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PwC to undertake national study of local government financing

Pressure

ALGA has commissioned PricewaterhouseCoopers to undertake a major study of local government financing, with a report due later this year. Announcing the study today, ALGA President Cr Paul Bell said it would provide a sound rationale and model for appropriate and targeted support to local government for consideration by other spheres of government. Importantly, it will build on the excellent work undertaken by state associations on the financial sustainability of local government. "The study will review and strengthen our case for fair federal funding for local government," Cr Bell said. "We are particularly pleased that the project will benefit from PwC's highly respected financial work and from the political insight of Grahame Morris, a PwC Executive Director and Chairman of its Office of Federal Government Services," Cr Bell said. The results of the study will form the basis of submissions to the major parties later this year, well in advance of the 2007 federal election. "We will put the strongest possible case to the major parties for fair federal funding and will expect equally strong policy responses in the lead up to the next federal poll," Cr Bell said. The study will, among other things:

  • assess the current and long-term financial sustainability of the local government sector;
  • identify the key financial issues affecting the financial sustainability of local government;
  • identify any trends and/or differences between groups of councils based on size, density of settlement and rate of growth or decline;
  • develop recommendations for improved financial sustainability of local government including financial governance and potential sources of additional revenue;
  • investigate the appropriateness of reform to current intergovernmental financial transfers with a view to develop a new model for intergovernmental financial relations that will promote the financial sustainability of local government.

Academics argue councils nearing crisis point

Cover of Australian Local Government Economics

Local government resources "can be stretched only so far before a crisis point is reached", argue three Australian academics in a new book on the economic health of Australia's 700 councils. The book - Australian Local Government Economics - has been researched and written by Professor Brian Dollery and Andrew Johnson of the University of New England, and Dr Lin Crase of La Trobe University. The authors say evidence of the impending crisis could be seen with the deterioration in local infrastructure, particularly roads, the running down of reserve funds, the lack of provision being made for future asset replacement and a reduction in the provision being made for major maintenance items. The sector was expected to do "more with less". The authors argue that the Australian federation has been characterised by progressive expansion of the Commonwealth's taxation capacity, states' reluctance to relinquish expenditure responsibilities upwards and "severe fiscal stress on local government". It warns that the status quo "simply cannot be sustained indefinitely". The book can be ordered online from UNSW Press for $49.95.

Huge response to AusLink regional program

Jim Lloyd and co

The Australian Government has received nearly 500 regional transport proposals from 274 councils for possible funding under the AusLink strategic regional program. Roads Minister Jim Lloyd said this was an "excellent response" from city and regional councils to the call for applications that closed on May 1. The total value of these projects is over $1.9bn, towards which an Australian Government contribution of more than $1bn is sought. Each project will be assessed on its merits against the criteria contained in the guidelines provided to all councils. Projects are funded from a national pool of $127m, split into two notional allocations for larger and smaller projects. Councils can expect to have confirmation of the receipt of their project applications by the end of the week. The Department of Transport and Regional Services has commenced assessing the projects, with an announcement of successful projects to be made later this year. The strategic regional program assists councils to build regional land transport infrastructure that supports industry, tourism and economic development and improves access for regions to Australian and export markets.
From the President

I will today join local government ministers from around Australia for a roundtable on regional and remote council sustainability. The meeting - hosted by the NSW Local Government Minister, Kerry Hickey - will discuss the financial problems facing councils in regional and remote areas and explore potential strategies to address them. I expect the outcomes to be referred to the next formal meeting of the Local Government and Planning Ministers' Council, to be held in Adelaide in August. I will have three clear messages for the ministers. Point One: Local government is under severe financial pressure. This has been made abundantly clear by studies commissioned by local government associations, including the independent Allan inquiry in NSW and the independent study on council sustainability in South Australia. Point Two: Local government is finding it increasingly difficult to meet both recurrent expenditure obligations and to maintain existing infrastructure, let alone fund new capital needs and requirements. Point Three: Solving the financial pressures faced by local government across Australia will require concerted action by all three spheres of government - we must work together to achieve change. The need for change has been underscored by the latest book from Professor Brian Dollery and his associates (see above). ALGA has also commissioned PricewaterhouseCoopers to undertake a major, national study of local government financing that will build on the work of our state associations and strengthen our case for fair funding. I'm pleased that all ministers - state and federal - now acknowledge the problems. I'm also pleased that federal Labor is on the case. We know what the problems are. We must now work towards lasting solutions. And that will require major contributions from all three spheres of government - local, federal and state. I'll report on outcomes next week.

