Victorian government response
to the Victorian Competition
and Efficiency Commission’s
Final Report
August 2012
Local Government for a better Victoria: An inquiry
into streamlining local government regulation
The Secretary
Department of Treasury and Finance
1 Treasury Place
Melbourne Victoria 3002
Australia
Telephone: +61 3 9651 5111
Facsimile: +61 3 9651 5298
www.dtf.vic.gov.au
Authorised by the Victorian Government
1 Treasury Place, East Melbourne, 3002
© Copyright State of Victoria 2012
This book is copyright. No part may be reproduced by any process except in accordance with
the provisions of the Copyright Act 1968.
ISBN 978-1-922045-04-1 (PDF)
Published August 2012.
If you would like to receive this publication in an accessible format please telephone
+61 3 9651 0909 or email [email protected]
This document is also available in PDF format at www.dtf.vic.gov.au
ii
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Contents
Foreword ................................................................................................................... 1
Abbreviations ............................................................................................................. 2
Glossary ..................................................................................................................... 3
Response to VCEC recommendations......................................................................... 4
(4)
(5)
(6)
(8)
(9)
(10)
The Strategic Planning Framework .............................................................................................. 4
Planning regulation: The planning process.................................................................................. 8
Building and construction regulation ........................................................................................ 15
Local government procurement ................................................................................................ 18
Costs to local government of administering regulation ............................................................ 22
Improving the institutional arrangements ................................................................................ 23
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Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Foreword
The 79 local governments in Victoria play a significant role in supporting Victoria’s economic
growth and managing the opportunities and challenges created by population growth and
changing household structure. Local governments have responsibilities under the Local
Government Act 1989 to manage their municipal districts, and are key agencies for
implementing Victorian Government policies and regulations, such as under the Planning
and Environment Act 1987 and the Building Act 1993.
This final report of the Victorian Competition and Efficiency Commission’s (VCEC) inquiry,
Local Government for a Better Victoria, contains 37 recommendations to improve local
government regulatory frameworks and processes, with particular emphasis on streamlining
local government regulation. These recommendations relate to a number of areas including
land-use planning, building and construction regulation and local government procurement.
Some of the recommendations also relate to the relationship between local and state
government. In particular, it has identified a need for more clearly delineated roles and
responsibilities for delivering objectives.
The VCEC has observed that ‘if accepted, these recommendations would improve the
investment climate and save businesses between $42 million and $95 million per year,
without undermining the outcomes of regulation’.
The Victorian Government supports an effective local government system and is committed
to improvements that reduce red tape on businesses, deliver certainty to the community
and ensure that planning and building regulations are efficient and effective.
The VCEC’s report is being released with this Government’s response. The Government is
supportive of the general direction of the VCEC report and has also taken the opportunity
provided through the response to consider related policy improvements. The Government’s
response therefore forms part of a broader package of reforms that will include
implementing the recently announced Government response to the Victorian Planning
System Ministerial Advisory Committee recommendations.
Actions to be undertaken as part of this response are expected to assist local governments
across Victoria to deliver on both state and local objectives. In particular, planning and
building regulation and regulatory processes will be streamlined, minimising uncertainty and
delays for businesses and the community.
Savings to businesses from implementation of this response and related reforms are
expected to make an important contribution to delivering the Government’s commitment to
reducing red tape by 25 per cent.
We wish to thank everyone who participated in this inquiry, which attracted a significant
level of input from key stakeholders. We will ensure the consultation process continues as
part of the implementation of the Government’s response and to further develop those
responses that do not yet specify a detailed approach.
KIM WELLS MP
Treasurer
MATTHEW GUY MLC
Minister for Planning
JEANETTE POWELL MP
Minister for Local Government
August 2012
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
1
Abbreviations
2
BIA
Business Impact Assessment
CRB
Councils Reforming Business
DPCD
Department of Planning and Community Development
EPA
Environment Protection Authority
MAV
Municipal Association of Victoria
PEP
Procurement Excellence Program
RIS
Regulatory Impact Statement
SME
Small and medium enterprise
VCEC
Victorian Competition and Efficiency Commission
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Glossary
Business
Impact
Assessment
A report, usually prepared for Cabinet consideration, which assesses the costs
and benefits of primary legislation proposals that have potentially significant
effects for business and/or competition in Victoria.
Code assess
A streamlined planning assessment track proposed for straightforward low
impact classes of applications, which can be assessed against criteria set out in
the planning scheme.
Councils
Reforming
Business
Councils Reforming Business (CRB) program assists councils to work with each
other, the State Government and other stakeholders to develop and
implement new programs to boost efficiency, reduce costs and provide better
services to communities.
Delay costs
Costs incurred while waiting for regulatory approvals. These includes standby
costs (capital and labour down time) and holding costs (interest on loans, rent,
material procurement, builder contract costs, additional consultancies, and
lost business opportunities), and may also include costs from not being able to
deliver on time.
Local Planning
Policy
Framework
The local section of a planning scheme that sets out the Municipal Strategic
Statement and the Local Planning Policies that apply to the local government
area covered by the scheme.
Planning
scheme
A statutory document that sets out objectives, policies and provisions relating
to the use, development, protection and conservation of land in the area to
which it applies. Each municipality in Victoria has its own planning scheme.
