Local or municipal government is one of the three tiers of government - the State and federal governments being the other two - which hold sway over Melburnians and the city's affairs. Sub-regional institutions, Local Government Authorities (LGAs) are responsible for child care, cultural institutions, parks and gardens, pet registration and vermin, rubbish and garbage disposal, health and social work, town halls, building control, city planning, heritage and traffic.
Councils pass local laws (or by-laws). Elections are held once every three years with councillors representing wards and electing a mayor as titular head but the chief executive officer (CEO) is responsible for administration. Revenue derives principally from rates levied on the property owners, fees, fines and charges, and from State and federal government grants. Municipal government is constituted by an Act of the Parliament of Victoria and overseen by a State Government minister with powers of regulation and dismissal, strengthened following extensive reorganisation in 1993-97 which reduced LGA numbers by amalgamations, renaming and restructuring many formerly well-known institutions.
Traditionally, LGAs identified closely with their regions. Although it is not recognised in the Australian Constitution, local government is seen as community-based and 'closest to the people'. Constitutional reformers, arguing that enhanced local government would allow for the abolition of State Governments, have not been well received in Melbourne where local administrations are comparatively weak and State politicians are reluctant to cede power. Political scientist Alan Davies wrote in 1955:
municipal government in this State has never been healthy: the functions entrusted to councils, from the first of a narrow and petty order, have clearly failed to engage the interest of more than a small minority, and over the years the councils have been progressively stripped of powers even within this circumscribed range.
Municipal government had its origins in the 1840s. In foundation and early Melbourne increasing numbers of freeholders required services - especially roads, water supply and sanitation. Road trusts were formed in the various parishes contained in Bourke County but citizens were disinclined to accept either responsibility or the cost when little real political autonomy was offered. Squire, parson and English villagers were not easily transplanted to Australia where society advanced typically along urban lines. In August 1841 following a public meeting, a market was authorised and commissioners elected. The town was divided into four wards on the intersection of Bourke and Elizabeth streets. Each was to return two commissioners elected by householders of an annual rental value of £20, or freeholders to the value of £200, a franchise that encompassed about a third of Melbourne's population. In 1842 the commissioners were replaced by the Melbourne Town Council, later the Melbourne City Council (MCC). Drawn from British models Melbourne's Act of incorporation - passed in the same year as Sydney's - provided for an elected council with responsibility for justices, butchers, markets, roads and sewerage, water supply and gas, with power to regulate nuisances. Control of the militia - and later the police - remained with the colonial authorities. Provision existed for the creation of new wards with city growth and in 1850 Collingwood became the MCC's Fitz Roy Ward (later Fitzroy).
Separation saw a central government created in Melbourne and proposals for the extension of local government. Despite the increased immigration and suburbanisation brought by gold, larger freeholders, tenants and pastoralists, fearing the taxation that might accompany an extension of local government, sought to confine new municipal institutions to existing urban areas. Under the Municipal Institutions Act 1854 a house had to be a substantial building and the maximum area of a municipality 9 mi2 (23.3 km2), with no two points more than 6 miles (9.6 km) apart. The pastoralist-dominated Legislative Council made for much smaller municipalities than had been envisaged.
New communities did not act until offered financial incentives by the colonial government. East Collingwood, Prahran, Richmond and St Kilda were the first suburban municipalities in 1855. Emerald Hill (later South Melbourne) elected its council first but only achieved independence after legislation permitted it to break away from the MCC. Other early municipalities included Brunswick formed in 1857, and three MCC wards, Fitz Roy in September 1858, Hotham (later North Melbourne) in 1859, and Sandridge (later Port Melbourne) in 1860. Fitz Roy embraced only 1.25 square miles (3.2 km2), Hotham a mere .75 (1.9 km2), while Emerald Hill was 3.5 (9 km2) and then outlying Footscray was 6.5 square miles (16.8 km2).
An 1862 inquiry found many LGAs 'too limited both as regards population and rateable property' and the manner in which they had been encouraged not compatible with the self-reliant traditions of local government. But the unwanted municipalities did not wither away. Legislation in 1863 strengthened the hold of property owners, introducing a secret ballot and a three-tiered property franchise, allowing for between one and three votes for occupiers of rateable property up to and more than £150. Continuing amendment of the Local Government Act provided for the system's expansion but metropolitan municipalities were restricted in geographic extent, fragmented and unable to act beyond their borders. Outlying areas conceived their function simply as facilitating suburbanisation and land subdivision, but the already developed inner areas and Central Melbourne faced other challenges. Melbourne waited for deep underground sewerage because of colonial government intransigence and municipal incapacity, and the health of the city suffered. There were difficulties in the provision and administration of essential services and transport. The Metropolitan Town Planning Commission of the 1920s failed because no authority existed to implement its wider-ranging recommendations. The Melbourne and Metropolitan Board of Works (MMBW), a coming-together of the municipalities in 1891 to achieve public works they could not undertake individually, flourished largely as a consequence of municipal incapacity.
