Tuesday, March 03, 2015

Vegetable Love or Time’s Winged Chariots: local government reform as real change or short term response to frustrations in State economic policy setting level?

Is it just me or do others have lots of questions about what is behind the latest cycle of State government-imposed reform on local government?

Have any other people with an interest in local government got the feeling that the higher up the elected food chain policy makers get, the more simple they want life to be? 

That complexity is the failure-point of political success and to be avoided at all costs?

By now a number of local government stakeholders have been presented with the Minister for Planning and Local Government, the Hon Peter Gutwein MHA’s thoughts on reforming local government.  We’ve all had the power point, selected documents and Q&A.

For those not invited to the forums, the Minister has set a single objective and timelines in which he wants it to be.  He wants Tasmania to be the “most competitive and attractive place to live, work and invest in the entire country” and he wants it done with a voluntary amalgamation investigation process. 

Firstly, at the Council level in 2015.

Secondly at the Local Government Board level, with transitions ready for commencement by the end of 2016.

Don’t get me wrong – if an amalgamation or shared service or fee for service arrangement is the best cost-benefit analysis proven way ahead for what is needed now and into the future for Tasmania, all well and good.  I remain open to suggestions and of course, I’m politically independent, so there’s plenty of opportunity for debate across a wide range of ideas.

So what’s my problem, then?

I just have this nagging feeling that in pursuing a single policy approach, Tasmania is doomed if the focus is only on local government activities and not whole of State.

By now, if you’ve read any of my other blogs, you’ll be familiar with this concern.  And if you haven’t, let me repeat it. 

Is it only just local government activities we should be reforming or given the policy behaviour of State and Federal governments since Federation towards local government, is it not a whole of State service delivery policy that we need to rethink to get the sort of economic outcomes the Minister wants?

So who speaks to policy reform?

It’s the language around the demand for reform that is causing a few alarm bells to go off.  Let’s look at how reform demands are publicly framed.  How has this whole debate being defined in the past few years?  Picking up on the messages out in the community:

  • The Property Council defines the problem as too many Councils costing too much with too high rates charged and too much “red and green tape” that impedes the activities of their members to develop/speculate/accumulate property.  They argue for less Councils so resulting in less rates and charges for their members and less restrictions on “growing the pie”.  And they back this up with their tailor-made economic research to fit their arguments of efficiencies to be gained.
  • Various Mayors of small rural councils define the problem as wanting to address their Council’s lack of financial capacity to provide services their communities demand in line with other areas of the State.  They lament the growing impediments of cost-shifting where the lack of funding by State and Federal governments causes them increasing problems in balancing their books and therefore cautious to spend on infrastructure.  Other Mayors want to achieve reforms on a regional scale yet are held back by system constraints that in effect penalise reform (loss of size of FAGs once Councils get bigger is a key issue for some; lack of fully delegated powers to take on whole of region issues (ie roads) is another). 
  • State governments see local government reform as a political issue with the proven capacity of losing them government (hence the mantra, no forced reforms), yet an arena in which they have to be seen to be doing something.  The ever-present stormy economic clouds make local government finances a handy distraction, happy to isolate each Council via the Auditor-General’s reports yet not taking a whole of State analysis of cause and effect.  At the same time, if they can’t achieve their particular vision of their State of progress, local government has proven an always useful sacrificial goat.
  • The community bemoans the always increasing rates and charges.  The recent well-meaning policy shift at the State level to improve the supply of clean water and functioning sewerage systems has resulted in greater costs and this is being sheeted home to local government.  Ratepayers are seeing what is done in other areas of the State and demanding the same services at the same or lesser costs.  Yet they easily turn on the other Councils as being too many, and broadly accept the statement less Councils will cost less and charge less.  Ha!  Did our rates go down after the 1993 amalgamations? No.
  • The Auditor-General has developed a number of very informative reports on the financial state of local government across the State.  How the performance of Councils rate is something that is used in the media to label local government as financially irresponsible and therefore ripe for reform.  The language is financial and governance.  (As an aside, why the Auditor-General does not hold hearings on a “please explain” basis as to why elected members vote the way they do, and thereby identify the local culture that influences Council decisions?  And then perhaps form some pertinent questions on State government cost shifting from that?)
  • At the elected level, a number of Mayors like the idea of amalgamation as they see regional benefits, particularly for the smaller councils with little in the way of population or major rate payers.  However, the issue of representation of local community concern is something that appears across local government, whether at the suburban level or out in the rural councils.  Financial reform is a given as needing work; no elected member would disagree once they’ve been through a budget review.  However, and this is where many voices, not just mine, are being ignored, financial review for local government means also including the State and Federal government policies and actions to be more accountable for cost shifting.