Procurement
Excellence
Program
A CRB support program including infrastructure, engineering and general
procurement. It will enable all councils to participate in metropolitan and
regional capability development activities and take advantage of a new suite
of procurement excellence tools.
Regulatory
Impact
Statement
A publicly released report that assesses the costs and benefits of subordinate
legislation proposals that may impose a significant economic or social burden
on a sector of the public.
State Planning
Policy
Framework
The State section of a planning scheme that sets out the State Planning
Policies which apply across Victoria.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
3
Response to VCEC recommendations
(4)
The Strategic Planning Framework
Recommendation 4.1
That the Victorian Government clarify the governance and
institutional decision-making framework for planning to ensure that
its key policy statements can be implemented, by endorsing and
declaring:
 The importance of strategic planning as a central tool for managing
the impacts of population growth within the current framework.
 That the Victorian Government bears ultimate responsibility for
responding to challenges of State-wide significance through the
land-use planning framework and setting clear consequential tasks
for councils that will result in addressing these challenges.
 That the Victorian Government is responsible for making its
regulatory objectives clear, supporting councils as necessary, and
ensuring that outcomes are measured to ensure that planning
objectives are being addressed. Local government, in accepting the
State’s objectives, is responsible for developing and implementing
strategic plans that meet the State’s objectives with approaches
that have regard to the objectives of the communities that they
represent.
Response
Support
The Government agrees that clarity in strategic planning objectives is
critical to effectively manage land use and development outcomes in
the context of population growth and change.
The Government is preparing a new metropolitan planning strategy
and regional growth plans that will clarify the State’s strategic
metropolitan objectives.
The metropolitan strategy will also include a process for monitoring,
evaluation, review and reporting on the implementation of the
strategy and its objectives, including revision of guidance to councils.
The Government has established partnerships with local governments
to support the development of regional growth plans. Localised
planning statements for a number of key areas in regional Victoria will
be established, providing clarity of outcomes for these areas in a
spatial context.
Recommendation 4.2
That the Victorian Government provide local government with clarity
as to their task in contributing to State objectives, by:
 Specifying priority measurable land-use planning outcomes that
the State wishes to achieve, and:
– identifying the priority outcomes, including spatially wherever
possible
– clearly indicating areas of State significance and providing
councils with guidance as to the areas where they can exercise
discretion
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Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
– identifying potential trade-offs between competing priorities
and providing guidance on how they should be resolved,
through spatial expression, or a policy ‘hierarchy’
– providing sufficient details as to how State-wide priorities
translate into tasks for groups of councils, and for individual
municipalities so that it is clear whether the required outcomes
are being met.
 Reducing the complexity of planning regulation by removing
objectives form councils’ planning task that:
– can be adequately achieved under another regulatory regime, or
– contribute to the cumulative costs of planning regulation
without commensurate benefits.
 Identifying the required State infrastructure investment to support
growth, and other State priorities, and committing to meeting
those investment needs, both in capacity, and in timing.
 Monitoring and evaluating performance against objectives, and
reviewing key policy guidance to councils to reflect its
requirements.
Response
Support in part
The Government’s new Vision for Victoria will be the hallmark of the
State’s approach to strategy planning that is not just about land use,
but a framework for the State’s ongoing liveability, productivity,
investment and jobs for the next 30 to 40 years.
The Government will identify land-use planning outcomes that are
consistent with State priorities. The new metropolitan planning
strategy will provide clarity to local governments as to their task in
contributing to State objectives.
Issues of capacity and timing of state infrastructure will be addressed
by the Government as part of the budget process.
The new metropolitan planning strategy will also include a process for
monitoring, evaluation, review and reporting on the implementation
of the strategy and its objectives, including revision of guidance to
councils.
The Government agrees in principle that the complexity of planning
policy objectives should be reduced.
The Victorian Planning System Ministerial Advisory Committee has
provided advice to the Minister for Planning on ways of improving the
planning system. The Government has agreed with the Advisory
Committee’s recommendations relating to assessing the performance
of the Victorian Planning Provisions, and the role of Municipal
Strategic Statements and Local Planning Policy. Further work is
required to investigate these recommendations. The outcomes of this
work will inform future reform initiatives of the Government.
The Government will improve the clarity of existing and future
planning policy objectives in the State Planning Policy Framework and
remove objectives that can be adequately achieved under another
regulatory regime. State planning policy plays an important role in
delivering the Government’s policy objectives. The extent to which
such policy can be simplified will depend on whether there are viable
alternative mechanisms to deliver those objectives.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
5
Recommendation 4.3
That the Victorian Government:
 Ensure that councils are provided with a full range of tools
(including new residential zones, other zones and overlays, and
structure plans) to enable them to implement planning schemes
that meet State objectives while having regard to local preferences.
 Require councils to review their Municipal Strategic Statements to
ensure that the tasks set by the State Government
(Recommendation 4.2) are addressed, including spatial
representation of municipalities.
 Indicate the processes it intends to use to intervene in municipal
planning schemes if tasks assigned to councils (Recommendation
4.2) are not executed when local planning schemes are reviewed,
to ensure that its key priorities are met.
