I was recently invited to present a speech to the Municipal Association of Victoria on the challenges facing local government.
A broad topic, but one that has been brought into focus in recent weeks following the Commission of Audit report and the Federal Budget in particular.
While all councils are unique, providing services and infrastructure to widely different communities and facing different challenges, local government as a
whole, faces major nationwide challenges.
High on the agenda is the White Paper on Federation. While there is a widespread view that the Australian Federation can work better, the Australian Local Government Association (ALGA) has argued that the White Paper process should not be a search for a perfect Federal model. We need a review which looks at how the Federation actually works in the real world – how the different levels of government – including local government -work together now and can work together better in the future.
The Federation White Paper is not about Constitutional recognition, but an opportunity to have the role local government plays in the Federation acknowledged and to ensure that role continues. That is our challenge and all councils can help play a part in having local government’s role acknowledged by making submissions to the White Paper process when the time arises.
The National Commission of Audit also presented a possible model of how the Federation should work. The Audit report recommended that the Commonwealth should play no role in local government funding. Not just direct funding but also no Financial Assistance Grants. These grants would end but the Commonwealth would pass some taxing power to the states to raise the money, which they could then pass to local government.
ALGA does not support these recommendations and the National General Assembly this month will give all councils a chance to make their views known.
These issues have highlighted the challenge local government as a whole faces in terms of financial sustainability. As councils we can and should seek to be as efficient as we can in delivering services and infrastructure but that is not going to be enough to overcome our funding gap.
The demands for services are continuing to grow, but our funding is going to remain under pressure. Many smaller councils do not have the option to increase rates – their rates bases are just too low. Other councils in major metropolitan areas have more capacity to look at rate increases but recognise there are growing questions about the ability for ratepayers to pay in some communities.
Our local ratepayers expect to see local services and infrastructure delivered by council in return for the rates they pay. But there are growing pressures from other levels of government that local government rates be used to collect levies such as emergency services levies or environmental levies, or suggestions they be used to fund national programs such as the new National Injury Insurance Scheme, expected to begin in 2017.
We must be united in opposing these approaches. Local rates for local services is a point we must push in the forthcoming Taxation White Paper, foreshadowed over the next two years.
We must also push to maintain, and restore, the level of general revenue support we get from the Commonwealth through Financial Assistance Grants (FAGs). The Government’s decision to freeze indexation for three years from next year will deprive councils of a cumulative total of $925 million in FAGs by 2017-18. We must fight to have indexation reversed. It is important that councils join ALGA’s campaign and contact their Federal Government representatives to highlight the implications of this decision on the ability of councils to deliver local services and infrastructure.
