A change of guard at the Federal level, the release of the Productivity Commission’s draft report — Assessing Local Government Revenue Raising Capacity — with a final report due in a few months, and increasing national and international attention to combating climate change present a raft of challenges and opportunities for Local Government as we enter 2008.
At the same time, the start of 2008 has seen banks raising interest rates and fuel prices tipped to reach $1.50 a litre, which is adding to escalating household debt. The 2007–2008 State of the Regions Report, prepared by National Economics for the Australian Local Government Association (ALGA), found that the combination of this increasing household debt, additional costs to households from climate change and many areas still not having access to high speed broadband is continuing to widen the gap between the more affluent and the poorest of Australia’s 64 regions.
In most cases it is rural Australia that makes up the poorest of our regions. Added to this, the Productivity Commission’s draft report states that a modest increase in rates and charges by urban Councils is less difficult than it is for rural and remote Councils that are already drawing on a higher proportion of their local community income. As a result, many rural and remote Councils continue to depend more and more on State and Federal grants than their urban counterparts.
The draft report further states that Local Government revenue is a “small” ratio of GDP – about two per cent. Moreover, the ratio of rates revenue to GDP has decreased from 1.1 to 0.9 per cent between 1990–91 and 2005–06. If this ratio had still been 1.1 per cent in 2005–06, national revenue from rates would have been 20 per cent higher, representing an extra $1.7 billion or $84 per person (see page 12 for further key issues raised in this report).
With Councils continuing to battle a $14.5 billion infrastructure backlog and the difficulties identified by the Productivity Commission of relying on their own revenue raising capacities, ALGA’s policy platform for Local Government to have a direct share of taxation must surely be given serious consideration by the new Rudd Government.
As pointed out by ALGA President, Paul Bell, in the lead story for this edition, an overhaul of Council of Australian Governments (COAG) meetings, with Local Government represented on three of seven new working groups – infrastructure, housing, and climate change and water – promises a new era in intergovernmental cooperation. Let’s hope it lives up to expectations.
2008 certainly looks like being an interesting year. Here’s to a prosperous and more equitable year for all Councils.