So it’s all about problem definition?

Problem definition is a first, and often too lightly undertaken, first step. Here are key questions for people to consider in looking at all the debate and information out there: who actually defines the problem and its parameters?  And what evidence do they base their problem definition on?

There is currently being experienced in Australia in any whole of community political debates a worrying denigration of evidence-based, peer reviewed research.  Climate change is one.  Local government reform is another.  Politically, the favour is towards debate-framing lobbying documents prepared to order by those with particular interests in the financial and political outcomes.

I’ve just recently experienced this when pointing people to the work of economics/public policy Professor Brian Dollery (University of NSW) on local government reform.  The first question is whether there is any contra-evidence as to what he concludes, that is, amalgamation doesn’t deliver the outcomes people ask for. 

Good question. 

Yet when it is answered, I haven’t found any, thereby holding his conclusions up as guiding light for working out how current reform can be shaped for Tasmania, the response has been, he’s only an academic, what would he know! 

Yes, I too was stunned, and when retorting that all his work was based on actual on the ground evidence from local government, had this dismissed with a flick of the wrist and change of attack in favour of documents prepared by lobby research groups (which have consistently failed to stand up to scrutiny). 

A man hears what he wants to hear and disregards the rest, goes the song.

So if you think amalgamation as defined by Treasury is going to resolve the problem as the Minister sees it, then I’d personally have to say that the problem definition is too narrow.

And then there’s the problem of political timeframes. 

When an Opposition goes to election and makes promises, they have to be seen to be keeping them thereby getting political wins in place before the next election.  Am I too cynical in commenting that it doesn’t matter that the outcome achieved is not perhaps in the best interests of the people they serve in setting policy reform agendas; what matters is being seen to achieve, and being able to pump out media to improve the political ratings? 

Personally speaking, on long observation, the higher the political position, the greater the pressure to be seen to act.  Those of us lower down the political kicking order are left to muddle through in sorting out the policy directives in the real world.

So what we have here in a Tasmanian context is a current State government having to live up to an election commitment within the timeframe of the next State election when it comes to reform of local government. 

As mentioned before, the Minister has set a timetable that has Councils deciding to look into voluntary amalgamations and developing up detailed proposals by the end of May, undertaking feasibility and community consultation by end September and reporting back by end December 2015.  2016 will be the year the Local Government Board reports on which Councils should be amalgamated, with it all over by Christmas.

One solution to change them all, Amalgamation to reform them, One policy to bring them all and in the political wilderness reform them...

Okay, so maybe this is coming across as some sort of policy quest given the number and length of blogs on it.  Yet the debate has been framed towards amalgamation over any other solution that might arise, especially when you look at the material coming from the Minister’s office being sent to local government elected members.  

Yet at the same time the State Government admits there is no current modelling what amalgamations would achieve in respect of price (rates) or service improvements, in the same breath, the Minister says:

The ‘Right’ (his parentheses) amalgamations have the potential to deliver”

  • Improved service delivery;
  • Greater opportunity to attract and retain skilled staff;
  • Increased capacity to comply with legislative requirements;
  • Improved risk management;
  • Improve the capacity of councils to respond to future major challenges; and
  • Better regional planning

It is the Minister who offers three independent consultants to choose from, a debate facilitator to choose from, and the offer of money up to certain sums depending on how many Council get together.  It is the Minister who defines what the problem is, and what the terms of reference of the amalgamation solution are to be, and the timeframes in which to achieve it (the next two years before the next State election).

But seriously, what do we really know about Tasmania’s local government?

The Minister bemoans the fact that he is unable to compare Tasmanian Councils with interstate Councils, let alone within the State.  However the Minister is also the Treasurer, and surely he can use the copious reports from his own Auditor General to set up some key KPIs to inform him?