Response
Support
The Government is reviewing Victoria’s planning zones to ensure they
are functioning correctly and their schedules are still relevant. The
Government is also progressing proposed changes to the Planning and
Environment Act 1987 to implement the VicSmart streamlined
planning assessment process for appropriate forms of development to
give greater clarity as to what can be built and where, and to reduce
regulatory delay.
The Government will also expand the scope of the annual statement,
provided to Parliament on the use of ministerial intervention to
include other relevant matters.
Recommendation 4.4
That the Victorian Government specify how it will support strategic
planning by councils, to ensure that councils have adequate and
ongoing resources (including funding and staff) to undertake the
strategic planning tasks necessary to support the State’s planning
policy objectives. This support needs to:
 Have regard to the policy challenges faced by specific councils over
the next 10 years, and the extent to which the councils’ responses
will impact on other municipalities and the State as a whole.
 Be prioritised to the areas where the need for strategic planning is
the highest.
 Ensure that Municipal Strategic Statements can be reviewed in the
required timeframes by Councils.
Response
Support
The Government will support strategic planning by councils through a
range of initiatives.
Providing greater clarity about the Government’s strategic planning
objectives, and local government’s task in contributing to state
objectives (referred to in recommendations 4.1 and 4.2) will assist
local government in undertaking its strategic planning.
The new metropolitan planning strategy, along with the Regional
Growth Plans and proposed localised planning statements for specific
areas in regional Victoria, will provide improved clarity and direction
to local councils to support their strategic planning activities.
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Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
The Government has also established a new Peri-Urban Council Unit,
in the Department of Planning and Community Development (DPCD)
that will assist peri-urban councils with long-term strategic and
structure planning, population management and environmental and
biodiversity issues.
In addition, the Rural Planning Flying Squad of experienced planners
has been established to provide specialist expert and technical
assistance to local councils in regional Victoria with future planning
measures, including developing long-term land use plans for
municipalities.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
7
(5)
Planning regulation: The planning process
Recommendation 5.1
That the Victorian Government develop and publish a performance
reporting and evaluation strategy for Victorian planning regulation by
July 2012, and that the strategy be developed in consultation with
councils and users of the planning system, and include the following
components:
 A clear statement of the State Government’s priorities for planning
regulation, covering expected performance standards (such as
number of calendar days to decision, and achievement of housing
growth capacity).
 Corresponding performance indicators for individual councils, as
well as outcome-based measures, such as user surveys.
 Performance indicators and benchmarks for planning processes
administered by the State Government such as the timeliness of
approving planning scheme amendments, and the administration
of call-in provisions.
 Indicators relating to the processes adopted by councils, covering
the elements of the best practice assessment process
(recommendation 5.2).
Response
Under review
The Government is developing new arrangements to introduce more
comprehensive monitoring and reporting obligations for decision
makers in the planning system. This will include amendments to the
Planning and Environment Act 1987 that will require decision makers
including planning authorities, responsible authorities and referral
authorities to annually report to the Minister for Planning on specified
performance and accountability matters. These reports will help the
Government and councils to track trends in planning processes,
identify problems and allocate resources efficiently and effectively.
The information from these reports will inform an annual report on
the planning system by the Minister to Parliament.
Local governments already provide information regarding planning
permit activity, which will form the basis of the proposed monitoring
and reporting requirements. New formalised requirements for
planning authorities and referral authorities to annually report on
planning activities will be developed.
8
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Recommendation 5.2
That the Victorian Government develop a model best practice
planning assessment process, with councils. The best practice model
would:
 Draw on work already undertaken by councils, the Municipal
Association of Victoria, and the Department of Planning and
Community Development.
Provide guidance on:
pre-application meetings
the delegation of decision making to council officers
use of online tools
notifications and objections
dealing with incomplete objections
referral processes.
 Be subject to annual reporting (recommendation 5.1), with input
from the local government sector, on the uptake of the best
practice model by councils as well as the costs and benefits of
improvement initiatives.
–
–
–
–
–
–
Response
Support
The Government will work with the Municipal Association of Victoria
(MAV) and other stakeholders of the planning system to develop best
practice guidance on the planning assessment process. This work will
build on work already jointly undertaken between the MAV and
DPCD.
Opportunities for evaluating the costs and benefits of process
improvements will be explored as part of the development of the best
practice guidance.
Recommendation 5.3
That the Victorian Government develop and implement a framework
to improve the efficiency and effectiveness of regulatory processes
administered by councils, taking account of the following key
principles:
 There are clearly defined outcomes and benchmarks for measuring




Response
the efficiency and effectiveness of councils’ processes, that include
both ‘best practice’ and minimum standards (drawing from
recommendation 5.1 and recommendation 5.2).
Councils are consulted on the development of the framework.
Guidance and financial support, drawing from existing grants and
process improvements programs, is provided to councils to help
them to meet best practice and standards
The Victorian Government’s response, if minimum standards are
not met, is clearly stated
There is transparent reporting on the basis for grant payments and
Ministerial interventions, and an evaluation of the effectiveness of
the framework.
