The role of local government needs reform beyond amalgamations

“What’s the biggest problem with Local Government? State Government.”
- Col Dunkley, “Grassroots”.

Australia’s local government leaders were delighted at the recent release of the findings of a federal parliamentary inquiry into the impact of cost shifting on local government.

What makes this report significant is that it finally gives some official recognition to the bad deal local government gets from the states. It notes the growing role of local councils in providing essential social services and the tendency of state governments to heap extra responsibilities on local councils without giving them access to sufficient funds to pay for it. The inquiry’s nineteen recommendations included the calling of an urgent meeting to develop an intergovernmental agreement with federal and state governments that addresses local government’s responsibilities and the allocation of funding.

There is nothing new in these complaints from the lowest tier of our federal system. Debates about the problems of local government have raged since the very beginnings of the institution. Indeed, the very first editions of the “Shire and Municipal Record” (the premier journal of local government in NSW between 1908 and 1991), show that even in its infancy the local government community had a keen view of the problems facing their burgeoning level of government. In the 1908 editions of the Record, only two years after New South Wales had created the new system of municipal government, articles lament the problems of cost-shifting, public liability, ability to deliver services effectively, and the general lack of autonomy from state government. These articles could have been penned in 2003, as the same basic issues remain unresolved almost a century later.

The primary response from the states to local government’s problems in recent times has been to amalgamate smaller councils to allow them to develop greater economies of scale, rationalise resources, and achieve a more secure rate base. The Kennett Government undertook the most comprehensive amalgamations in the early 1990s and reduced the number of councils in Victoria from 210 to 79. Tasmania has reduced its councils from 46 to 29, South Australia from 122 to 68 and Queensland from 134 to 125. NSW has taken its time in bringing about amalgamations but since the re-election of the Carr Government in March 2003 has begun to aggressively pursue this strategy. Legislation currently before state parliament will give the local government minister wide powers to redraw boundaries and restructure councils. Once the NSW reforms are complete, Western Australia will be the only state to not have reduced the number of its councils.

Local councils almost universally resist amalgamations and see them as an assault on the fundamentals of local democracy. They have reasonable grounds for questioning the economic basis of the policy. The enormous variation in the circumstances of individual local councils makes it almost impossible to draw any general conclusions about the financial benefits from amalgamations. Besides, many argue that any economic gains will be more than outweighed by the loss of democratic representation. However, leaving the protestations of local councillors and various community groups aside, it seems there is popular support for a big shake up of councils. Recent sackings and corruption findings in NSW have strengthened perceptions that local councils are fiefdoms of vested interests and shady dealings. In Western Australia, the turn out of 1000 locals to a meeting called by the community group “Heritage Gone Mad” to oppose Subiaco council’s decision to list whole suburbs under the WA Heritage Act also shows how councils can get carried away with their powers and out of touch with the communities they serve.

After more than a century of local government, it is time for a debate on the role of local government that goes well beyond the current banalities of the amalgamation debate. In NSW, the Carr Government’s amalgamation push has seen the state’s political parties already locked into well-worn battle trenches. The Liberal/National Coalition sees opposition to the Carr Government’s amalgamations as a political winner and argues that the future of local Government should be put into the hands of ordinary citizens through a referenda.

Minor parties like the Greens, Democrats, Christian Democrats and others, are likewise of the view that there is some political mileage to be made from opposing the Carr government’s reforms. This apparent democratic concern is commendable, but where is the action behind the rhetoric? The Liberals attempted reform when they were in office in 1993 and came up with an essentially identical system. All this bluster about referenda from the coalition benches rings particularly hollow when the opportunity to reform was so recently forgone.

It is time to stop the politics and look at the issues. What role do we want councils to play and how should they be structured? There are a multitude of possibilities beyond the options currently on offer. The growing success of a number of “regional organisations of councils” points to the advantages to be gained from further cooperation between councils to achieve economies of scale. It may also be that councils should be actually made smaller, rather than larger. Professor Percy Allan, former secretary of the NSW Treasury, has recently gone against conventional wisdom by calling for the formation of small “virtual councils”. This would see councils arranged on a suburb-by-suburb basis and entering into contract arrangements with each other to achieve economic efficiencies. The advantage of this approach is that it improves the democratic potential of local councils while also enabling economic concerns to be addressed.

But there are also many issues beyond size and structure. What responsibilities should councils have? Angst over the scale of development along our popular coastlines and concern about the style of development in our big cities has raised strong concerns about the role of local councils in the planning process. One term of a local council can potentially leave a local community scarred for decades by unwanted and inappropriate development. The protection of the environment is increasingly becoming a local government concern.

Perhaps these powers should be enhanced?

It may also be that further regionalisation will enable local government to be more involved in providing services currently being delivered by state governments. Local government, being closer to the community, may be far better at determining local priorities and needs. Recent disputes between the Commonwealth and the states over hospital funding again drew attention to the cracks and wastage in our federal system. It may be that comprehensive local government reform is the first step to achieving a better balance in the provision of essential services like health and education.

It will take more than an intergovernmental agreement and amalgamations to create a role for local government that addresses the issues left unresolved since its inception. By moving local government beyond the debates of last century we will not only be able to find it a more secure place in our federal system, but also help create a far better system of government for the next century.