See also: 2005 National General Assembly
Opening address to the 2005 National General Assembly
Cr Paul Bell AM, ALGA President
9.30am, Tuesday 8 November 2005
- Deputy Prime Minister
- Members of the ALGA Board
- Presidents of state and territory associations
- Fellow delegates
First of all, let me welcome the Deputy Prime Minister to the General Assembly. We are - of course - disappointed that the Prime Minister is unable to be with us here today. He is a strong supporter of this Assembly and has rarely missed the opportunity to share his views with us. Nonetheless - we understand that this is an unscheduled sitting week and that there are matters of pressing concern that are occupying his attention at this time.
Local government is a broad church. We reflect the political diversity of the constituencies we represent. But few would disagree that the Prime Minister has a genuine interest in the well-being of local communities and local government. Please convey our compliments to the Prime Minister and our appreciation of his support for local government over the past 12 months.
Delegates, later today, we will hold a rally to support a campaign to achieve three objectives.
- fair funding
- fair treatment
- and formal recognition
We need fair federal funding to replace the archaic system of financial assistance grants - grants that fail to provide for real growth - growth that will help us meet the demands and expectations of 21st century communities.
We need fair treatment by our state and federal counterparts - treatment that will rule out cost shifting once and for all.
And we need formal recognition to cement our place as a valued and equal player within the Australian federation - recognition that will give us protection from unfair and arbitrary interference.
These are not new goals. Local government has - for more than 50 years - been pursuing fair federal funding as the demands on local government outstripped the sector's financial capacity to respond. We have been fighting long and hard for better treatment at the hands of our federal and state counterparts. And we have been advocating constitutional recognition for decades, our case being put to referendum on two occasions.
Why a new campaign? Why now? There are four reasons.
- First - we have right on our side.
- Second, there is growing momentum for change.
- Third - there is significant goodwill towards local government among the major parties.
- And fourth - there is increasing recognition of the fiscal problems that confront us as the body of evidence supporting our case continues to grow.
To that, you can add the prospect of a tight federal election in 2007 as the Government seeks an exceptional fifth term in office. We shouldn't under-estimate the importance of momentum. In June this year, the Australian Government brought down its response to David Hawker's Fair Share report. The report examined the pressures facing local government and made significant recommendations for reform. In response, the federal minister responsible for local government, Jim Lloyd, committed his government to a limited, but significant, range of activities. There are four key components.
- It will press ahead with an intergovernmental agreement on cost shifting.
- It will commission a Productivity Commission study on barriers to local government revenue.
- It will move a motion to formally recognise the role of local government in both Houses of Federal Parliament.
- It will conduct a review of interstate distribution of the identified roads component of financial assistance grants.
In addition, Jim Lloyd has committed the Australian Government to - and I quote - "explore opportunities to further develop partnerships with local government to the benefit of local communities". This response may not be all we want - it may not come as fast as we want. But it does represent movement in a forward direction. We should also recognise the gains made in the past 12 months.
In the May Budget, the Government made good on all of the key election commitments made to local government last year. Roads to Recovery will be delivered in full - another $1.2 billion for local roads over the next four years. There's now additional funding for the regional roads component - $150m in extra funding.
The Black Spot program has been extended - another $90m. We have secured access to the $2 billion Australian Water Fund - in fact the first three grants were made to local government water utilities. $15m has been provided to help rural councils that have to step in and buy or build medical facilities to attract or retain doctors in their communities.
That's a really good start and we hope there will be more to follow. And there's $33m for an emergency management grant scheme, additional funding for regional programs and a boost to community crime prevention grants as well.
ALGA fought hard for these - the Australian Government delivered. We look to the Australian Government to further engage councils through an expansion of special purpose funding programs. We have - for example - just lodged a final submission with the Commonwealth that outlines our Better Rural Services plan. This calls for substantial new funds - $275m in total - to assist councils in regional areas improve service delivery through the use of information and communication technology. An investment in rural communications infrastructure that will - we hope - be the Roads to Recovery for the information age, helping communities to smash through the digital divide and access the benefits of the 21st century technology.
We are keen to see other partnerships emerge in areas such as health care, ageing, coastal zone management, the environment and urban transport. There is momentum, too, from Labor. The shadow minister, Senator Carr, has announced that he will issue a policy discussion paper on housing, urban issues and local government. This will - at the very least - open a very public dialogue on policy issues and we welcome that.
