While most Australians have already spent their tax bonus payments, the $42 billion economic stimulus package was only recently ruled constitutional. This followed the failure of State Right’s Champion Bryan Pape’s action in the High Court, which challenged the constitutional right of the Federal Government to provide direct payments to taxpayers.
The High Court recently published its reasons for throwing out the case.
While the Court acknowledged the need for the Federal Government to respond to the global financial crisis, it did not authorise the Government to spend money outside of its constitutional powers.
This casts a shadow of doubt over the Commonwealth’s power to continue to directly fund councils, which constitutionally are the responsibility of the States and Territories.
Each year, the Federal Government legally channels funding to Local Government through the States in the form of Financial Assistant Grants and specific purpose payments.
However, for some years, successive Federal Governments have also bypassed the States, spending billions of dollars in areas outside their constitutional responsibilities in a way that has never been formally upheld by the High Court.
This includes the $1 billion in community infrastructure funding that has been announced in the last six months, as well as some $350 million that is provided to councils each year through the Roads to Recovery program.
Australian Local Government Association President Geoff Lake said that while it is unlikely that these programs will end as a result of the judgment, there is a possibility that they, and any future programs, will need to be restructured so that all payments are made through the States.
He said this is problematic for a number of reasons, not least because it potentially undermines the intergovernmental place of Local Government in Australia’s system of government, and also because it creates unnecessary uncertainty for councils around future funding.
Councillor Lake has written to Prime Minister Kevin Rudd stating that an urgent response is needed so that councils can plan their works programs with certainty.
Regardless of the outcome, this entire issue and the uncertainty it has created further highlights the need for Local Government, and its ability to be funded by the Commonwealth, to be recognised in the Constitution.
As ALGA continues its quest towards this reform, it is vital that councils get the issue on their own agenda, highlighting to their communities the implications that not being recognised could have on infrastructure, services, and facilities.
It may be the most important conversation you will have with your communities this decade, or even century, as ultimately, if the question of reform does go to a referendum, it is our communities who will decide if it is successful or not.
So the challenge is set, get out there and drive the conversation!
