Describing it as ‘tax reform Black Friday for Councils and their communities across Australia’, President of the Australian Local Government Association, Councillor John Campbell, believes all Local Government’s concerns about being locked out of the recent Premiers’ Conference have been realised.
The principles agreed by the Commonwealth and States will see the Commonwealth washing its hands of Local Government, jeopardising any chance for uniform national standards across Local Government.
Passing responsibility for Local Government grants to the States will result in seven different funding systems. Councils in some States may do well, while others fear the consequences. In States, such as Victoria, where the Government has used legislation to severely reduce the powers of Councils to manage their own area, handing over control of the cheque book is potentially a disaster.
John Campbell believes that under the proposed reforms Local Government will be very exposed and likely to be the first to suffer funding cuts if the States are squeezed for cash.
Under the agreed principles, there appears to be no scope for Local Government to share any growth tax with the States. With Local Government grants frozen at an historically low level, it will be extremely difficult for Councils to maintain vital services for their communities.
ALGA’s call for a direct share of GST revenue, that is 6% of revenue raised or 1% of total Commonwealth taxation revenue, has fallen on deaf ears. This is in spite of the fact that such a proposal was overwhelmingly supported at the recent National General Assembly of Local Government in Canberra.
With the Commonwealth, State and Territory Governments now locked in a cosy deal protecting their own positions, once again Local Government has been left out in the cold. Although the Commonwealth Government has set down a requirement that the States maintain Local Government funding at the current level, there is no guarantee as to how long this will continue.
The variation across the States, regarding the sharing of National Competition Policy funds with Local Government, must ring alarm bells about these new funding arrangements.
Given the fact that the Government needs the support of the Democrats or Senator Harradine for its legislation to pass in the Senate, if a GST is introduced it may not be as broad based as the Commonwealth would like. This would result in a shortfall in the estimated revenue for the States which would then be passed on to Local Government.
ALGA believes the only hope now for Local Government is if the Senate rejects the agreement in its current form.
The Democrats have recently announced their continuing commitment to the Commonwealth Government retaining responsibility for Local Government grants. Democrats’ Spokesperson for Local Government, Senator Lyn Allison, said that the Democrats proposed terms of reference for a Senate inquiry into the GST includes an investigation of the impact of this new tax arrangement on Local Government funding and administration.
Through ALGA, State and Territory LGAs and at the individual Council level, pressure must continue to be applied to Federal Members and Senators to ensure a secure future for Councils and communities. This means a direct share of GST or total Commonwealth tax revenue, and the proposal that Local Government grants be passed to the States be rejected outright.