All Councils have reports that speak to liquidity, underlying operating results, asset management/replacement, cash reserves and net debt, all well scrutinised by the Auditor General and critiqued.  I refer the Minister to the excellent comparative analysis done by the same in the recent No. 7 Report, Vol. 4, pp. 31-41 (http://www.audit.tas.gov.au/ ) which covers demographics, employee costs, comparative income statements and statements of financial position. 

In fact, the Audit Office has on-line reports going back to the beginning of the millennium on local government.  Lots of comparative material there. 

(I have to ask though, why would you try to compare local councils from different States?  Each serves at their local level according to local needs, and while there are some groupings, even they are difficult to compare given economic, geographic, historical, demographic, environmental etc difference.  Even the economic think tank, National Economics, has difficulties and opts for broader groupings.)

And then there is the excellent work of the Australian Bureau of Statistics to further inform anyone on demographics, employment, gender, manufacturing, education etc, etc, etc. 

And there is floating around, the public version carefully redacted, a qualified report of some year’s age that compares all the Councils and points out the good, the bad and the ugly, just not publicly naming and shaming. 

The current Audit report is not so shy in mentioning names.  So it’s not as if the information isn’t there around with which to form some excellent questions on what actually needs reform.  In particular, consider this comment from the Auditor-General:

“As noted in previous years, rural councils can face difficulties in providing and maintaining services because they do not have access to the higher ratepayer base of larger councils and in some cases they manage large road networks.  This is highlighted in the number of rateable valuations per square kilometre which reflects the population and area disparity between the Councils already referenced.” p. 32

Further, in the day to day and future maintenance of infrastructure:

“The analysis of non-current infrastructure assets per square kilometre and per head of population confirms the concentration of infrastructure and people in the major cities and larger urban areas.” p. 35

And finally, in the matter of sustainability, the chapter on local government financial sustainability includes a summary table (p. 59) that compares each Council in terms of whether they have an Audit Committee (a governance/risk), a long term asset management plan (capacity to plan forward and know what you have), a long term financial management plan (twenty years of thinking forward on finance to guide decision-making) and governance risk rating (just how well skilled are elected and employed people are to do the job).

Amalgamation is no bed of roses either.

There’s a lovely document going around from the 2010 LGMA Emerging Leaders Conference “Amalgamation: Is it a dirty word?  Local government stakeholders (elected, employed, private industry, state government, community members) concluded that:

“Councils and government need to be very clear about what the seek to achieve should further amalgamations be considered, particularly as there is no ‘one size fits all’ option and as the survey data revealed, it can take years to recover from both the financial and energy expenditure required to undertake an amalgamation.”

And yes, amalgamation is good if cost-benefit analysis supports it however cost-benefit analysis may also support options such as shared services and group purchasing, both of which have had some success when pursued strategically.

So let’s go back a few policy cycle steps here.

First of all, what did the Minister list as the issues confronting local government when he recently presented to the Mayors? 

  • Operating deficits
  • Insufficient investment in assets
  • Inadequate maintenance of road systems
  • Declining net financial asset value over the last three years
  • Rate increases that have exceeded CPI and the Tasmanian Council Cost Index
  • Second lowest average population per municipal area of all Australia States
Now, if local government stakeholders had written a list also, what do you reckon they’d list out? 

