On 12 April, representatives from all three spheres of government signed an historic agreement to help counter cost shifting. The intergovernmental agreement (IGA) is designed to improve the way the three spheres of government work together, and provides a set of principles to guide the way functions and services are negotiated and transferred to Australia’s Local Governments. Moreover, the agreement establishes a framework for bilateral or trilateral agreements to be reached for the transfer of specific services or functions.
Federal Minister for Local Government, Territories and Roads, Jim Lloyd, said the IGA delivers on the Federal Government’s commitment made in response to the Rates and Taxes: A Fair Share for Responsible Local Government Report (The Hawker Report), tabled in Federal Parliament in 2003.
“The adequacy of resources available to Councils is significantly impacted by cost shifting onto Local Government,” the Minister said. “The objectives of the IGA include providing for greater financial transparency between the three spheres of government in relation to Local Government services and functions. In addition, the agreement aims to improve the relationship and consultation between governments on Local Government matters.”
President of the Australian Local Government Association (ALGA), Councillor Paul Bell, signed the agreement on behalf of Local Government.
“This is an historic agreement that has the potential to make a real difference to every Council in Australia,” he said. “ALGA estimates that cost shifting by Federal and State Governments places an additional burden on Councils of between $500 million and $1.1 billion each year.
“The Hawker Report found that there ‘was no doubt that Local Government has, over a number of years, been on the wrong end of cost shifting’. The impact of this cost shifting has varied from Council to Council and can take many forms. It might be the transfer of a State or Federal asset to Councils, such as a regional airport, regional roads or sea walls. Or it might take the form of regulatory functions, previously undertaken by a State, which is transferred to Local Government. Sometimes the responsibility is transferred with funding attached. But the funding is often inadequate or short lived, leaving Local Government significantly out of pocket. At the end of the day, it’s the community that pays.
“The IGA on cost shifting opens a new, more optimistic chapter in intergovernmental relations. We now hope that when future services and functions are negotiated, agreed and transferred to Local Government, Councils won’t be short changed and left out of pocket.
In short, the IGA gives us a high level agreement that will help ensure Local Government and local communities receive fair treatment.”
Councillor Bell said that while the IGA is a significant milestone for Local Government, the hard yards lie ahead.
“There are three points to be made,” he said. “First – the IGA applies to future arrangements, not existing ones. In other words, it does not right past wrongs. Reducing the burden of cost shifting will occur over time, not overnight.
“Second – the IGA paves the way to further bilateral or even trilateral agreements on the provision of specific services or functions. Negotiating these will not be easy. These agreements will need to have clear outcomes, clearly defined roles and responsibilities of each sphere of government, clear financial mechanisms, monitoring and evaluation processes and dispute resolution mechanisms.
“Lastly – the IGA is not a fiscal panacea for Local Government and will not replace the major concern, a need for fair funding arrangements to be secured from State and Federal Governments.”
To view the full details of the IGA visit www.alga.asn.au/policy/finance/costshifting/iga/fulltext.php
