Speeches: 2004
Priorities for reform
When it comes to housing affordability, local government is on the side of the angels. Secondly, I want to look at a case study which shows what can be achieved when local government takes the lead and works in partnership with other stakeholders to achieve positive change. Thirdly, I want to look at the financial pressure on local government and what might be done to enhance our capacity to provide services and infrastructure at the local level. And I want to finish with my views on where the priorities for reform should lie if we want to achieve our objective of securing more affordable housing.
Address to National Summit on Housing Affordability
Councillor Mike Montgomery
President, Australian Local Government Association
28 June 2004: Canberra
Thank you Chairman
There are four things I want to do today.
First, I want to kill off some fair dinkum furphies about local government and the cost of housing. When it comes to housing affordability, local government is on the side of the angels.
Secondly, I want to look at a case study which shows what can be achieved when local government takes the lead and works in partnership with other stakeholders to achieve positive change.
Thirdly, I want to look at the financial pressure on local government and what might be done to enhance our capacity to provide services and infrastructure at the local level.
And I want to finish with my views on where the priorities for reform should lie if we want to achieve our objective of securing more affordable housing.
Productivity Commission report
First, to the furphies.
You heard earlier today from the Housing Industry Association about developer infrastructure charges and council planning controls.
In particular, the HIA pushed the view that infrastructure charges are - to use their words - an 'inappropriate cash cow' and the funding raised from such charges is used for the construction of council 'monuments'. These claims are just plain wrong.
Infrastructure charges
The developers had the chance to press their case during the recent Productivity Commission hearing.
The Commission has heard all the arguments and read all the submission. The verdict is now in. The Commission emphatically endorsed the principle of infrastructure charges. It also found that they were insignificant cost drivers when it comes to house prices.
The Commission's report clearly states that there 'is a strong case for users of infrastructure services paying for costs attributable to them'.
It also notes that developer charges have generally increased less than house prices and that any subsidised provision of new infrastructure would 'primarily benefit land owners or developers rather than house purchasers'.
Planning controls
On planning matters, the accusation has been made that delays in approving development applications are causing problems with the supply of housing and increasing costs. There are a number of issues here.
Firstly, the Productivity Commission made it clear that there was little hard evidence to support claims of excessive delays. It said that it had been difficult to reconcile the claims made to the inquiry about delays against data available from official sources.
It said anecdotal reports suggested there had been increases in processing times, but how significant this was appeared unclear.
You may remember the scene from the film, Monty Python and the Holy Grail, where a peasant tells Arthur, King of the Britons, that dodgy women handing out swords from strange waterholes was no basis for representative democracy.
In a similar way, anecdotal reports are no basis to launch a comprehensive assault against a fundamental principal of local democracy.
Fortunately, this point was not entirely lost on the Commission. It accepted that 'some involvement of elected members in planning decisions is appropriate in some circumstances'.
It also said - and I quote:
'To the extent that necessary judgements cannot all be technical in nature, a role for councillors seems inevitable.' (PC Report page 153)
In other words, councillors must be involved in the decision making process. This is the key principle at stake - the Commission has endorsed it.
The Commission also found that delays have not been found to be a significant driver of cost.
'In the Commission's judgement', it said, '… improvements to land release or planning approval procedures, while desirable, could not have greatly alleviated the price pressures of the past few years".
In the end, it recommended that state and local government 'need to give priority to the scope to achieve greater separation of policy making and administration'.
Local government is supportive of - and is indeed driving - appropriate and sensible measures to streamline development application assessment procedures.
But we should not throw the baby out with the bathwater. We say keep planning controls in the hands of community through its democratically elected representatives. Don't sacrifice them on the altar of corporate greed.
At the moment, a draft development assessment model is out for public consultation. The model contains proposals to limit third party appeals and remove councillors from the decision making process.
These are totally unacceptable to local government and community groups and their presence in the model is impeding the reform process.
City of Port Phillip - Case study
OK, now we've put the furphies to bed, let's move on to some positive issues. There are, of course, many practical things that local government is doing to advance the cause of affordable housing.
Councils across the country are involved in important community housing programs, responding to local need in partnership with key stakeholders.
I'll give you just one example. The Port Phillip Community Housing Program in Melbourne
The City of Port Phillip's housing program provides secure, affordable and appropriate community rental housing for local residents with long-term links with the area and are eligible for public housing.
The catalyst for the Housing Program was the rapid closure of rooming houses and subdivision of blocks of rental flats in St Kilda.
St Kilda had a relatively low level of public housing and high levels of housing need located in the private rental sector. Consequently, the direct provision of community housing by the council was considered an important way of augmenting the state's responsibility to provide public housing.
The Housing Program became a tangible expression of the community's desire to support social diversity, inclusiveness and a charitable response to social disadvantage.
An essential element of the Housing Program's success rests with the unique partnership between the City of Port Phillip and the Port Phillip Housing Association.
Council develops housing policy, provides capital funding and undertakes project management while the Housing Association undertakes property and tenancy management.
The Council has undertaken 14 projects since 1985 with the construction of more than 370 units.