Cr Paul Bell AM
ALGA President

ALP infrastructure committee

ALGA President Paul Bell will meet next week with a national ALP committee examining the financing and provision of Australian infrastructure. Cr Bell is using this meeting as another opportunity to flag the substantial issues that local government has with meeting the cost of providing and maintaining the infrastructure needs of communities. He will also outline the need for structural reform to the financing relationships that are in place with the Australian government and with the state and territory governments.

Quote of the week

"... the fallacy [is] that 'bigger is better' in municipal governance..."
    - Brian Dollery et al, Australian Local Government Economics
Lloyd presses Labor on funding

Federal Labor should press their "state mates" to "stop ripping money out of local councils and to follow the Federal Government's lead in providing additional resources for councils", Local Government Minister Jim Lloyd told Parliament this week. He used Question Time to highlight the $300m Budget bonus for the Roads to Recovery program and counter Labor's attack on the Budget for its failure to address the quantum of funding provided to councils through financial assistance grants. He said the Roads to Recovery program was now worth $2bn to Australia's 700 councils over the next four years.

Waste report 'a load of rubbish'

A draft report on waste management released this week by the Productivity Commission has been labeled a 'load of rubbish' by a number of outraged environmental groups. The Commission said that that recycling can be good "up to a point", adding that the extent of waste pollution "has sometimes been exaggerated". It said the way to reduce potential pollution problems was through appropriate regulation, not landfill levies. It questioned whether councils in large urban centers were best placed to mange domestic waste collection and disposal, saying scale and planning issues were "increasingly suggesting" a regional approach was needed. The Commission has achieved one objective - the draft report has been released to "encourage further discussion and input" before its final report is delivered in October. Comments on the draft report are due by July 7. ALGA will be preparing a robust response.

Plastic bags: almost on target

A voluntary initiative by supermarkets has just failed to meet its target of cutting plastic bag use by 50%. Federal Environment Minister Ian Campbell, said the campaign by supermarkets had achieved a 45% cut in the use of single, lightweight bags since 2002. "This is an enormous achievement by shoppers and supermarket management," Senator Campbell said. He said supermarkets were committed to achieving the 50% target by the end of the year. "There will be some predictable complaints that the 50% reduction goal was missed and therefore the campaign failed. While 50% would have been better, 45% is still an outstanding result and it would be nonsense to portray it otherwise," Senator Campbell said.

Campbell's coastal protection plan

A national coastal protection plan was launched this week by Federal Environment Minster Ian Campbell. The new Framework and Implementation Plan for a National Cooperative Approach to Integrated Coastal Zone Management has been developed by the Australian Government with the Northern Territory and state governments through the Natural Resource Management Ministerial Council. It provides complementary arrangements on national coastal issues, such as land and marine based sources of pollution, managing the impacts of climate change, introduced pest plants and animals, and planning for population change. Senator Campbell said that the Australian Government was also working to protect coasts with state and local governments and communities on a range of important coastal issues through integrated coastal zone management, the Natural Heritage Trust and the Coastal Catchments Initiative.

Sydney acts on childcare

The City of Sydney is addressing a serious shortage in child care places for 0-2 year-old children by requiring developers of child care centres to reserve one in three places for children in this age group. The City, under the provisions of a new Child Care Centres Development Control Plan (DCP) introduced by the council late last year, also requires major new commercial and residential developments to provide childcare facilities.

Broome native title case determined

The Federal Court of Australia has made a determination in the native title application by the Rubibi Community over the town of Broome and its surrounds, bringing to an end a case that has been running for more than ten years. The court found that native title continues to exist wholly or partly in some areas and has been extinguished either wholly or partly in other areas. The determination also clarifies a number of complex legal questions regarding the interaction between native title rights and interests, where they continue to exist wholly or partly, and other rights and interests. The claim was largely successful because the Yawuru people established a communal native title entitlement to exclusive possession of their traditional country over approximately 4,900 km2 in and around Broome.

Cultural diversity award

All councils are encouraged to enter the 'strength in diversity' award, part of this year's National Awards for Local Government. This Department of Immigration and Multicultural Affairs-sponsored award recognises local initiatives that respond to, and promote benefits arising from migration, settlement and Australia's cultural diversity. The awards continue to reveal examples of how government can and does make a difference at the local level across Australia every day. Entries close on 13 June. Further information on the awards website, by telephone 1800 065 113 or by email awards@dotars.gov.au or call Malgosia Anczewska on 02 6264 2914.

2006 National Local Roads and Transport Congress
State of the Regions report 2005-06