  • A century of neglect by the State in assisting Councils to develop adequate financial and planning systems which are comparable across the State.  Only recently is this being addressed in the smaller Councils.  Is it any surprise the Minister is unable to make the sorts of comparisons he wants and the Auditor-General’s reports are so damning?
  • Cost shifting from State and Federal governments resulting in creation of services that then have to be funded via rate increases long after the pork barrel has left town.  The Price-Waterhouse report, over a decade old, is still relevant today in pointing the policy finger.
  • Overnight devaluing of water and sewerage assets financial value through the water and sewerage reforms, thereby creating financial issues in Council accounts.
  • Road systems that have been created to service State development projects (hydro, mining, forestry) and now left to local government to find funds to maintain and rebuild after floods and fire and for everyday depreciation and maintenance (for which we read, rate increases and highly competitive political lobbying for increasing Federal Roads to Recovery and Blackspot funding, thus adding to the pork barrel effect).
  • A lack of any definitive State population growth policy, and State policies predicated on keeping Tasmania as a “quarry State” focusing more on extractive industries, thereby creating shifting populations in towns following commodity boom employment, and loss of the younger demographics to interstate and international employment.  Yes, there are shifts to more innovation, but it is industries changing, not State policy (by which we read State politicians just loving being photographed with the winners).
  • A tentative at best style of State leadership in reform over decades resulting in multiple, tangled attempts at the local level for improvement, with each Council following what they believe is the best path in servicing their communities, rather than any regional or whole of State policy approaches.
Every participant in the policy process looks at a problem from their viewpoint.  Exclusion of key stakeholder input in policy definition is a real problem.  It is a major concern for me, both as a ratepayer and as a local government practitioner, that only the Minister is defining the problem. 
I have a real depth of concern for what local communities are likely to face into the future with what I see as poor problem definition now.  It is a serious worry that simplistic problem definition and choice of solution may well cause significant dislocation and financial hardship for local communities in the long run.  

What would you do then, I hear you ask?

So if I were Minister, heaven forfend I hear some of you say, reform would be a wholesale issue across the whole of state and local government.  It would be a matter for some serious think-tanking, not just solution-grasping.  Ask yourselves, just what is the problem here for Tasmania as an island, as a State in the Federation, as a player in a global economic market, as part of the web of life on this planet?

And I’d go to the community, and ask them, are you willing to give us some real time in which to get some answers on this?  It may take two terms of government, it may take less, but give us enough time to overcome two centuries of poor policy decisions, and granted, we’ll make changes along the way where we can.

History’s a wonderful thing.

If I were Minister, I’d take a leaf out of what two opposing colonial State governments did in reforming local government prior to 1900.  When Dr John McCall MHA was dealing with local government reform, he went from government to opposition.  Yet the new government kept him in charge of reform.  They recognised that to otherwise would waste his years of experience and understanding of the players.  They knew that to not take a long view would mean policy failure.  And the State did succeed in the end with a new Act and reforms implemented shortly after Federation.  Some 366 plus local bodies all combined into 50 Councils (who shortly then reduced to 47).

So, there’s some basic housekeeping policy and practice that needs fixing first before we go on to amalgamate Councils and then (the Minister’s recent expressed desire) make them more responsible for economic development in accordance with State policy.

It’s the sort of thing that can take a decade, even today, and what State government today is willing to plan for that long?  Yet it must do so if this round of reform is to succeed. 

And remember what the cunning old devils did back then – they gave a non-elected Commission of three people the power to make reform decisions, thus deflecting most of the political opprobrium from elected Parliamentarians and getting on with the job.  (The records in the State Archives are a hoot to read on what locals said and then what the Commission actually did!)

And so on to implementing the policy...

If I were Minister, I’d be thinking carefully of what outcomes, intended and unintended, could likely happen in simply choosing only amalgamation.  Remember, the higher the political level, the greater the temptation for a simple policy approach to be taken. 

And here lies a trap in what happens outside of Parliament and the Ministerial speeches - implementing the policy.

Perhaps, given he was one of my old university lecturers, the Minister’s Senior Policy Advisor, Dr Tony McCall could supply the Hon Peter Gutwein with a copy of Pressman and Wildavsky’s:

Implementation: How Great Expectations in Washington are Dashed in Oakland: Or, Why It's Amazing that Federal Programs Work at All, this Being a Saga of the Economic Development Administration as Told by Two Sympathetic Observers who Seek to Build Morals on a Foundation of Ruined Hopes

It might have been published in 1984 and it does refer to the US policy arena; however it has solid policy lessons for all those who seek to implement great ideas from above.  (And Tony, you can still get it on Amazon.com, updated with three new chapters if you don’t have a local bookshop to order it from.  Can you imagine the fun in going up to the counter in the Hobart Bookshop and asking for it by full title?)

A final hopeful request.

In asking the Minister at one of the recent forums why there is no debate on a whole of state approach to government (state and local) service delivery, the Minister responded that it was over the horizon, that he wanted local government reform first, before dealing with what the State should do, what local should do.  Is it too much to ask that the Minister takes some time to reflect on some likely outcomes of his chosen policy approach, before time’s winged chariots overtake?

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