A strengthened Intergovernmental Agreement to prevent cost shifting

Mayor Troy Pickard
ALGA President

The national debate on taxation reform remains focused on measures to address the fiscal challenge faced by all levels of government and preventing cost shifting from one level of government to another. Although the spotlight has been on State and Federal government, cost shifting onto Local Government must also be considered in this debate.

Cost shifting by the Commonwealth and state governments back in 2003 was estimated to have a negative impact on councils of up to $1.1 billion annually. Today, the effects of cost shifting to Local Government from other levels of government (mainly state governments), for which the sector remains uncompensated, have magnified. Other levels of government continue to assign additional responsibilities to councils. These include increased emergency and disaster management, environmental programs, community education, business development, management of certain land and the transfer of roads.

The Municipal Association of Victoria recently highlighted the cost shifting occurring in its state, which was in excess of $140 million a year for just four service areas.

In April 2006, all Australian governments signed the Intergovernmental Agreement Establishing Principles Guiding Intergovernmental Relations on Local Government Matters (the IGA). The IGA outlined a set of principles designed to improve the way the three spheres of government work together and established an ongoing framework to address future cost shifting and prevent the cost shifts that have occurred in the past.

ALGA is calling for a commitment from all levels of government to working towards a renewed and strengthened IGA, which would provide Local Government with a mechanism to aid in the prevention of cost shifting, and facilitate an effective intergovernmental collaboration to avoid and prevent cost shifting practices.