Under review
The Victorian planning system is subject to continuous improvement,
reflected by the consistent updating and improvements of the Victoria
Planning Provisions, issuing of Planning Practice Notes, Advisory Notes
and Ministerial Directions, and amendments to the Planning and
Environment Act 1987. The Government is committed to the
continuation of this practice.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
9
DPCD has worked with the MAV in the development of the STEP
Planning Process Improvement Program, which is a low cost, well
structured way to regularly review and improve council's planning
services. The program gives councils the tools and support to
effectively review and continuously improve the quality and efficiency
of planning processes.
As noted in its response to Recommendation 5.1, the Government is
also committed to the development of more comprehensive
monitoring and reporting obligations for decision makers in the
planning system.
The need for a framework to improve the efficiency and effectiveness
of planning regulatory processes administered by councils will be
considered in the context of the development of the monitoring and
reporting obligations, the best practice guidance on the planning
assessment process (in response to Recommendation 5.2), and any
future amendments to the Planning and Environment Act 1987.
Recommendation 5.4
That the Victorian Government outline, in consultation with councils,
the characteristics of effective pre-application meeting processes,
including pre-lodgement certification, and incorporate this guidance
in a best practice model for planning permit assessments (outlined in
recommendation 5.2).
Response
Support
The Government will work with the MAV and other stakeholders of
the planning system to develop best practice guidance on effective
pre-application meeting processes. This work will be undertaken as
part of the development of best practice guidance on the planning
assessment process, committed to in response to Recommendation
5.2.
Recommendation 5.5
That the Victorian Government provide guidance on best practice
delegation processes in regard to the roles of councillors and council
staff, which promotes delegation except where strategic policy is
being determined. This would form part of the best practice model for
planning permit assessments (outlined in recommendation 5.2).
Response
Support
In 2010-11, 94 per cent of planning permit decisions were made under
delegation.1
The Government will work with the MAV and other stakeholders to
develop best practice guidance on delegation processes in regard to
the roles of councillors and council staff. This work will be undertaken
as part of the development of best practice guidance on the permit
assessment process, as committed to in response to Recommendation
5.2.
1
10
DPCD, Planning Permit Activity in Victoria 2010-11, February 2012.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Recommendation 5.6
That the Victorian Government indicate the target uptake rate it
expects for online tools and provide guidance on process and system
change supporting the use of online tools as part of the best practice
model for planning permit assessments (outlined in recommendation
5.2), with councils reporting on their uptake of e-planning
improvements.
Response
Support in principle
The Government recognises that online tools provide opportunities
for efficiency improvements in planning processes, and supports
further uptake of these tools by councils.
However, the Government does not believe that setting a target
uptake rate and reporting requirements will necessarily achieve this
objective.
Instead, the Government believes that this objective will be more
effectively addressed through the development of an ePlanning
strategy that:

identifies the key issues affecting the ability of councils to adopt
online planning systems, including the need for complementary
business process improvement; and

identifies support materials to address the key barriers that must
be overcome to facilitate the uptake of online planning
application tools.
The ePlanning strategy will be used to inform the nature of future
guidance and support that is provided to councils to facilitate uptake
of online tools.
Recommendation 5.7
That the Victorian Government provide guidance to councils on best
practice public notification (including the type and timing of
notification required) and best practice processes for dealing with
objections and ambit claims, as part of the best practice model for
planning permit assessments (outlined in recommendation 5.2).
Response
Support
The Government will work with the MAV and other stakeholders of
the planning system to develop best practice guidance on public
notification and dealing with objections. This work will be undertaken
as part of the development of best practice guidance on the planning
assessment process, committed to in response to Recommendation
5.2.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
11
Recommendation 5.8
That the Victorian Government provide guidance to councils as part of
the best practice model (recommendation 5.2) on practices for
reducing the incidence of incomplete or poorly prepared applications,
including standard guidance material and checklists.
Response
Support
The Government will work with the MAV and other stakeholders of
the planning system to develop best practice guidance to help reduce
the incidence of incomplete or poorly prepared applications. This
work will be undertaken as part of the development of best practice
guidance on the planning assessment process, indicated in response
to Recommendation 5.2.
Recommendation 5.9
That the Victorian Government streamline referral processes by:
 Developing standard agreements with councils and referral
authorities that councils could adopt when dealing with referral
authorities. Councils would remain able to negotiate amendments
to the agreements if circumstances required.
Amending the Planning and Environment Act 1987 to introduce an
explicit deemed to consent provision if no response to a referral is
received in 28 days.
Response
Support in principle
The Government recognises that there are opportunities to improve
the operation of referrals under the planning permit assessment
process. These opportunities include clarifying the purpose of
referrals, the effective transmission of information between local
councils, referral authorities and permit applicants, and improving the
process of obtaining input from referral authorities.
The current system already provides for standard agreements to be
adopted. The ongoing monitoring of referral requirements will enable
further opportunities for (and improvements to) standard agreements
to be identified.
While the Government does not support introducing a deemed to
consent provision, the Government is committed to improving the
efficiency of the referral process.
Recommendation 5.10
That the Victorian Government, in consultation with local
government, develop by July 2011, a strategy to help Victorian
councils meet their planning recruitment and retention challenges.
The strategy would provide:
 Information and analysis of turnover and retention in the planning
sector
 Information on the extent of shortages, including demand and
supply drivers and the nature and impact of recruitment and
retention challenges facing councils so that the required
interventions, including their cost and size, are understood.
