2006 – The challenges ahead

Article image - 2006 – The challenges ahead

Local Government’s key national policy and lobby group, the Australian Local Government Association (ALGA) is gearing up for a busy and energetic year as it seeks to secure significant commitments from the major political parties in the lead up to the 2007 Federal election.

“While 2005 was a year of consolidation, 2006 will be a year of positioning,” said ALGA President, Councillor Paul Bell. “ALGA has three clear, interrelated goals. We seek fair Federal funding, fair treatment, particularly by putting an end to cost shifting, and formal recognition.”

He said without doubt, 2005 has been a good one for ALGA and Local Government at the national level. In May, the Australian Government delivered on its election commitments to Local Government, bringing benefits worth hundreds of millions of dollars to Councils across the country.

In June, Minister Jim Lloyd responded to the Fair Share report with four major commitments:

  • development of an intergovernmental agreement between the three spheres of government to counter cost shifting
  • recognition of Local Government by resolution of both Houses of Federal Parliament
  • review of barriers to Council revenue by the Productivity Commission
  • review of the interstate distribution of the roads component of Financial Assistance Grants by the Commonwealth Grants Commission.

In July, the second phase of the Roads to Recovery program got underway – a program now worth $1.45 billion to Local Government over the next four years. In November, Jim Lloyd committed a further $100 million to the regional roads component of the Roads to Recovery/AusLink program, with Deputy Prime Minister Mark Vaile suggesting more funding will follow. And in December, Labor flagged a new funding deal for Local Government, suggesting it may, in government, reform financial assistance grants and increase the amount of funding available to Local Government.

Councillor Bell said these were important achievements, but the “big battles still lie ahead”. Local Government’s biggest and toughest goal is securing fairer Federal funding. ALGA has been a long standing critic of the way increases in Financial Assistance Grants are calculated. The Australian Government provides around $2 billion each year to Local Government, of which $1.6 billion comes in Financial Assistance Grants. ALGA argues that the methodology applied to increase these grants each year fails to match the real costs encountered by Councils. The escalation factor relies in CPI and population movements.

“This simply doesn’t allow for any real growth in these grants,” Councillor Bell said. “Road maintenance and staff costs alone are increasing way in excess of CPI.”

ALGA asserts that the current system – now 30 years old – should be scrapped and replaced with a program that provides untied funding equivalent to a share of at least one per cent of national taxation revenue. If this had been applied at the last Federal Budget, Councils would have secured a $400 million increase in funding in 2005–06 alone.

“Such a system would provide us with funding that grows as the economy grows,” Paul Bell said. “We’ve seen the States gain a massive windfall when they abandoned financial assistance grants and gained access to tax revenue through the New Tax System. Local Government also deserves a fair share of taxation revenue.”

ALGA is now reviewing its case for reform through a two-stage process. First, it is working with its State Associations to assess the availability of nationally consistent data about Local Government finances. Second, it will commission a major economic consultancy to review Local Government’s financial plight and ensure that the strongest possible case for reform can be put to the major parties in advance of the next Federal election.

“We want the case to be finished by mid year, so we can feed our reform options to the Parties as they set about constructing their policy platforms for the 2007 election,” Councillor Bell said. While securing fair funding is a big ask, considerable progress has already been made towards the goal of fair treatment.

“By fair treatment, we mean stopping cost shifting and establishing a much more stable and fair set of principles to guide our financial relations with State and Federal Governments,” he said. Two major hurdles have already been cleared. In August last year, Federal and State Local Government Ministers agreed to press ahead with the development of a draft intergovernmental agreement (IGA). And in December, a key working party of Local Government, State and Federal officials reached consensus on a draft document.

The draft IGA will now need to be cleared through the internal processes of the State and Federal Governments. This will involve central agencies – particularly State treasuries – giving the document the all clear. When – and if – this can be achieved, the draft IGA will be presented to a special meeting of the Local Government and Planning Ministers Council, scheduled for March. This date may slip as South Australia heads to the polls in March. Nonetheless, Councillor Bell is optimistic a meaningful IGA to counter cost shifting and establish a set of principles to guide the transfer of functions and responsibilities to Local Government, can be secured.

ALGA’s third goal – achieving formal recognition for Local Government – is a longer term objective. However, the campaign will gain new momentum with both Houses of Federal Parliament expected to pass a resolution early this year acknowledging the role of Local Government within the Australian Federation.

“We see parliamentary recognition as an important stepping stone for one key reason,” Councillor Bell said. “The resolution is likely to have bipartisan support. This is critical. It was lack of bipartisan support that sunk the last referendum on Local Government recognition back in 1988. The last thing we need is for a future referendum proposal to become a political football. Bipartisan support for a parliamentary resolution will – we hope – significantly reduce the risk of this happening.”

The first half of 2006 will also see the development of a national transport strategy for Local Government. ALGA is working with State Associations on strategy that will address the continuing need for Federal funding for local roads as well as other Local Government transport objectives. Importantly, the draft strategy will look beyond the second phase of the Roads to Recovery program and canvass the need for a third phase of funding.

Other issues to be examined include regional passenger transport, sustainable urban transport, congestion and pollution issues.

“This will be an important document that will help shape our lobbying efforts in the coming years,” Councillor Bell said.

The draft strategy will be considered by the ALGA Board in the first part of the year. It will then go before ALGA’s National Local Roads and Transport Congress, to be held in Alice Springs in July.

While ALGA is carefully laying the ground work for its election asks, Councillor Bell expects that the major Parties will increasingly look for local solutions to national problems.

“People are talking about the rise of localism, not as a flash in the pan, but as an increasing and discernable trend in voting intentions at both the State and Federal level,” Paul Bell said. “It is happening because people care about their local communities, they care about their local environments and they care about their local services and infrastructure. Federal and State Governments ignore the rise of localism at their own peril.”