Declining autonomy in 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.