 Options for addressing the supply of planners, including fasttracking and fee discounts for planning qualifications, allowing for
basic technical qualifications, and offering additional cadetships
and scholarships
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Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
 Options for addressing the demand for planners, including
restructuring planning roles, examining the different types of work
that planners currently do, and the appropriate skill-sets for
different categories of work, including those tasks that can be
undertaken by non-planners.
 Options for revising salaries to attract planners to the sector,
supported by more liberal fees (recommendation 5.12) and
expanding the role for private planners (recommendation 5.11).
Response
Support in principle
The Government recognises that the difficulties experienced by local
governments in the recruitment and retention of staff arenotexclusive
to town planning, but also affect other local government professional
streams.
The Government notes that this may be regarded as a national issue.
The workforce development program of the Australian Centre for
Excellence in Local Government will address specific skills shortages
and gaps in local government and inform future government work in
this area.
Recommendation 5.11
That the Victorian Government allow private planning officers to
assess and determine planning applications in the code assess track
within 18 months of implementing the code assess track.
That as a transitional step, code assess applications be contracted out
to private planners, with councils auditing the outcomes.
That, to ensure proper governance arrangements in support of private
provision of code assess permits, the Victorian Government:
 Review the experience on the transitional step to ensure that all
critical issues have been identified
 Clearly allocate responsibility for monitoring and enforcing
compliance with code assess requirements to an existing State
Government body or to councils or another appropriate entity.
 Ensure that the body tasked with monitoring and enforcing code
assess requirements is adequately resourced to undertake these
tasks
 Report annually on key performance indicators to ensure that the
code assess process is operating well.
Response
Under review
The Government is committed to introducing the use of a streamlined
assessment process for straightforward planning permit applications.
Once this process, known as VicSmart, is operational, the Government
will be in a position to consider the relative benefits and costs
associated with the use of private planners, and provide a considered
response to this recommendation.
The Government recognises that there are wide ranging views about
the appropriateness and potential effectiveness of private planners
having a formalised role in the assessment and approval of planning
permit applications.
The perceived benefits and risks associated with this proposal, along
with the likely costs associated with the governance structures
required to support the system, are such that this recommendation
requires more careful consideration to ensure the most effective way
of improving the planning permit processes is provided.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
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Recommendation 5.12
That the Victorian Government removes the cap on fees for code
assess applications with the introduction of private planning
assessments (recommendation 5.11).
That for merit assessments, the Victorian Government replaces the
cap on planning fees with a default fee that is based on the estimated
costs facing councils and involves an explicit judgement as to the
appropriate level of cost recovery.
That the Planning and Environment Act 1987 be amended to allow
councils to adopt self-set fees, which councils would be required to
assess against the Department of Treasury and Finance’s Cost Recover
Guidelines, and test through public consultation.
That the Planning and Environment Act 1987 be amended to allow a
council’s self-set fee to be revoked, if necessary.
Response
Support in part
While the Government acknowledges the VCEC’s support for local
councils setting their own fees, there is substantial merit in planning
fees being consistently set across Victoria.
Extensive work has already been undertaken to determine the costs
of providing planning services. It will also be important to ensure that
the fees are set at efficient levels and supported by consistent and
efficient processes.
The need to remove the cap on fees for the VicSmart streamlined
planning assessment process, associated with VCEC’s
recommendation to adopt a private planning assessment, will be
addressed as part of any future consideration of private assessment
by the Government.
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Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
(6)
Building and construction regulation
Recommendation 6.1
That Local Government Victoria, in conjunction with councils, identify
variations in terminology across councils in their building and
construction local laws and in the relevant State Acts and ensure they
are consistent.
Response
Support
Local Government Victoria’s Building Site Management Project is
examining variations in local laws around building and construction
and building site management. The outcomes of this project will
address state wide variations in terminology in relation to building
and construction local laws.
Recommendation 6.2
That Local Government Victoria, in consultation with councils, the
Building Commission and the EPA, develop (within the Code of
Practice) a consolidated set of working hour requirements that
encompasses all existing restrictions that:
 Are fully aligned with existing State legislation, regulations and
policy guidelines in relation to noise and related amenity matters
currently dealt with by local laws
 Include references to a consistent set of exemptions, and
exemption processes (such as permits and site management plans)
that allow businesses to undertake work outside the specified
hours, where such flexibility would provide demonstrable benefits
to business without impacting on community amenity.
Response
Support in principle
The Building Site Management Project is examining current building
site management standards as they are applied by local governments.
It is also identifying current State requirements to minimise overlap.
The outcomes of this project will include guidance to help ensure a
consistent state wide set of working hour requirements.
Recommendation 6.3
That Local Government Victoria develop (within the Code of practice)
a consistent set of site-fencing and identification requirements that
provides flexibility for builders about how they manage site litter, but
provide for a ‘deemed to comply’ solution for those businesses that
want certainty about the performance-based requirements.
