Editorial: Reform jeopardises LG trust in intergovernmental relations

Last month Federal Treasurer, Peter Costello, announced that the Productivity Commission will commence a study into Local Government’s own revenue sources. This was one of the key recommendations of the Hawker “Fair Share” Inquiry that was tabled in Parliament in November 2003. The Government committed to such a study back in May 2005.

The Australian Local Government Association (ALGA) provided its views on the possible scope of this study in August 2005 and has consistently urged the Government to commence the review since that time.

Better late than never, the Treasurer’s press release said, “The study will provide the States and Territories with a clearer picture of Local Government’s financial capacities and the sources of revenue available to them. The study will examine the capacity of different types of Councils to raise revenue, the impact of the various revenue sources available to Local Government, and the regulatory environment surrounding Local Government’s revenue raising capacity.”

With recent financial sustainability studies undertaken by the State Local Government Associations and ALGA’s PricewaterhouseCoopers report highlighting the financial difficulties many Councils are operating under, the Productivity Commission’s study is long overdue.

Recent amalgamation moves by the Queensland Government have very much been a top down approach to reform (refer
page 9). Taking action without the support of Councils and their communities smacks at the very heart of local democracy and undermines the essential ingredient in intergovernmental relations – that of trust.

At the same time, whether a Federal review of Local Government’s revenue sources will have much impact on the States and Territory Governments remains to be seen. However, it is an opportunity not to be missed.

ALGA President, Councillor Paul Bell, has urged Councils and other stakeholders to log onto the commission’s website to register their interest in lodging a submission to the study.

The Terms of Reference for the study are available from the Productivity Commission’s website at www.pc.gov.au or by contacting the Commission directly on (02) 6240 3239.

Commissioner Judith Sloan and Professor Cliff Walsh will undertake the Productivity Commission’s study. Professor Walsh has been appointed to the Productivity Commission as an Associate Commissioner for this study.  He has experience in the development, implementation and evaluation of public policy at Commonwealth, State and Local Government level. 

Judith Sloan commenced as half time Commissioner of the Productivity Commission in April 1998. She is also Commissioner of The Australian Fair Pay Commission and a Director of Santos Ltd.

The Productivity Commission is required to provide a final report within 12 months.

It will report on:
• the capacity of different types of Councils, such as capital city, metropolitan, regional, rural, remote and Indigenous, to raise revenue and the factors contributing to capacity and variability in capacity over time
• the impacts on individuals, organisations and businesses of the various taxes, user charges and other revenue sources available to Local Government
• the impact of any State regulatory limits on the revenue raising capacity of Councils.

However, the terms of reference do not enable the Commission to investigate the scope for Local Governments to borrow.