressed support for mandatory training for mayors and deputy mayors at a minimum and preferably for all councillors. Interestingly, both NSW and South Australia local government reviews have made similar recommendations and Victoria intends to introduce legislation to require mandatory training for all newly elected councillors.

Financial sustainability

A sustainable council is commonly defined as a council with the capacity to function effectively, efficiently and economically and able to meet current and future needs of its community. Councils need to have a complete understanding of their sustainability risks and develop a range of short to long term strategic responses to mitigate those risks. Councils that are financially viable, accountable and efficiently managed are well positioned to be sustainable in the future.

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The Price Waterhouse Coopers report, the National Financial Sustainability Study of Local Government,

identifies common characteristics of councils facing financial sustainability constraints as including:

 generally minimal or negative revenue growth. A small proportion of councils also have limited access to rate revenue due to relatively small annual rate increases and a low initial rating base;

 cost growth which has typically exceeded revenue growth. Expenditures have been rising by an average of CPI +2-3 per cent per annum;

 limited access for some councils to strong financial and asset management skills which are critical to identifying sustainability problems, optimising renewals expenditure and improving revenue streams;

 increasing involvement in non-core service provision due to escalating community demands, coupled with a related tendency by some councils to ‘step-in’ to provide a non-traditional service; and

 a tendency by some councils to run operating deficits with a growing inability to meet all costs with available income leading some councils to defer or underspend on renewal of infrastructure, particularly community infrastructure.

The Tasmanian Government has been working closely with the local government sector over the last three years to improve the financial and asset management practices of councils. The results of this work are reflected in the gradual improvement of the sector’s financial performance. The passing of legislation in 2013 requiring councils to implement and adopt long-term financial and asset management planning frameworks will further assist councils in becoming sustainable and viable into the future. The legislation also requires councils to establish audit panels and all councils are now required to report financial and asset management indicators in their financial statements, which together will improve accountability.

However, as the recent Auditor-General’s report1_{points out there are concerns about the financial} performance of some councils and there are clear indications that a number of councils will have considerable difficulty in remaining financially sustainable without significant structural reform. Key concerns raised by the Auditor-General include:

 16 councils have reported net operating deficits totalling $15.871 million and the Auditor-General has recommended that all councils develop plans with the objective of achieving positive operating surplus.

 On average, councils expended 90 per cent of their depreciation expense on existing

non-current assets, which is below the 100 per cent benchmark (although this is an improvement on previous years).

 At 30 June 2013, seven councils were still to develop long-term financial and asset management plans.

There are however a number of positive results which indicate the sector is making progress in improving their financial and asset management, and therefore long-term sustainability:

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 Seven councils had no debt and all councils with debt were comfortably able to meet their loan interest charges.

 All councils managed their working capital effectively and were capable of meeting short-term commitments.

 On average the asset consumption ratio for roads continues to improve and was 5 per cent above the benchmark2_.

 Collectively councils reported a low financial sustainability risk from a liquidity perspective.

The Auditor-General concluded that councils in general have a moderate financial sustainability risk from a financial operating and asset management perspective, low financial sustainability risk from a net financial liabilities perspective and a high financial sustainability risk from a governance perspective.

The establishment of a sustainability framework which requires councils to undertake long-term financial and asset management planning and introduces measures to improve the consistency and transparency of asset depreciation and revaluation practices will assist councils to make decisions which are financially responsible and defensible. The work undertaken with councils to build rating capability and encourage a shift to capital value as a rating base will also assist with improving financial management and strategic planning.

Accountability will be improved through the requirement for councils to report on financial and asset management sustainability indicators in their financial statements. Providing the framework and the tools is an essential step in improving council performance but ultimately it is up to councils to ensure they utilise the tools effectively and not just tick the boxes in order to meet compliance requirements.

