Honouring an election promise made by the Coalition parties, the Minister for Regional Services, Local Government and the Territories, Wilson Tuckey, recently announced a Parliamentary Inquiry into cost shifting by the State Governments to Local Government. In welcoming the Inquiry, the Australian Local Government Association (ALGA) believes that this is an important step in clearly identifying and acknowledging the extensive role of Local Government in delivering services to communities. However, ALGA has expressed its concern that instances of cost shifting from the Commonwealth to Local Government have not been included in the Inquiry’s terms of reference. Added to this is the proviso that inquiry recommendations must be budget neutral in regard to the Commonwealth Government. The ALGA rightly believes this will substantially restrict both the Inquiry deliberations and its recommendations.
The issue of dividing up the tax cake across our spheres of government has dogged intergovernment relations since the early days of Federation. Initially a Commonwealth versus States tug of war, in recent times the passing of unfunded mandates to Local Government by both the Commonwealth and States have dramatically increased pressure on Councils, creating a three way tussle.
When the GST was introduced, the Commonwealth and States entered an agreement whereby the latter would receive 100 per cent of all revenue raised under this new tax. Despite calls from Local Government that it should be included in the loop and receive a set percentage of this new growth tax, its lobbying and representations went unheeded. Two years down the track of the Howard Government’s New Tax System, Local Government continues to face increasing difficulties as it battles to meet the expanding needs of local communities.
As well as the recent slashing of $100 million from road funding to Councils in the Federal Budget, Local Government is battling through the current public liability crisis while lending what assistance it can to local businesses and community organisations faced with huge premium rises and possible closure.
The Commonwealth Government dealing itself out of the cost shifting Inquiry must be seen as a flagrant attempt to shift responsibility to the States. The chance of the States accepting this, or agreeing to any recommendations from the Inquiry that would see them meeting the shortfalls faced by Local Government, are unlikely.
A funding solution that best meets the needs of all communities, no matter where they are located, demands a full Inquiry where all cards are placed on the table. Without this, a fair and equitable division of the tax dollar is a long way off.
