President's Comment - The bigger issues

Presidentís Comment

In each edition we feature the views of a Local Government Association president. Our November issue features a comment from Councillor Bill McArthur, President of the Municipal Association of Victoria (MAV).

It has been an interesting and significant year for local government.

In Victoria, our unity as a sector has delivered some amazing results, including $18 million in libraries funding; securing State landfill levy reinvestment into local waste and resource recovery; and a $79 million, 50-50 funding partnership for our Maternal and Child Health programs.

Unfortunately, other developments have not been as positive and have the potential to redefine the way we see local government into the future.
In recent months, Victorian councils have taken a number of hits, including cuts to home and community care funding and indexation; a $24 million shortfall in Financial Assistance Grants; and being handed the unwanted role as a state tax collector for the new property-based fire services levy.

Other setbacks include Victorian Government action to limit councilsí autonomy to strike differential rates; reforms to the Local Government Act without consultation; and a superannuation liability of nearly $400 million thatís due in mid-2013.

There are challenging times ahead. Even following this yearís Victorian Budget, which significantly reduced expenditure, future state revenue challenges will continue to affect the capacity of councils to advocate for funding. Iím sure Victoria is not the only state facing these hardships.

In recent times there are some notable examples of the state and Commonwealth governments ignoring the intent of the national intergovernmental agreement on cost shifting. This agreement is critical. It is meant to stop the shifting of further unfunded responsibilities onto councils by guiding how the three levels of government work together to deliver services.

But across Australia there is a growing regulatory burden imposed on councils by other levels of government. In just one month in Victoria, proposed new roles for councils included asbestos management, urban flood levees, and as collectors of a state transport levy.

These proposals commonly fail to consider councilsí capacity, funding or the cumulative impacts of expanding roles. Somewhat surprisingly for councils, they also appear to believe ratepayers are a limitless untapped resource for Ďnew revenue streamsí.

A recent Productivity Commission report on local government regulation found that state governments are playing a key role in increasing the regulatory burden on the community by requiring councils to undertake more functions on their behalf. The Victorian Competition and Efficiency Commission also made similar observations.

Itís a common issue that weíre all grappling with ó doing more with less. But these impacts are quite simply unsustainable. There is not a holistic look by governments at our capacity, or the capacity of our ratepayers to pay. The MAV is pushing for the introduction of local government impact statements, and will continue to advocate this matter strongly with the other levels of government.

Faced with this trend of ever expanding expectations, I think local governments across the country are edging closer to the time when we need to make some difficult decisions, and initiate a strong united sector response.

With taxation options limited for councils, expansion of our revenue base will require wholesale change to the roles and responsibilities of the three tiers of government. Australian councils are not alone, with reports of local government across the Western world struggling for revenue. A range of new taxation options have been proposed internationally, from local income taxes to tourist taxes, or access to a greater share of Commonwealth revenue.

I canít pretend to have all the answers to these many, complex issues. But I do want Australian local government to be having the conversation and working collectively towards solutions. And these solutions must include access to a revenue source that grows with the economy, along with a more comprehensive discussion about the roles and responsibilities of each level of government.