Response
Support in principle
The Building Site Management Project will examine the issue of site
fencing and identification requirements with a view to increasing
consistency and providing flexibility for builders. The outcomes of this
project will include guidance to help ensure a consistent state wide
set of site fencing and identification requirements.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
15
Recommendation 6.4
That Local Government Victoria, in consultation with the Building
Commission and Department of Planning and Community
Development, develop (within the Code of Practice) a model asset
protection process for enabling builders to apply for council asset
protection permits in parallel with the processing of the building
permit.
That Local Government Victoria explore the options of incorporating
trigger mechanisms for asset protection permit processes as part of
the planning approval process and/or the building permit process.
Response
Support in principle
The Building Site Management Project is examining the potential of a
model asset protection arrangement including appropriate trigger
mechanisms. The outcomes of this project will include providing
guidance to help ensure asset protection processes that benefit
councils and business.
Recommendation 6.5
That the Code of Practice developed by Local Government Victoria be
reviewed by a Regulatory Impact Statement (RIS), Business Impact
Assessment (BIA) or similar process that demonstrates:
 Clear objectives for the Code of Practice and each model building
site management requirement
 How the model building site management requirement minimises
unnecessary business burdens in achieving its objective including
the reduction of: (a) inconsistencies between councils; (b)
inconsistencies between local laws, State and Commonwealth
regulation and (c) other administrative, compliance and/or delay
costs
 A mechanism for evaluating the performance of the Code of
Practice, five years after its inception, including (a) the adoption
rate of councils; and (b) efficiency and effectiveness of the model
requirements adopted.
Response
Support
The normal regulatory impact assessment processes in place in the
Victorian Government will be followed as required by the
implementation of any significant regulatory reform in this area.
The Government supports an evaluation of significant regulatory
reform taking place five years after its inception.
Recommendation 6.6
That the Victorian Government clarify that building regulation is the
most efficient means of addressing the environmental performance of
building, through changes to national building standards or through
changes to State building regulation.
That the Victorian Government clarify the boundaries between
building and planning with regard to environmental performance of
buildings, and develop a strategy to remove overlapping standards
and assessment processes, for example, initially by:
 Deeming environmental performance areas in which councils
should retain primary responsibility
 Clarifying environmental performance areas which should not be
addressed by the planning process, but rather specifying for
councils how these will be dealt with.
16
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
That the Victorian Government clarify that councils’ role under the
planning system does provide for voluntary schemes and the
provision of information and tools to assist applicants make informed
decisions about the environmental performance of buildings.
Response
Support
The Government agrees that greater clarity is required in relation to
the role and responsibilities of local government in seeking to improve
the environmental performance of buildings. This is particularly in
relation to the use of the planning system to achieve environmental
outcomes above and beyond the minimum standards regulated under
the building system. While recognising that innovation can be
valuable, the Government does not support councils imposing
building environmental performance standards that impose greater
costs on business over and above agreed national standards.
The Government recognises that in providing such clarity, regard must
be given to the national context, including the Building Code of
Australia which regulates building performance, as well as the
national approach to the delineation of planning and building
systems.
In this context, this recommendation will be implemented through:
 actively pursuing a national approach to addressing the delineation
of the roles and responsibilities of building and planning systems ;
 revising the state policy context to clearly articulate that building
regulation, not the planning system, is the primary and most
efficient means for addressing the environmental performance of
buildings, including removing overlapping standards and processes;
and
 clearly articulating the role of local government in addressing the
environmental performance of buildings.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
17
(8)
Local government procurement
Recommendation 8.1
That the Victorian Government strengthen best practice in local
government procurement by bringing local government procurement
principles into line with State procurement principles. This includes:
 Amending the Local Government Act to specify that the principles
for procurement are value for money, accountability, probity and,
for larger councils, scalability, consistent with the principles in the
Victorian Public Finance and Accountability Bill
 Requiring councils to disclose in their annual report instances
where, and the reasons why, they have not prioritised value for
money (minimising cost given the required quality, quantity, risk
and timeliness on a whole-of-contract and whole-of-asset-life
basis) over other principles for contracts that exceed the
thresholds for public tenders.
Response
Support in principle
Pursuant to the Local Government Act 1989, councils are currently
required to tender for goods and services (greater than $150 000) or
construction works (greater than $200 000).
The annual report of each council must provide the detail of tenders
awarded during that reporting period which were not subject to the
tender requirements. The Procurement Best Practice Guidelines
specify how councils may meet their reporting requirements and
accord with best practice
The principles of value for money and accountability also currently
exist in respect of Best Value Principles (Local Government Act 1989
s208).
Section 186A of the Local Government Act 1989 also requires a local
council to adopt, publish and make available for inspection a
procurement policy compliant with guidelines as determined by the
Minister.
These guidelines are the subject of a current review in respect to their
continued relevance to best practice and to ensure adequate
coverage of previous reports of the Auditor General (Victoria February
2010), VCEC (August 2010) and the Ombudsman report of
investigations into the City of Port Phillip (August 2009).
Recommendation 8.2
That the Victorian Government remove the unreasonable costs that
some councils impose on tenderers , including small and medium
enterprises (SMEs), by requiring council to adopt the procurement
improvement initiatives being developed under the Councils
Reforming Business (CRB) program by:
 Amending the regulations under the Local Government Act to
require that by the end of the roll-out stage of the Procurement
Excellence Program in June 2011, councils:
– adopt the procurement improvement initiative being developed
under the CRB program, including tender documentation and
engineering standards, or
– if they do not adopt the procurement improvement initiatives,
publicly disclose their reasons in their annual reports.
