Declining autonomy in local government

In April 2006 the Local Government and Planning Ministers’ Council (LGPMC) announced its agreement to sign the Inter-Governmental Agreement Establishing Principles to Guide Inter-Governmental Relations on Local Government Matters (IGA).

When announcing the new agreement local government ministers described it as the first in Australia’s history involving financial issues between the three spheres of government. It promised to improve government co-operation for the benefit of communities.

While media coverage of the IGA at the time was relatively minor it was enthusiastic, with claims that the agreement marked a “watershed in the history of government in Australia”.

I would like to offer a more sober analysis. My argument is that, despite the IGA, genuine co-operation will become a myth. The combination of the fiscal dominance of the federal government, the constitutional control of state governments, and the inadequacy of local government resources will continue the trend of local priorities being subsumed by state and national objectives.

This raises the question that if there is to be real co-operation between governments then is there a need for something more radical than the IGA; perhaps a “revolution” in local government is required.

The IGA represents a joint response to the long-standing issue that the federal and state governments have maintained a practice of cost shifting to local government.

For local councils cost shifting has been a double-edged sword: more responsibilities transferred from the other spheres of government without appropriate resources producing a drain on their own resources resulting in a reduced capacity to meet what councils claim are increasing community demands.

Under the IGA arrangements there is supposed to be consideration of the impact of programs on local government resources. However, agreements would be based on federal or state government priorities.

The IGA only relates to services or functions that the Commonwealth and state governments “require” local governments to undertake, not necessarily the things the local community wants from its local council. In assessing the impact of the new requirements the IGA determines that the impact on the financial capacity of local government must be “considered”.

Recent developments would suggest the IGA does little to arrest the declining autonomy of local government and will contribute to a further weakening of its capacity for democratic representation and proactive policy innovation.

The requirements introduced by the IGA will not be sufficient to redress the limitations of the constraints faced by local government. This is particularly so where councils seek to be proactive and pursue their own initiatives in areas that reflect community demands.

Are local councils worth the effort or are they really only just about roads, rates and rubbish? Should they just deliver services and become like a government department? These are questions that continue to be debated. But while the debate goes on the community is increasing its demands and expectations of local government.

Demands vary from state to state but there is consistency in areas such as economic development and support for local businesses, environmental repair and management, promoting tourism, the provision of social and cultural facilities such as libraries, theatres, galleries and museums, the improvement in the presentation of main streets, recreational facilities such as sport centres and grounds and support for the arts.

The Australian Government has been a keen supporter of the importance of local government in the maintenance of our democratic values. Australia is an active member of the Commonwealth Local Government Forum, which in 2005 signed up to the Aberdeen Agenda; a set of internationally agreed principles that support:

• constitutional recognition for local government;
• co-operation and partnerships between spheres of government;
• adequate and equitable resource allocation; and
• building strong local democracy and good governance.

Back in 2003 the Commonwealth parliamentary inquiry into local government finance emphasised the benefits of the diversity of local government and the need for flexibility in designing programs to meet community needs.

The inquiry recognised that local councils are often regarded as the best source of solutions to local problems and their contribution to identifying such solutions should form a critical element of government policies.

Despite the appearances of strong support and attachment to local government, and here is the paradox; there has been a continual decline in the financial support provided by the other spheres of government. This has resulted in devastating consequences.

Other inquiries conducted in each of the major states since the introduction of the IGA reveal many local councils are in financial trouble. A national inquiry conducted by Price Waterhouse Coopers for the Australian Local Government Association concludes that the proportion of financially unsustainable councils varies between the 25 per cent in NSW to 58 per cent in WA. These studies conclude that lack of funding has resulted in considerable backlogs in infrastructure in areas like water, sewerage and roads; the key functions of most local councils.

Despite the introduction of the IGA, federal and state budgets have barely maintained funding levels to local government, in fact the majority of states have reduced funding in real terms. Federal funding has failed to keep pace, with Financial Assistance Grants (FAGs), a mainstay of local government funding, declining as a proportion of total Commonwealth revenue over the past decade.

Predictably local government associations have been critical and condemn this lack of support. The Municipal Association of Victoria announced that the Victorian state government had ignored local government despite mounting cost pressures and crumbling infrastructure. The WA Local Government Association claims the state government is being stingy and denying local councils the benefits of the booming economy.

If the problems are so great that they are threatening the existence of many local councils is the idea for a local government “revolution” worth pursuing?

Given the improbability of constitutional reform in the short term we need to consider other immediate measures that could improve the current situation.

Each of the inquiries mentioned above conclude there can be little doubt that the federal and state governments need to improve current funding arrangements if the poor financial condition of local government is to be remedied. The IGA will not be enough. They also need to look at ways to improve funding conditions for local councils under specific purpose payments. Current conditions stifle initiative and restrict participation; communities end up being the losers.

State governments could also look for ways to support councils that find it difficult to attract skilled professionals; perhaps bonded scholarships, sponsorship of tertiary courses and research, a public servant exchange program or sabbatical arrangements could be established.

States should also encourage their departments to work more closely with local government in dealing with community issues. One excellent example is the work of some education departments that co-operate with local councils in establishing recreational, education and sporting facilities on a single site.

But local councils themselves need to be revolutionaries and keep looking for ways to improve the way they do things and keep pushing new policy initiatives. The majority of local councillors work very hard for their constituents, and most members of the public have a poor understanding of the workloads of most councils. But local government associations need to continue to provide training to raise the competence and credibility of local councillors.

Attitudes to local government are not improved through allegations of corruption and favouritism. Such attitudes just reinforce bad stereotypes and work against the respect needed from local communities and do nothing to raise the confidence of state governments to the capacity of local councillors to act without close supervision.

Co-operation between the Victorian government and the Municipal Association of Victoria looks to raise the competence of local councillors through comprehensive training and punitive sanctions. This could be a model for other states to consider.

Councils also need to get serious about regional co-operation. There are many examples of councils working together in areas that promote efficiency, but what about new initiatives?

Some councils have shown the way to co-ordinate projects to deal with community issues. Many local councils work with their neighbours with purchasing and asset management but this is just tinkering. Serious and effective regional co-operation involves long-term approaches across a range of policy areas.

Councils need to be responsive to new ideas and to identify innovative approaches in areas such as economic development, environmental management, and community resources.

Australia is facing significant public policy issues and local government should play a key role in identifying solutions but it needs more opportunities to undertake new initiatives that reflect community needs and demands. More flexible funding models should be developed that allow local councils to pursue initiatives that lead to improvements for their communities.

In reflecting the principles of the Aberdeen Agenda the federal and state governments need to reverse the decline of local government and help rather than undermine a key institution of our democracy.