Not all municipalities accepted their diminished status. The MCC - for many years the largest, most central, richest and most powerful of them all - led the way in municipal borrowing with the Gabrielli Loan and provision of services and infrastructure. In the 1870s Melbourne town clerk, Edmund FitzGibbon, contrasted the City's government with the combative parliamentary ministerial and party system. He identified a special virtue in the municipal system of committees, which he perceived as having no 'opposition' and employing the skills of all members. The MCC staged entertainments, including mayoral balls, and set a trend for substantial town halls. Other municipalities followed suit, notably in the 1880s land boom, but the 1890s depression left them with financial difficulties. The larger, more centrally located municipalities were better placed. A vogue developed for 'municipal socialism', meaning the acquisition and development of public utilities for the benefit of ratepayers and citizens. Innovations in energy supply and transport (gas supply and electric tramways) were undertaken by Footscray, Williamstown, Prahran and Malvern but most lacked the scale to develop such enterprises. Proponents of the early 20th-century Greater Melbourne Movement sought to address these issues through the creation of a single metropolitan government on the London model. Divided over the constitution of the new body they were defeated by conservatives who chose to give the MMBW greater powers instead.
Municipal politics became increasingly polarised in the 20th century, especially in the inner city where the Australian Labor Party gained control of some councils. In Port Melbourne and Richmond factional politics became a by-word for petty corruption and favours. More commonly, candidates proclaiming themselves 'independents' played down or concealed their wider political affiliations. For decades Labor Party and later resident-voter influence in the MCC was contained by imbalances in the ward rolls and the property franchise, and from the 1950s to the 1970s its Civic Group functioned effectively to maintain the dominance of conservative business interests. From the 1840s to the present day it has been those who have organised alliances or 'factions' who have been the most successful. However, at key points State Governments have acted to dismiss councils perceived as dysfunctional, replacing them with appointed commissioners.
Postwar suburbanisation saw city-fringe shires and boroughs become towns and cities. Some wholly new institutions were created. Knox municipality was created in 1963 from the Shire of Ferntree Gully with a population of 24 000. By 1994 when it was given city status its population had increased nearly six-fold to 137 000. Suburban growth undermined the old municipal order. The MCC and inner Melbourne municipalities could no longer dominate the MMBW. Inflation forced the adjustment and eventual abandonment of plural voting scales, the Local Government Act 1969 giving every voter one vote.
Acting on the recommendation of the 1979 Bains Inquiry which had been critical of the multiplicity of authorities, the Cain Labor Government (1982-90) created a Local Government Commission but, lacking control of both houses of the parliament, backed away from the challenge of reform. It did, however, diminish the size and political role of the MMBW. Jeff Kennett's Liberal Government (1992-99) used its control of both houses of the Victorian Parliament to transform municipal government. Melbourne's municipal councils were dismissed and commissioners appointed to oversee renaming, amalgamation, reorganisation and restructuring, reducing the 53 metropolitan municipalities to 26. Programs of 'downsizing', 'outsourcing' and privatisation of services, similar to those being undertaken by State Government departments, were introduced along with a rate cap, limits on spending and compulsory competitive tendering, exposing at least 50% of council expenditure to market forces with contracts replacing permanent employment. Council workers and departments tendered for contracts they had undertaken formerly as employees, major responsibilities like garbage disposal were contracted out and community and social welfare functions were reduced or abolished as commissioners reduced expenditure by 20%.
Commentators have identified the reforms as a move from 'government' and towards 'administration'. Central and inner-urban councils remain weak and fragmented. Democratically elected councils returned in 1996 but their autonomy is constrained by legislation that placed them under threat of easy dismissal. In 1999 the incoming Bracks Labor Government promised a different approach, announcing in 2000 a sweeping initiative in the form of dismissal of the MCC. A new City of Melbourne Act became law on 9 May 2001, providing for a popularly elected Lord Mayor and deputy, and seven councillors elected as citywide representatives. The cumulative effect of reforms by State Governments of different political persuasion has been to render municipal government bland and corporate, defusing it as a political institution overall. This trend has been most apparent in the City of Melbourne. Local governments still have a strong capacity to reflect community sentiment, especially over planning and development issues where they often find themselves in difficulties representing conflicting interests in the community.