 Assigning responsibility to a Victorian Government body to monitor
council uptake of CRB improvement initiatives.
18
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Response
Not support
The Victorian Government will continue to work with councils to
improve their procurement practice through the partnership model
developed by the Councils Reforming Business (CRB) program.
The Government does not support mandatory participation by
councils in the Procurement Excellence Program (PEP), as this
recommendation is at odds with the current successful approach.
The Government is transitioning the PEP and its ownership to embed
ongoing reform activity within the sector. The PEP experienced a 100
per cent voluntary participation rate. This enabled the development
of regional and sector-wide collaborative approaches to procurement,
ensuring more consistent, efficient and effective practice. The
program promoted good practice in the sector through reporting on
success, not through monitoring compliance.
The CRB program and its approach will be subject to an evaluation in
2012.
Recommendation 8.3
That the Victorian Government reduce the costs to businesses,
particularly SMEs, of requirements in local government tenders,
recognising local government’s role in managing the risks of
procurement, by expanding the CRB and PEP program to include bestpractice standards for:
 Insurance requirements in local government tenders, including a
best-practice framework for extending councils’ insurance policies
to suppliers and SMEs in particular;
 Contract security deposits and retention amounts on progress
required of contractors.
Response
Support in principle
While the Government is supportive of reducing costs to SMEs in this
area, further consideration is needed of the sector-wide costs and
benefits of implementing an extension of council insurance cover to
SME tenderers as well as security deposits and retention amounts.
Recommendation 8.4
That the Victorian Government seek to reduce the costs to
businesses, including SMEs, and councils of current arrangements for
tender advertisements by requiring that all local government
procurement above the thresholds for public tenders be advertised,
and the related tender documents be available on the Victorian Local
Government Procurement Hub website.
Response
Support
This Government considers that this recommendation could provide
significant benefits for councils and business. The Government will
examine the requirements for ensuring long term implementation and
uptake by the sector.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
19
Recommendation 8.5
That Local Government Victoria implement the Victorian AuditorGeneral’s recommendation to prescribe more precisely the
circumstances under which a council must tender. As part of this task,
the Commission recommends that Local Government Victoria
evaluate the net benefit of granting s186 exemptions for sole supplier
situations as well as community services type contracts that result
from significant development input from third parties who are best
suited to provide subsequent services.
Response
Support in principle
These procurement guidelines are the subject of a current review in
respect to their continued relevance to best practice and to ensure
adequate coverage of previous reports of the Auditor General
(Victoria February 2010), the VCEC (August 2010) and the
Ombudsman report of investigations into the City of Port Phillip
(August 2009).
Councils are currently able to apply for s186 exemption through
application to the Minister for Local Government on a case by case
basis. The need to make a case, in accordance with the Act,
encourages local governments to adhere to good procurement
principles.
Further, the Government notes that councils are currently able to
procure goods and services through the State Government purchasing
contracts, which yields results in line with this recommendation.
Recommendation 8.6
That the Victorian Government, through the Department of Planning
and Community Development, strengthen the incentives to councils
for efficiency through more collaboration in procurement, where
value for money exists, by removing any impediments to councils
undertaking collaborative procurement through agents. The
Commission recommends that this be done by amending the Local
Government Act, in consultation with councils and agents, to allow:
 Agents that meet a set quality standard to become ‘prescribed
procurement entities’, in line with other Australian jurisdictions
 Councils to access existing tenders and contracts that are
conducted by agents without the need for Ministerial approval.
Response
Support in principle
The Government believes more work is required to ascertain the
degree to which this recommendation would complement the current
legislative framework for local government procurement.
Considerable analysis is required to identify the overall benefits of an
agent accreditation system and whether these benefits exceed the
costs of system establishment and maintenance to meet quality
standards.
The CRB program is to undergo formal evaluation, including the
Procurement Excellence Program. This evaluation will provide data on
regional procurement plans which may then be benchmarked against
other models.
20
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Recommendation 8.7
That the Victorian Government remove the unnecessary opportunity
costs that councils impose on tenderers, including SMEs, by extending
the Victorian Government’s Fair Payments Policy to local government.
Response
Support in principle
The Government notes that the Fair Payments Policy is not currently a
legislative requirement. To investigate how such a policy could be
taken up by local governments, Local Government Victoria will work
with councils to weigh up the costs and benefits of this proposal.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
21
(9)
Costs to local government of administering regulation
Recommendation 9.1
In order to improve the capacity of local government to manage the
costs of administering regulation, to provide a better basis for user
pays charging, and to measure the net cost to local government of
administering major regulations, Local Government Victoria, in
collaboration with the Municipal Association of Victoria and selected
councils, measure the costs of administering major State and local
regulations to develop a methodology for adoption by all councils.
Response
Support in principle
The Government is developing guidelines to assist councils to consider
cost recovery for setting fees and charges in areas within their direct
responsibility. However, local governments are, in most areas of
regulatory administration, required to adhere to a fee structure set by
other levels of government to ensure state wide consistency.
