The Essential Services Commission of SA (ESCOSA) is rolling out a scheme where each of the state’s 68 councils will over the next four years receive “advice” about the “appropriateness of council’s long-term financial plans”.

ESCOSA and the councils are required by legislation to publish the advice once finalised, although ESCOSA cannot compel councils to follow its suggestions.

The aim of the scheme, introduced as part of the Marshall Government’s 2021 local government reforms, is to “give ratepayers confidence that the rates they pay are set at the level necessary for their council to provide the services they value”.

But the scheme has stirred up opposition in the local government sector because each council is required by legislation to reimburse ESCOSA for “costs reasonably incurred” in carrying out the scheme.

This prompted ridicule from Burnside Council CEO Chris Cowley and City of West Torrens CEO Terry Buss, both of whom wrote to Brock to argue the scheme was “a waste of ratepayers’ money” and the advice they were set to receive would be “blatantly obvious” and duplicate information already provided by council’s external auditors.

The two CEOs said they were initially informed by ESCOSA they would have to pay $52,000 for advice under the scheme.

In August 2022, ESCOSA revised the total cost of the scheme over four years down to $47,466 per council ($3,227,697 in total).

But the City of Onkaparinga now claims ESCOSA has “verbally” informed it that the council will have to pay $154,000 for the mandated advice – a claim ESCOSA denies.

Speaking at their council meeting on Tuesday, February 21, City of Onkaparinga financial services manager Jade Bird said ESCOSA was now basing each council’s costs for the scheme on the size of their subscription fees to the Local Government Association of South Australia (LGA).

The change means larger councils will bear more of the cost compared to smaller councils.

“The estimated cost that we have been provided verbally is $154,000 for the City of Onkaparinga,” Bird told councillors last week.

“My understanding is they’re basing that cost on LGA subscriptions, the original model was that the total model of the scheme would be divided equally between the 68 councils to a cost of about $52,000 each.

“But upon release of the final framework, our understanding from the councils who are currently going through the reporting to ESCOSA is they are basing it on LGA subscriptions.

“Which is essentially indicating that the bigger council you are, the more that you will pay.”

ESCOSA CEO Adam Wilson denied to InDaily that the Commission has told the City of Onkaparinga it could be paying $154,000 for the scheme.

He confirmed, however, that ESCOSA has “indicated” it will spread the cost based on LGA subscription fees rather than an equal split.

He said ESCOSA was “reconsidering” this model and would make a final decision on cost allocation “shortly”.

“At the suggestion of submissions made during the consultation process, the Commission indicated that it would adopt the LGA subscription fee model,” he said in a statement.

“The Commission originally proposed an equal split of costs across councils, on the basis that, for the first four-year cycle, the individual effort associated with councils would not be known.

“Having had the benefit of working through the first round of advice, the Commission is reconsidering that allocation approach, with a decision on the final cost allocation model to be made shortly.”

ESCOSA is scheduled to distribute is first round of advice to 15 councils today, including the cities of Burnside and West Torrens.

The City of Onkaparinga is not due to receive its first round of advice until 2023-24.

At last week’s council meeting, Onkaparinga councillor Marion Themeliotis asked Bird whether the council had budgeted for the claimed $154,000 in ESCOSA advice.

Bird responded: “We will be identifying this cost as a budget pressure in our 23/24 budget.”

Themeliotis then asked if it was “fair to say that we don’t know how we’re going to pay for it right now”, to which Bird replied: “That is correct.”

The City of Onkaparinga has a total annual operating income of more than $189m, according to its 2021-22 annual report.

Council resolves to express ‘frustration’ about advice scheme

Onkaparinga councillors passed a motion last week calling on Onkaparinga mayor Moira Were to “write on behalf of Council/Elected Members to the Minister for Local Government or the LGA, outlining our frustration with the expected cost to ratepayers for ESCOSA to provide advice about rates and spending to Council”.

Councillor Themeliotis, who moved the motion, argued the ESCOSA advice scheme would come on top of other transparency initiatives, such as the City of Onkaparinga’s “transparency portal” and the state government’s “councils in focus” website.

“This is another layer on top, and I don’t even think ESCOSA – not to be offensive to them – but I don’t even think they’re prepared for what’s sort of coming their way and know exactly what is being asked of them,” she told councillors last week.

“But what’s being asked of us is $154,000.

“We’ve just heard that we’re going to have to sort of find where that money’s going to come from, but where does that money come from?

“Does it come from (Onkaparinga) councillor (Geoff) Eaton’s pathways? Does it come from councillor (Lauren) Jew’s parks or reserves? Do we have to sell something to pay for that?

“I know these all sound really extreme, but what it’s going to do is it’s a hit to our community to pay for this, which was put on us by the former state government, and I don’t think that’s good enough.”

She said the Malinauskas Government should be reviewing the scheme.

“The new government should really be taking a look at what the old government did and seeing what is worthy and not worthy,” Themeliotis said.

“And we’ve got a local government minister who was a former councillor… a former mayor who should be well versed in the pressures of council.

“Elected members, when we go through the budget process, there’ll be a stage that you’ll see this pie will come up, and what this pie will show you is everything that’s legislated that we have no control over.

“And more and more, state government and other people are eating my pie, and I’m hungry, and my residents are hungry too, and they’re taking away from us.”

So far, Brock has indicated that he does not intend to alter the scheme and will review its outcomes after the first round of advice is given and costs are finalised.

InDaily asked Brock’s office whether the City of Onkaparinga had been quoted $154,000 for advice under the scheme.

In response, he said: “The costs of the advice are a matter for the councils and ESCOSA.”

“This is an advisory scheme to provide transparency and confidence to ratepayers about the financial management of their councils and the rates that they are charged for the services they receive,” he said in a statement.

“The advice is being provided to all 68 councils over a four year cycle. It would be premature to consider changes to the scheme until the advice is rolled out in its entirety.”

Last month, Brock wrote a sharply-worded letter to Burnside mayor Anne Monceaux in response to CEO Chris Cowley’s criticisms of the scheme.

Brock said Cowley’s criticism came “prior to any evidence that the Scheme does not work (given it is still being implemented)”.

“While the commentary – and the tone of the letter itself – might read well in the media, it does nothing to lend confidence that the content of the letter is well considered,” he wrote in a letter dated January 10.

“I will await the outcome and the experience of the Scheme operating as the Parliament intended prior to considering whether changes are warranted and deserving of future consideration by the Parliament.”

The LGA has also expressed reservations about the scheme to ESCOSA.

LGA SA CEO Clinton Jury told InDaily: “It’s reasonable to expect that if councils are paying for an independent review of council long-term financial and asset management planning, the advice provided should be robust, useful, and represent value for money.”

“From what we’ve been told ESCOSA’s advice is based on a desktop review of existing documents at council rather than any personal face to face visits – and currently, that’s forecast to cost the sector much more than what was originally put forward in SA Parliament,” he said in a statement.

“What we don’t want to see is advice being provided where the individual cost to councils outweighs the value they receive – particularly as councils are already independently audited.”