PRESENTATION TO SOUTH AFRICAN LOCAL GOVERNMENT DELEGATES 11 October 2004

1. PRESENTATION TO SOUTH AFRICAN LOCAL GOVERNMENT DELEGATES11 October 2004 John Comrie Executive Director SA Office of Local Government

2. Office of Local Government SA GOVERNMENT • Explicit policy to treat LG with respect as a separate, responsible and accountable sphere of government • Encourage LG to approach sector-wide issues in a strategic and coordinated fashion

3. SA MINISTER FOR STATE/LOCAL GOVERNMENT RELATIONS Office of Local Government • Strong background in Local Government • Actively promotes principle of subsidiarity • Emphasises councils’ prime accountability is to their communities • Resists treating with individual councils on sector-wide issues

4. Office of Local Government ROLE OF OFFICE OF LOCAL GOVERNMENT • Manage projects to implement Government policy • Advise other agencies and Ministers on projects, relationships and legislative changes that involve Local Government • Provide advice on and support for associated statutory authorities under MS/LGR • Respond to inquiries from the public, councils and LGA

5. Office of Local Government SA Office of Local Government Focus is to develop and improve collaborative working relationship between State and Local Government eg: • The Minister’s Local Government Forum • The State-Local Government Relations Agreement

6. Office of Local Government MINISTER’S LOCAL GOVERNMENT FORUM Brings together both spheres of government to cooperatively consider possible solutions to issues of importance

7. SA STATE-LOCAL GOVERNMENT RELATIONS AGREEMENT Office of Local Government State Government will: • promote coordination in consultation • consult/communicate prior to implementation or variation that impacts on local government • provide information on State/Local Government financial relations • report on outcomes of State/Local Government consultation processes

8. SA STATE-LOCAL GOVERNMENT RELATIONS AGREEMENT Office of Local Government LGA will: • Coordinate collective decision-making and representation of views • Facilitate regional strategic planning processes and linkages between country regions on matters of interest • Facilitate infrastructure planning and best practice initiatives, and promote collaboration by councils

9. RELATIONSHIP BETWEEN MS/LGR AND OTHER MINISTERS Office of Local Government • Issues relating to administration of specific functional issues referred to functional Minister • Functional Ministers can refer systemic or persistent problems to MS/LGR

10. RELATIONSHIP BETWEEN MS/LGR AND OTHER MINISTERS Office of Local Government • MS/LGR encourages other Ministers (and OLG encourages other agencies) to consult with Local Government on initiatives that affect them • LGA advises MS/LGR of discussions with other Ministers • MS/LGR regularly communicates with other Ministers (and OLG with agencies) on relationship with LG on functional, financial and policy matters

11. Office of Local Government LEGISLATIVE FRAMEWORK • Council subject to range of “public sector” Acts • Functional Acts – contain provisions relating to the administration of that function by State and/or councils • Provides holistic framework

12. Office of Local Government RELATIONSHIP BETWEEN OLG AND LGA • Co-operative – share goal of strengthening capacity of councils to govern and serve their communities • Exchange technical and strategic information • Joint projects • Issue resolution

13. Office of Local Government SOUTH AUSTRALIAN LOCAL GOVERNMENT GRANTS COMMISSION

14. Office of Local Government THE COMMISSION: Function • Make recommendations on the distribution of untied Commonwealth financial assistance grants to local governing authorities in South Australia • The payments consist of two components: • A general financial assistance component; and • An identified local road component (which was previously made as tied grants) • The total grant to council is untied • Grants are distributed immediately the Commission receives the funding

15. Commonwealth Financial Assistance Grants SA Share = $108.19 m 2nd largest source of revenue (10%) behind property rates General Purpose Grants Identified Local Road Grants SA Share = $ 82.05 m SA Share = $ 26.14 m

16. Office of Local Government THE COMMISSION: Basic Principles • Horizontal Equalisation • Per Capita Minimum • Effort Neutrality • Other Grant support • Aboriginal and Torres Strait Islanders

17. Office of Local Government THE COMMISSION: Horizontal Equalisation Full horizontal equalisation as defined by the Local Government (Financial Assistance) Act 1995 Section 6 (3a) is a reference to an allocation of funds that: • Ensures that each local governing body in a State is able to function, by reasonable effort, at a standard not lower than the average standard of other local governing bodies in the State and, • takes account of differences intheexpenditurerequired to be incurred by local governing bodies in the performance of their functions and in their capacity to raise revenue

18. Office of Local Government THE COMMISSION: Horizontal Equalisation Accordingly, the grants should compensate councils for differences in the costs of providing services and in differences in their revenue raising capacity, according to a theoretical model.Equalisation refers to the financial capacity of the Council, it does not mean that the level of services must be equal.Councils may choose to have higher or lower level of service according to their own priorities. The Commission aims to equalise Councils financial capacity to provide a similar level of service to their communities.

19. Per capita minimum Councils High capacity to raise revenue Low expenditure needs Average Low capacity to raise revenue High expenditure needs

20. Office of Local Government THE COMMISSION: Effort Neutrality The grant is independent of the policy of practices of the individual council in relation to revenue and expenditure.

21. THE COMMISSION: Aboriginal Peoples & Torres Strait Islanders Office of Local Government Grants are allocated in a way which recognises the needs of Aboriginal Peoples and Torres Strait Islanders

22. Office of Local Government THE COMMISSION: Commission’s Methodology • There are 2 components to the calculations:- Revenue Component Expenditure componentA standardised formulae is used for both revenue and expenditure calculations

23. Office of Local Government THE COMMISSION: Expenditure Component The calculation is based on the assessment of specific expenditure functions typically undertaken by councils. It estimates a grant component which depends on whether the standardised expenditure of the council per capita is grater or less than the standard and takes account of relative cost advantages and disadvantages between councils

24. Office of Local Government THE COMMISSION: Expenditure Functions Aged careAnimal & plant controlEmergency servicesWaste ManagementHealth inspectionServices to families & childrenSport, recreation & cultureLibrariesPlanning & building controlPublic busesOther needs assessment Sealed roads, built-upSealed roads, non built-upUnsealed roads, built-upUnsealed roads, non built-upUnformedStormwater drainage - construction Stormwater drainage - maintenance .

25. Office of Local Government THE COMMISSION: Cost Relativity Index CRI’s are a measure of a councils relative advantage or disadvantage to other councils in providing similar services or functions.Measure the degree to which a council’s costs for each function might be expected to exceed (or be less than) the average or standard cost because of factors outside the council’s control.State or Average Council = 1.0 and consequently they are centred around 1.0.If no CRI exists for a function the CRIc = 1.0

26. Office of Local Government THE COMMISSION: Identified Road Component Formula grants 85% Special Local Roads 15% Formula grants divided between urban and rural councils on the basis of an equal weighting of road length and population. (= 41% urban and 59% rural)Urban distribution is determined by an equal weighting of road length and population. Rural distribution is determined on an equal weighting of road length, population, and area.Special Local Roads pool distribution is based on recommendations from the Local Roads Advisory Committee.