While the sector has implemented systems and processes to improve the management of expenditure and these reforms are making a difference, there are still a number of councils who are currently experiencing financial stress and will continue to do so in the future. Given the future is likely to include additional pressures in terms of constrained revenues, increased demand for services, and cost pressures arising from both population growth and decline and the ageing of these communities. It is evident there are councils who will increasingly need to make difficult choices to remain viable in a what is set to be a challenging and constrained budgetary climate in the years to come.

Councils with stagnant or declining populations, who have low population density, high population dispersal, large land areas and road networks will have significant challenges in remaining financially viable without significant increases in grant revenue. These councils will always face higher cost structures and difficulties in attracting qualified staff as well as constraints in their ability to reduce costs and/or increase own-source revenues and are likely therefore to remain dependent on external grants to supplement rates revenue. For some councils, their main strategy to remain financially viable is to rely on continual rate increases above CPI or reduce expenditure by reducing services or service levels or by underfunding infrastructure renewal. Councils will increasingly need to look at broader options to reduce costs through improving scale, reducing services levels, entering into innovative funding arrangements with private sector, regional collaboration or entering into shared services agreements.

2_{This finding needs to be treated with caution as the Auditor General has since found that not all councils were valuing and}

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6. Sectoral assessment

of local government

One of the benefits of the approach taken with the RoLG project has been to gain agreement on what a high performing council would look like. The identification of the eight roles and the breakdown of each role into their components provided councils with a simple tool to assess their performance in each of the eight roles.

The council self-assessment survey strongly affirmed that the vast majority of councils consider the need to perform all eight roles, are undertaking the components to various degrees and importantly, that the majority aspire to improve their delivery of the roles.

The process of undergoing the self-assessment survey was for many councils a valuable experience. They stopped work for a moment and took the time to discuss and reflect on how they are performing. In the busy operational focused world of a council this was an opportunity to acknowledge achievements and discuss areas where they lack capability or capacity. It is through conversations like these within councils that innovation and commitment to improvement are fostered.

The council self-assessment survey revealed the majority of councils consider they are delivering the roles well or very well. Despite this very positive assessment, many of the comments received by councils and submissions indicate that within the sector there are many who see the need for significant change in cultural, governance and operational aspects of local government.

The Local Government Role Assessment Interim Report while reporting on the sector’s self-assessment also sought to add to this process of assessment by highlighting the differences between just delivering the role and achieving excellence. Clearly Tasmanian councils are operating at different levels and categorising a high performing council which takes into account their size, geographic location, demographics etc. is not a simple task as councils deliver these roles differently.

The eight roles of local government were each individually assessed in the Interim Report. Each role assessment presents findings from the council self-assessment, responses to the community survey, submissions, discussion papers and a range of authorative sources. The assessment provides a sectoral assessment of local government although in some instances contrasts have been drawn between different categories of councils, if relevant. For a summary of the methodology to assess the roles see Appendix B.

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Council self-assessment of the eight roles of local government

As shown in Figure 2, for most of the identified local government roles, over 70 per cent of councils considered they delivered the role well or very well. Few councils considered they did not need to

undertake a role (2 per cent for four of the roles). Roles which councils considered they were strongest in (i.e., did well or very well) included:

 representation and cooperation (89 per cent)

 service delivery and asset management (78 per cent)

 sense of place (76 per cent)

 community engagement (76 per cent).

Councils had the most concern over the economic development and strategic leadership roles, with some 50 per cent and 33 per cent of councils respectively indicating a desire to build more capability.

Figure 2: Extent to which councils deliver identified roles

Councils largely see their capabilities to support the eight roles as approaching adequate. Figure 3 shows that, on a scale where 1 is significantly inadequate to 5 which is currently adequate, around 70 per cent or more councils have ranked most of their capabilities as 4 or greater, with over 90 per cent of councils ranking most of their capabilities as 3 or greater.

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Figure 3: Council capabilities to support roles

The exception is a number of capabilities where a significant proportion of councils have ranked their capability as 3 or lower, including financial resources (57 per cent); collaboration with other councils (43 per cent); and technology and tools (47 per cent).

