National General Assembly briefing on Cost Shifting Report
24 November 2003
You would all be aware that the long awaited report of the Commonwealth House of Representatives Inquiry into Cost Shifting onto Local Government was released at 12.40pm today. ALGA President Mike Montgomery was at the release and has provided this statement as an initial response to delegates of the National General Assembly.
The Report confirms that there is overwhelming evidence of cost shifting to local government from all levels of government.
ALGA's position throughout the Inquiry has been that local government needs three things:
- An acknowledgment that cost shifting, the transfer of more and more unfunded tasks to councils, was causing substantial hardship for local government and impeding its ability to deliever services and maintain infrastrucutre;
- An acknowedgement that fixing cost shifting, while critically important, will not in itself resolve the overall financial crisis facing local government.
- A new funding system for local government that provides it with access to a fair share of national taxation revenue backed by an intergovernment agreement and effective compliance mechanisms to stop cost shifting.
Today's report is a breakthrough for local government.
House Economics Committee Chairman David Hawker said the inquiry had revealed some stark and disturbing realities.
The most immediate and obvious being that cost shifting is largely a symptom of a growing crisis in Australian governance," Mr Hawker said.
Mr Hawker will be addressing the National General Assembly tomorrow at 4pm.
The Committee has placed before the House of Representatives 18 strong recommendation to address costs shifting.
- An urgent meeting of the Prime Minister, Federal Treasurer, state and territory premiers/chief ministers/treasurers, and representatives of local government from each state, to develop a federal-state intergovernmental agreement on the roles and responsibilities of local government, and determine funding sources to meet those responsibilities;
- A new national model, to be phased in over three years, be established for the distribution of Financial Assistance Grants to local government, based on equalisation principles (ie on the basis of need), with funds paid direct to local government;
- That the federal Treasurer assume responsibility for the Commonwealth's financial relationship with local government;
- All future Federal State Specific Purpose Payment (SPP) agreements to require state governments to report on what responsibilities States intend to hand to local government, and the volume of funds to be distributed to local government to perform those functions. SPPs directed to local government (such as for roads) should be conditional on States not reducing their effort;
- The Federal government to establish a Local Government Liaison Unit to coordinate local state-federal relations and initiatives; and
- Local government bodies be required to audit the state of their infrastructure and provide status reports to the Commonwealth Grants Commission.
The report also calls for a Summit on Intergovernmental Relations to be held by COAG in 2005 to thoroughly review the roles and responsibilities of the three levels of government, and how they are funded. The summit would also review progress made on the more immediate recommendations made in the report.
In summary, there is a lot of work to be done between now and the proposed summit, including a detailed assessment of the implications of all the recommendations, positive engagement by state governments and seeking appropriate commitments in the lead up to the next Federal election.
On the whole the report has paved the way for a new beginning including a serious role at the table for local government to negotiate the way forward.
It contains recommendations which include: A strong call for an IGA Formal recognition of local government by the Federal Parliament It recommends a CoAG summit in 2005 which will be about: which level of government, does what best and the need to be funded accordingly. It identified a process to enure the renegotiation of roles and responsibilities and funding between the levels of government
Some aspects of a few recommendations must be treated cautiously in particular the potential consequences of changes to the methodology to FAGS.
Can I say that this is probably the best outcome we would have hoped for from a Parliamentary report of this nature. There will be details on the margins that must be thrashed out and with other spheres of government.
However, if we allow ourselves, or our state governments to be distracted by differences over details, if we drop the ball, we probably won't see another opportunity like this in our lifetimes. This is a time for national leadership and effective collaboration to achieve a sound basis for recognition of the three spheres of government and effective mechanisms to work together for the communities we all serve.
Detailed assessment of the report will be made by ALGA and state territory associations and a formal response developed in the near future which will be available online soon.