The Government will consider incorporating a local government
impact analysis or consultation requirement for Cabinet submissions
to better account for user pays charges and cost recovery.
22
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
(10) Improving the institutional arrangements
Recommendation 10.1
That the Department of Treasury and Finance amend section 4-6 of
the Victorian Guide to Regulation, by specifying that:
 The section also applies to sunsetting statutory rules and to
primary legislation that imposes a regulatory obligation on councils
but does not exceed the threshold above which a BIA is required
 Where the Victorian Government intends for local government to
administer or enforce new primary legislation, or new or revised
regulation, it is a requirement that lead departments consult with
councils about the issues specified in the current section 4-6 and
also about:
– the relevant priorities, where new Acts or statutory rules have
more than one objective
– whether the Government expects councils to re-direct their
resources in light of the new or renewed obligation
– the accountabilities of the department, councils, regulators and
others for administering and enforcing the new legislation or
new or renewed statutory rule.
 This consultation needs to:
– take place when the proposal is still formative
– identify the resources and capabilities required to implement
the proposed regulations and any gaps.
 The lead departments must report in the ministerial briefings and
Cabinet submissions associated with BIAs and RISs whether
councils support the proposed actions.
Response
Support
The Government will replace the Victorian Guide to Regulation with
an updated guide. It will contain best practice guidance on
government regulation, including early consultation with affected
stakeholders regarding options for government intervention and
consideration of implementation issues. The guide will specifically
address situations where local government is expected to administer
or enforce State legislation.
The Department of Premier and Cabinet will ensure that local
government impacts are considered in Cabinet submissions, as
appropriate.
Recommendation 10.2
That the Department of Treasury and Finance amend the Victorian
Guide to Regulation to require the relevant lead department to work
with councils to document how new legislation and statutory rules
will be implemented, drawing on consultation between the State and
local governments, and including the publication of the plan and its
sign-off by Cabinet or the responsible minister.
Response
Support
As discussed in relation to Recommendation 10.1, the Government
will replace the Victorian Guide to Regulation with an updated guide.
This will include guidance on a best practice consultative approach to
implementation issues associated with new legislation and statutory
rules.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
23
Recommendation 10.3
That the Victorian Government use more effectively existing
mechanisms for State-local government consultation and publicise the
outcomes. The purpose of this consultation is to:
 Ensure that State and local governments have an ongoing shared
understanding of the regulatory outcomes that the State
Government is seeking and their relative importance to the
Government, and of the respective accountabilities of the two
levels of government in administering and enforcing regulation to
achieve these outcomes
 Identify specific challenges facing councils in achieving these
outcomes (for example, with respect to resources or capabilities),
and accountabilities for addressing them.
Response
Support
The Government is committed to renegotiating the current Victorian
State-Local Government Agreement to enhance consultation
mechanisms.
The Government has also established a Local Government MinisterMayors Advisory Panel to advise on issues of costs and resourcing.
Recommendation 10.4
That the Premier’s annual statement of government intentions
identifies any changes in priorities or new obligations that need to be
considered by councils.
Response
Support in principle
As discussed in relation to Recommendation 10.1, the Government is
committed to active consultation with councils where State legislation
or policies impact on the sector, including through the Local
Government Minister-Mayors Advisory Panel.
Recommendation 10.5
That the Department of Treasury and Finance re-writes the best
practice principles in the Victorian Guide to Regulation so that they
cover the implementation and enforcement, as well as the
development, of regulation. In doing so, the Department should
consult councils in developing the principles and develop a training
program to help councils to apply them.
Response
Support
The Government will replace the Victorian Guide to Regulation with
an updated guide. This will include guidance on implementation and
enforcement. In doing so, the Department of Treasury and Finance
will consult with councils in developing the principles and develop a
training program to help councils apply them.
24
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
Recommendation 10.6
That the Victorian Government require:
 The departments responsible for State regulations administered by
councils to fund and co-ordinate evaluations of regulations that
impose significant costs on the regulated parties and/or on councils
that enforce the regulations
 These evaluations be published and assess (amongst other issues)
whether the legislation and regulations have been implemented
consistently, effectively, and without unnecessary burden on
business and councils.
Response
Support in principle
The Government supports this recommendation in principle, but
notes potential budgetary impacts. The Department of Treasury and
Finance will consider the resourcing requirements and aim to roll out
such processes in a phased manner. Any impacts from the VCEC’s
inquiry into Victoria’s regulatory framework will also be taken into
account.
Recommendation 10.7
That the Victorian Government assigns to a single point (individual or
entity) the accountability for:
 Monitoring progress with the implementation of those
recommendations from 10.1 to 10.6 that the Government accepts,
and
 Reporting progress on implementation to the Victorian and local
governments.
Response
Support
The Department of Treasury and Finance conducts appropriate
monitoring of the implementation of all Government commitments in
response to VCEC inquiries, including reporting progress to the
Government. Impacts on the monitoring and reporting process from
the VCEC’s inquiry into Victoria’s regulatory framework will also be
taken into account.
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation
25
www.dtf.vic.gov.au
26
Victorian government response to the Victorian Competition and Efficiency Commission’s Final Report
Local Government for a better Victoria: An inquiry into streamlining local government regulation