Councils reported a range of different barriers to undertaking the eight roles. The most common barriers were limited financial and staff resources and geographic dispersion or isolation.

There was a similar variability in responses on potential solutions to identified barriers. However, common themes emerging included:

 access to more financial and staff resources;

 improving communication;

 improving leadership capabilities; and

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A summary of barriers and possible solutions identified by councils through the local government self-assessment survey are provided in Table 6.

Table 6. Council identified barriers and solutions to delivering the eight roles of local government

Role Barriers Solutions

Sense of Place Limited financial and staff resources Geographical dispersal and parochialism Insufficient public consultation

Not considered in strategic direction, leadership

Access to funding and improving financial management

Encourage and support the sharing of activities across municipality

Improve communication Leadership development Community

Engagement Community apathy _{Limited financial and staff resources} Geographic dispersal

Underutilisation of consultation

More regular, proactive and targeted approaches to consulting

Increasing resources Improve communication

Leadership and strategic development Strategic Leadership Limited non-financial resources

Leadership and Planning

Changing legislation and policies

Geographical dispersal and parochialism

Additional resources and improved resource management

Leadership training and cooperation

Improve communication and communication technology

Regional cooperation Land-Use Planning Government Policy and Frameworks

Staffing constraints

Closer workings with Government

Regional cooperation and use of professional consultants

Economic

Development Limited financial and staff resources _{Lack of strategic economic planning} Extraneous forces

Lack of effective regional cooperation and strategic planning

Additional resources and improved resource management

Leadership training and cooperation Cooperation with State and Federal Government

Regional cooperation Service Delivery and

Asset Management Limited financial resources _{Ageing assets and increasing standards of} services

Unrealistic expectations of communities

Improved regional and national cooperation

Legislation and

By-Laws Limited financial and staff resources _{Legislation burdens} Increased resource support and regional cooperation Simplified and less onerous legislation Representation and

Cooperation Limited financial and staff resources _{Geographical isolation} Wariness, self-interest

Increased resource support and regional cooperation

Being proactive and assertive Cooperation with Government

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7. Role assessment:

summary of findings

The eight roles of local government were each individually assessed in the Local Government Role Assessment Interim Report. Each role assessment presents findings from the council self-assessment, findings from the community survey, submissions, discussion papers and a range of authorative sources. The assessment provides a sectoral assessment of local government although in some instances contrasts have been drawn between different categories of councils, if relevant. The Interim Report identified an extensive range of areas where council capability could be improved as well as impediments which need to be addressed by both sectors of government. Table 7 below provides a summary of the role assessment findings and recommended actions. For a complete version of the local government role assessment see Appendix C. Table 7. Local government role assessment summary of findings

Role Council self-assessment result

Role assessment key finding

Suggested approach

SENSE OF PLACE

Councils facilitate and work with their communities to develop a sense of place through branding, promoting and enhancing local identity, and promoting social cohesion and health and wellbeing

75 per cent of responses assessed their council as performing this role well to very well

Councils need to incorporate sense of place into strategic planning and involve community in place building decisions.

Individual councils to consider capability actions.

Collaboration Working Group to investigate models relating to council support for health and wellbeing initiatives

COMMUNITY ENGAGEMENT

Councils engage with their communities, sharing information about community, council and government business, and where appropriate, provide opportunities for constituents to influence and/or participate in council decision making

There are opportunities for councils to improve the way they engage with the community,

particularly in terms of empowering residents to contribute to strategic planning, service delivery and decision making processes

Individual councils to consider capability actions

STRATEGIC LEADERSHIP Councils provide strategic leadership through understanding current and future operating environments, identifying

opportunities and risks and making decisions which align with long-term strategic plans and corporate plans

A number of councils are financially vulnerable and may experience financial sustainability issues in the future. There is a need to build elected members’ strategic leadership capability

