Federation paper ‘ignores local government’

Aust local govt

The Federal Government’s recently released Discussion Paper on ‘Reform of the Federation’ almost entirely overlooks local government, says Dr Bligh Grant of the Australian Centre of Excellence for Local Government at the University of Technology, Sydney.

“The absence is remarkable, and is a blight on the whole document,” says Dr Grant, who has researched local government in Australia at UTS and at the University of New England.

“The only real mention of local government in the document is in Chapter 5: ‘Federal Financial Relations’, and then only in a sidebar text box. It asserts that ‘own-source revenue accounts for about 90 per cent of total local government revenue nationally’ and that ‘the options [for fiscal reform] are not intended to foreshadow any potential changes to local governments’ funding arrangements’.

“This is highly misleading. The extent of local government self-funding varies radically across Australia, as does the self-funding by the states and territories. The majority of local governments in regional, rural and remote areas are heavily dependent on funds from both state and federal governments to provide a range of basic services, not just roads. Also, the Abbott Government has already eliminated the indexing of Financial Assistance Grants (FAGs) to local government – we are going backwards”.

Dr Grant noted that in a recent visit to Canberra head of ALGA Troy Pickard pointed out that the sector would be short of $925 million over 2017-18 as a result of changes to local government funding. Mr Pickard, mayor of Joondalup in Perth’s northern suburbs, has been a trenchant critic of the reduction in FAGs, which have for years been used as a financial backstop to allow councils to access money from Canberra for a range of services they provide to communities.

Portfolio and machinery of government changes under the current government have also stripped the local government sector of a dedicated federal minister to champion its cause.

The Discussion Paper, which was released in late June, is intended as a draft of the final White Paper, which the Government has promised by the end of the year.

“The Discussion Paper canvasses six options for reform of Australia’s fiscal federalism: three to address Vertical Fiscal Imbalance (VFI) and three to change Horizontal Fiscal Equalisation (HFE),” says Dr Grant. “We can discuss the merits of these in regards to the states but noticeably absent from these possible reforms is any mention of local government”.

“Make no mistake about it. Local government is, at present, off the table in the current considerations of reforming the federation. Beyond their own revenue-raising powers local governments will become supplicants of the states, even more so than they are at the moment.

“The Discussion Paper gives short shrift to a genuine debate about reforming the Federation, ignoring long-standing arguments about regionalism, localism and even the possibility for more states, as part of a strategic vision for Australia’s Federation.”


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