2006 saw the Australian Government reach a number of significant milestones in its Local Government responsibilities, primarily those relating to responses to the recommendations of the Hawker Report, including:
- the signing of the tri-partite Inter-governmental agreement in April
- the receipt of the report by the Commonwealth Grants Commission on the inter-state distribution of the roads component of the financial assistance grants in June (which the Government is considering)
- the implementation of the new financial assistance grants National Principle relating to council amalgamations in July
- the passage of the resolution on Local Government through both houses of the Federal Parliament during the spring sittings.
In the September edition of National Perspective I mentioned the parliamentary resolution on Local Government in passing because it had only just been introduced into the Federal Parliament. What pleased me most about the debates in both the House of Representatives and the Senate was the universal recognition by all speakers from all sides of politics of the importance of Local Government and the great work that both Councillors and employees of Local Government do. This praise was sincere and it indicates the great respect that the Australian Parliament has for the level of government closest to the people. I was very proud to sponsor the resolution and am sure that it heralds a continued close relationship between the two spheres of government into the future.
Other significant matters for Local Government during 2006 included an extra $307.5 million in funding under the Roads to Recovery programme announced in the Budget; an additional $65.7 million (or 4.06% above 2005-06) in Financial Assistance Grants to Local Government was also announced in the Budget bringing the total for 2006-07 to $1.684 billion; and the continuation of a number of significant grant programmes which Local Government can access, such as the Black Spot programme, the Bushfire Mitigation, Regional Flood Mitigation and Natural Disaster Mitigation programmes, the Regional Partnerships programme and the Rural Medical Infrastructure Fund.
During 2007 I am expecting the issue of Local Government financial sustainability to be discussed and debated at the Federal level, the State and Territory level, the Local Government level, and by a range of other stakeholders in the Local Government sector.
The last couple of years have drawn attention to the financial sustainability of Local Government with the publication of a number of reports from Local Government Associations indicating that a significant proportion of Councils, primarily small rural and remote Councils, are not financially sustainable in the medium to long term. I believe that the Australian Government is doing its part in supporting Local Government through maintaining the value of the Financial Assistance Grants and through the other programmes mentioned above which currently bring Australian Government support to Local Government to over $2 billion per year.
The ability of Local Governments to raise their own revenue is fundamental to each Council’s financial future and as part of its response to the Hawker Report, the Government agreed to ask the Productivity Commission to examine this issue. I have sought the views of the Premiers, Chief Ministers, State and Territory Ministers for Local Government and the President of the Australian Local Government Association on terms of reference for the Productivity Commission study, and the Treasurer will be taking those views into account in his decision to formally issue terms of reference.
The recently released reports into Local Government financial sustainability indicate that Councils need to focus on accounting for their expenditure in a more strategic way, and implementing more rigorous medium to long term funding policies to cover their expenditure requirements.
The Local Government and Planning Ministers’ Council has considered this issue and has proposed, for consultation with the Local Government sector, nationally consistent frameworks for assessing financial sustainability, financial planning and reporting, and asset planning and management. The Council of Australian Governments will also consider Local Government funding arrangements at its next meeting, expected to be held in April.
I expect 2007 will be a significant year for Local Government and I look forward to continuing to work in partnership with all Councils and other Local Government stakeholders, to ensure that Local Government continues to effectively serve its communities.