A number of reforms have been introduced which will assist councils address financial vulnerability issues and improve long-term sustainability

Governance Working Group to investigate options to enhance elected member strategic leadership capability

LAND-USE PLANNING

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Role Council self-assessment result

Role assessment key finding

Suggested approach planners who work with

communities to create an

environment that guides the use of land to balance economic,

environmental and

community/social values, and to support the health and wellbeing of their communities

their council as performing this role well to very well

to adopting a regional approach and could improve strategic planning aspect of land-use planning

which streamline the planning process for councils

Governance Working Group to investigate elected member training requirements

ECONOMIC DEVELOPMENT

Councils facilitate the economic development of communities by working with the business community to attract and retain investment and support sustainable economic growth

There is a need to improve collaboration between councils, regional authorities and Tasmanian Government departments and build council capability in economic development

Economic Development Working Groupto develop initiatives to build capability Collaboration between local government authorities, the Tasmanian Government and Australian government will continue to deliver economic development outcomes

SERVICES AND ASSETS

Councils are responsible financial managers who deliver cost effective, equitable and efficient services and assets which reflect local needs and expectations and are guided by council’s long-term corporate planning objectives

Councils need to improve their capability in

developing and implementing long-term financial and asset management plans and improve service delivery costs and standards

The legislative reforms which require councils to develop and maintain long-term financial plans and long-term strategic asset management plans will assist councils to build capability over time

Collaboration Working Groupto develop initiatives to improve service delivery outcomes

LEGISLATION AND BY-LAWS

Councils enforce relevant state and national legislation and create by-laws and policies as required to support the efficient and effective functioning of council to support the community

It is essential for the effective and lawful operation of all councils to perform this role to a very high standard. It is unclear to what extent councils are meeting their legislative responsibilities

Legislation Working Groupto develop initiatives to improve capability

REPRESENTATION AND COOPERATION

Councils engage with each other and other spheres of government to represent and advocate the needs of their communities, and where appropriate, cooperate and work in partnership to generate the greatest benefit for

communities

Regional and state-wide and inter-council

collaboration needs to be on a wider scale and scope in order to improve efficiencies and reduce costs

Collaboration Working Group to develop initiatives to improve capability

LGAT and regional authorities will continue to investigate and implement collaborative initiatives

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8. The PLGC working

groups

The PLGC accepted the recommendation made in the Interim Report to establish four PLGC working groups. The working groups will be tasked with developing a range of reform initiatives for the following priority areas: governance, legislation, collaboration and economic development.

The volume of ideas and suggestions made by local government and Tasmanian Government agencies clearly indicates that the local government sector sees the need for reform and is keen to be part of developing the solutions. The proposed work program for each of the four working groups provides a range of suggested strategies and actions for the working groups to consider when determining their work program.

Governance working group

The Governance working group is warranted on the basis that effective governance underpins the political, corporate and operational roles of councils. Councils have identified a range of concerns relating to the need to build strategic leadership capability, to ensure elected members and council staff are fully cognisant of their roles and responsibilities and have sufficient expertise to make informed decisions.

Reviews of local government repeatedly identify poor councillor performance as an issue which ultimately impacts on the overall operation and reputation of councils. Good governance includes factors such as councils being open and transparent in their decision making and reporting back to the community, elected members and staff are professional and maintain high standards and council operates efficiently and

effectively. Councils experiencing constant in-fighting, factionalism and incidences of unprofessional conduct and poor decision making processes which lack transparency damage public confidence in their ability to operate effectively and ultimately damage the reputation of the sector as a whole.

Work program suggestions

 Review elected member and council staff responsibilities specified in the Local Government Act 1993

and develop a program to enhance the ability of elected members and staff to fulfil these responsibilities.

 Build elected member leadership capacity through encouraging ongoing professional development.

 Introduce mandatory, professional development for new councillors and mayors.

 Consider the introduction of early intervention powers to address council dysfunction (similar to those recently introduced in NSW).