Of course, the problems we confront have a number of causes.
- We face rapidly escalating demand for human services. In fact, spending on human services has trebled in the past three decades.
- Rates - our only source of taxation revenue - are politically sensitive and fall short of the realistic and sustainable levels needed to fund council services.
- Cost shifting by state and federal governments has become widespread and commonplace.
- Demographic change and an ageing population are imposing additional burdens on councils across the country - burdens that will grow dramatically over the coming years.
- State and federal grants have failed to keep pace with costs and escalating demand.
- Local government infrastructure is rapidly ageing and in dire need of renewal or replacement.
The answer in 1947, was to seek Commonwealth assistance to help over come the fiscal disadvantages faced by councils. We needed help from the feds. Today, that help exceeds $2 billion a year. We are grateful for this assistance. It is much-needed and well spent. Our case for fair funding - however - concerns the financial assistance grants. These grants - accounting for $1.6 billion a year - are effectively capped. The annual increase is calculated using a formula based on CPI increases and population change.
In other words - there is no real growth. And there is no real growth when you compare CPI with the increasing costs faced by councils. The cost of road maintenance alone far exceeds CPI - as do staff costs. As do fleet costs. The Commonwealth's obligation to local government is clear. The Commonwealth is the nation's principal tax collector. It is the Commonwealth's duty to share these funds with its state and local government counterparts to ensure we can meet the service and infrastructure needs of our communities. By doing so, they counter the effects of vertical fiscal imbalance.
It was a Coalition Government that - in the late 1970s - linked payments to local government to a share of taxation revenue - in that case, personal income tax. This gave us - for the first time - access to a fair share of revenue - access to growth funding. This sensible and fair arrangement was axed in the 1980s by the Hawke Government as a cost cutting exercise. Since then, we have been steadily losing ground. The simple fact is this - financial assistance grants have failed to match the increasing demands made on 21st century councils.
Over the past 20 years, the application of this escalation factor has resulted in a decline of financial assistance grants as a percentage of total Commonwealth revenue. The value of these grants, as a proportion of total Commonwealth revenue, will have fallen from 1.2% in the early 1990s to less than 1% by 1996-97. In two years time, it will have fallen to less than 0.8%. While Commonwealth revenue grows - the value of our funding falls.
Our task now is to build on the momentum for change. The body of research continues to grow. Earlier this year, the case for change was made clear in South Australia. The independent inquiry - commissioned by the Local Government Association of South Australia - delivered a blunt report. Councils are under pressure. Councils are struggling.
The NSW Local Government and Shires Associations have just commissioned their own independent inquiry. Other states are also examining the financial sustainability of councils. At the national level, the ALGA Board met on Sunday and has resolved to undertake a two-part approach. We will start by commissioning a study that will - for the first time - build a comprehensive bank of nationally consistent data.
One of the problems we have faced is the lack of this data. We have - of course - been pressing our case with the Australian Government for a number of years. Our case has relied on the data available at the time - much of which is either anecdotal in nature or based on sample studies. It's important that we get our hands on high quality, nationally consistent data that will underpin a comprehensive and water-tight case to the Commonwealth.
Once we have overcome this hurdle, we can proceed with the full consultancy and come up with a comprehensive case for change. This study will examine the pressure facing local government across the country and make recommendations to address these issues on a national basis. This will then be put to the major parties during the course of 2006 with the expectation of policy responses to be made in the lead up to the 2007 federal election. At the same time, we must have a grass roots campaign that will build understanding and support among the community, among non-government organisations and - most importantly - among federal MPs and senators.
We must - over the next 12 to 18 months - convert them to our cause. They - more than anyone else - hold the key to our success. Local government is on something of a long march. A march that will - ultimately - take us from a tier of government that is under-funded and under-valued …
… to a sphere of government that is an equal and valued partner playing its full and legitimate role within the Australian Federation.
I invite you all to join ALGA on this campaign - a campaign that's not about sustaining local government as such - it's about sustaining our communities. At the end of the day - local government is all about people - we build and sustain communities. And we do it damn well. All we now ask, is for the means to get on with the job.
Thank you.
Cr Paul Bell AM
ALGA President
8 November 2005, National General Assembly