Of these, around one third are older persons units, a further third are 'rooming house' singles, 20% are family units and the remainder are for people with disabilities, students and young people or are self-contained units for singles.
Port Phillip has contributed nearly $14 million - or nearly 40% of the total project costs, while the Commonwealth provided - up to 1994 - some $2 million - or nearly 6% of total funding.
The state government's contribution has been $20 million or 56%.
Through this initiative, the council has been able to gain significant funding leverage.
More than $1.60 has been gained from the Commonwealth and state governments for every $1 the council has invested.
Needless to say, Port Phillip has won a number of national and international awards for its innovative housing program.
Constraints of local government finances
Innovations like these are positive examples of what is possible through local government.
However, while there is a great deal of good work going on at the local government level, we need to be aware of that councils are operating in a climate of increasing financial pressure.
In particular:
- Local government's ability to raise its own revenue - principally through rates and other fees and charges - is severely limited;
- Commonwealth and state government funding for local government is failing to meet the increasing costs of providing local government services;
- The Commonwealth and state governments have been guilty of shifting costs to local government, requiring councils to provide an increasing range of services without the funding resources to go with them; and
- Communities are understandably expecting and demanding a greater range of service provision from local government. They don't care what the constitution says about which sphere of government is responsible for delivering which service - they want local action on local issues.
The financial pressure on local government is becoming more and more severe, limiting the ability of Australia's 675 councils to satisfy all demands for services and infrastructure provision.
The gap between demand and council capacity is growing at an alarming rate.
Infrastructure pressure
Local government owns and maintains infrastructure worth around $106 billion.
But much of it dates from the post war period in the late 1940s and 1950s, when state and federal grants enabled councils to construct roads, bridges, swimming pools, community halls and sports grounds.
Local government is now faced with renewal and maintenance of these infrastructure assets but simply does not have sufficient financial capacity to do so.
The ability to meet the cost of depreciating assets is severely retarded by our overall financial status.
Despite growing responsibilities, local government has for many years been under-funded, under-resourced and under-valued.
There is some hope as the Federal and state governments seek to work with us to implement key findings of a recent Federal parliamentary report on cost shifting and local government financing.
But what does all this mean for the housing agenda?
It means this - we need state and federal financial support to be able to provide us with the capacity to deliver the range of local services and facilities needed to sustain and grow our communities.
The way ahead - Seven suggestions
This brings me - appropriately - to the point of my presentation - where do we go from here.
I have seven suggestions.
- 1. National housing policy
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A national housing policy - I think - should be developed which brings the three spheres of government together, to co-operatively determine roles and responsibilities of each sphere of government and to ensure funding levels match those responsibilities.
The national housing policy should focus on good housing outcomes, particularly for low income earners, and should not be unnecessarily obsessed with the concept of home ownership.
I might say, from my experience, where you do get all three spheres of government working together, you get very good results.
I see this at COAG, where ALGA participates as a full member. When we resolve to work together, we get quick and effective results that really can make a big difference to our communities. And let's face it, housing would benefit enormously by getting the same attention as the national water initiative signed on Friday. After all, there are few things as important as food, water and shelter.
- 2. Better resource local government
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Stop beating up on local government. Instead, let's ensure local government is properly resourced to do its job - and that means giving it access to a fair share of national taxation.
The states have got access to a vast source of growth funds through GST revenue. At the same time, local government has been left to languish on flat-lining federal assistance grants.
Better resourcing for local government will allow us the flexibility to engage - where appropriate - in the kind of partnerships that can produce results like those demonstrated by the City of Port Phillip.
- 3. Distribution of tax revenue
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We do need to take a look at tax - but in a different way than has been suggested to date. We need to have a much broader look at tax issues and how revenue is distributed among the three spheres of government.
As I said before, there's one sphere that's missing out and being left well behind. And it's not just councils that are being left behind, it's the communities we serve.
- 4. Keep communities in control of planning
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Keep communities - through local government - in control of planning regulation. Good housing and planning outcomes are achieved where communities, through council, control the planning process. We must not let anyone remove the ability of local communities to control and set social priorities for their own environment.
- 5. Developers must contribute
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We also need to find innovative ways of ensuring that developers meet their partnership responsibility in the provision of affordable housing. For example, we should explore a requirement for developers to provide an appropriate housing mix in new developments which includes affordable housing options.
- 6. Greater federal/state investment in public housing
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There needs to be greater investment in public housing by state and federal governments.
This would complement local government initiatives undertaken by councils who opt to become directly involved in the provision of housing, even though it is a state government responsibility.
- 7. National inquiry into low income housing needs
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I think we need to support the call for a national inquiry into the housing needs of low income Australians. Such an inquiry would do well to examine what is happening in places like Port Phillip, for example, and see how much can be achieved through strong partnerships.
Summary
In summary, there is much that can be achieved. We just need some strong consensus to get on with the job. Local government is the sphere of government that is closest to the people. As such, we are well placed to respond to local need, to grow local partnerships and develop and implement local solutions.
As I said, we're on the side of the angels - we just need a more viable and sustainable financial platform to let us get on with the job.
Thank you.
Councillor Mike Montgomery President
Australian Local Government Association Canberra
28 June 2004
