Reneging on the COAG agreement on National Competition Policy, the Commonwealth Government has cut Financial Assistance Grants to Local Government by 1.2%. Announced in the Budget, this translates into about $15 million in real per capita terms per annum.
Despite a recent assurance by the Minister for Sport, Territories and Local Government, Warwick Smith, that real per capita increases will be returned in the next Budget, the Australian Local Government Association fears that should this indexation base not be returned, Councils stand to lose $60 million over the next four years.
The Minister recently described these cuts as Local Government making a contribution of 1.2% of its Financial Assistance Grants to the Budget deficit. Unlike the States and Territories that accepted voluntary cuts last year, Local Government was not consulted over its supposed 'contribution' to getting the Commonwealth Budget back into surplus.
The ALGA has rightly expressed its grave concern that the Federal Government has now broken all major promises made to Local Government prior to the 1996 election - namely on constitutional recognition, regional development, the Local Government Development Program and now Financial Assistance Grants. ALGA believes that the cuts will have a serious impact on services and employment, particularly in rural and regional Australia.
While the States received supplementary Competition Payments to offset their 'voluntary' cuts, Local Government's only benefit from the National Competition Policy to date, the real terms per capita guarantee, has been spirited away to help the Federal Government balance its books.
The question has been put by Cr John Campbell, President ALGA, that as the only benefit has been withdrawn from Local Government why should Councils continue to cooperate with National Competition Policy?
With the Queensland Government, the only State Government to date to agree to share a proportion of its Competition Payments with Local Government, the Federal Minister has stated that he will raise with the Treasurer what the Commonwealth might be able to do to encourage other States to follow suit.
Queensland is to be applauded for its initiative. However, without Constitutional Recognition and a guaranteed share of the distribution of taxation raised by the Commonwealth, Councils and their communities continue to be at the mercy of policy decisions made by other spheres of Government.