By Paul Hemsley and Julian Bajkowski

Councils in New South Wales have repudiated claims by the state’s Minister for Local Government, Don Page, that an amendment to the Constitution to allow financial recognition of local governments will lead to pork barrelling as baseless scaremongering.

As the September 14th referendum debate heats up, joint presidents of peak body Local Government New South Wales (LGNSW), Keith Rhoades and Ray Donald have slammed Mr Page’s comments as “misleading” and “ill-informed”.

The latest vigorous exchange over the flow of money from Canberra mirrors a similar war of words in Victoria last week where councils also accused their state masters of trying mislead the public over the consequences of financial recognition for councils.

It comes as a Nielsen poll on the outcome of the local government referendum conducted last week, published by The Australian Financial Review on Monday, found that 65 per cent of voters said that they would vote ‘yes’ for financial recognition of local government. The same poll determined a support level in all states of 60 per cent with the highest proportion of voters intending to vote ‘no’ being just 20 per cent in both NSW and
Victoria.

The Australian Local Government Association (ALGA) immediately seized on positive indicator of support for change, saying that the numbers reflected its own research.

“ALGA's own research…indicates that the majority of voters support the concept of constitutional recognition of local government and more than 60 per cent support the need for financial recognition of local government," ALGA President, Felicity-ann Lewis said.

"Communities understand that without constitutional recognition of local government, programs such as Roads to Recovery are at risk of High Court challenge. We have seen recent examples of High Court challenges in which direct Commonwealth funding was called into doubt. Communities can't afford this risk to vital infrastructure."

While NSW and Victorian governments may beg to differ, their ambivalence towards financial recognition for local government is far from uniform and has highlighted a rift between Coalition premiers in the southern states and Queensland   which has backed the Constitutional tweak after Premier Campbell Newman wrote to Prime Minister Julia Gillard indicating his support.

In the referendum, Australians will be asked whether or not local government should be recognised through an addition to Section 96 of the Constitution that previously only recognised states.

The proposed change to the Constitution will read: “Financial assistance to states and local government bodies. During a period of ten years and after the establishment of the commonwealth and thereafter until the parliament otherwise provides, the parliament may grant financial assistance to any state, or to any local government body formed by a law of a state.”

The changes have been necessitated after two High Court cases (Pape and Williams) that put direct funding of local government projects and initiatives, like the circa $3 billion Roads for Recovery scheme, on unsafe legal ground in terms of their Constitutionality.

While the Federal government, Federal Opposition and councils are all strongly pushing the ‘yes’ case for the proposed change, the initial strong support from voters for keeping direct funding alive could prompt some state governments to increase their hostile rhetoric in an attempt to swing opinions and votes.

The Australian Local Government Association has mustered a warchest of $10 million for civics education to push the cause and the Department of Regional Australia, Local Government, the Arts and Sport will was allocated $11.6 million in last Tuesday’s Budget to provide information to the public on the referendum.

Last week Victorian Minister for Local Government, Jeanette Powell, claimed that financial recognition of councils in the Constitution would result in an erosion of state power, a statement that drew fire from Municipal Association of Victoria (MAV) president Bill McArthur as holding “no weight”.

In NSW, Local Government minister Don Page told ABC radio that on the eve of a federal election, marginal seats could potentially benefit from an injection of Commonwealth funds into councils to spend on local infrastructure.

Local Government New South Wales (LGNSW) joint presidents Keith Rhoades and Ray Donald are having none of it.

"The comments made by Don Page, who continually claims to be the Minister ‘for’ Local Government, are baseless and equate to nothing more than a scaremongering campaign!" Mr Rhoades said.

Mr Rhoades repeated Western Australian Local Government Association (WALGA) president Troy Pickard’s assertion that state government power will not be diminished as a result of a successful referendum.

"The upcoming federal referendum will not erode the power of the NSW Government or change its relationship with NSW councils,” Mr Rhoades said.

"It seems a tad contradictory for the NSW Coalition Government to trumpet criticism of councils' financial sustainability, then fail to support a referendum which would protect federal grants for the most basic community needs, like local roads,” Mr Rhoades said.

Mr Donald also ripped into the state government’s “contradictory” stand on the referendum.

“Given the recent TCorp Report into NSW council finances, it's astounding the NSW Coalition Government won't support a practical change to the Constitution securing tens of millions of dollars each year for NSW communities and their infrastructure,” Mr Donald said.

He said the Howard Coalition Government initiated direct federal funding to local councils more than a decade ago.

"This financially-specific relationship between Canberra and councils has helped thousands of community projects get off the ground right across NSW, regardless of the politics of individual councils,” Mr Donald said.

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