Australian Local Government Association

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Federal Budget submission 2006-07: Fair funding for local government

11 November 2005

Contents

• Letter to the Treasurer
• Summary
• Nation building and reform
• Reform initiatives
• Contacts regarding this submission

Letter to the Treasurer

• Hon Peter Costello MP
• Treasurer
• Parliament House
• CANBERRA   ACT   2600

Dear Treasurer

ALGA Budget Submission 2006-07

Thank you for the opportunity to provide a submission for the 2006-07 Federal Budget.

The ongoing prosperity of Australia's economy has placed the Australian Government in an excellent position to be able to deliver an innovative and progressive 2006-07 Federal Budget that should focus on two essential themes:

• national reform, in particular reform to local government finances
• nation building.

Australia's current and future prosperity can in no small part be attributed to the Australian Government capacity to embrace and drive essential economic reform. ALGA notes the current Council of Australian Government (COAG) review of National Competition Policy (NCP) and welcomes our involvement in the process.

ALGA encourages the Australian Government to continue to explore further areas of reforms that will lead to increased productivity, participation and community benefit.

While this process is critical to the well-being of the nation, there is growing evidence that at the local level communities are facing increasing financial pressure. Local government, the embodiment of local communities, is facing pressures from a variety of sources. Three major reports - the Commonwealth Grants Commission review of Financial Assistance Act¹, the Hawker Report², and the Rising to the Challenge Report³ - have provided extensive evidence that many local governments, especially those in rural and remote Australia are in significant financial trouble.

ALGA considers that an important element of the 2006-07 Federal Budget should be the reform of the financial relationship between the Australian Government and local government. Specifically, it should introduce measures to improve the financial sustainability of local government including:

• reform to financial assistance grants
• the elimination of cost shifting.

ALGA encourages the Australian Government to introduce a number of specific initiatives in the areas of: information technology; health (including immunisation); Indigenous housing, emergency management; and sustainable urban development.

ALGA believes that these initiatives should be built upon the popular and successful Roads to Recovery model of direct funding to local government to achieve national objectives.

Finally, ALGA also proposes that the Australian Government should consider the development of a comprehensive national framework for infrastructure. The framework would facilitate better planning and coordination of local infrastructure including better water supply and water quality programs, response to climate change and emergency management at the local level.

Local government appreciates our growing partnership with the Australian Government and seeks opportunities to collaborate further with you. This Budget submission puts forward important proposals that will improve outcomes at the local level for all Australians.

I am pleased to present you with ALGA's 2006-07 Federal Budget submission.

Yours sincerely

 

• Cr Paul Bell AM
• President

Summary

Ongoing prosperity has placed the Australian Government in an excellent position to deliver an innovative and progressive 2006-07 Federal Budget that should focus on two essential themes: national reform, including reform of local government finances, and nation building.

Over several years, the Australian local government sector has participated in considerable reform to improve its efficiency and effectiveness. As part of these reforms, councils have undergone substantial structural change and have introduced a range of corporate practices including corporatisation of council owned enterprises, outsourcing of services, and adoption of a more outcomes focussed approach.

ALGA and all state and territory local government associations have shown considerable leadership in this area. Over the past 24 months, ALGA and several state local government associations have commissioned a number of major studies into local government's financial sustainability. While most of these studies are due to report next year, there is strong evidence that significant reform in financial governance arrangements, including intergovernmental financial relations, is needed to secure the financial sustainability of local government across Australia.

These studies follow the Hawker Report - Rates and Taxes: A Fair Share for Responsible Local Government June 2003 and the review of the Local Government (Financial Assistance) Act conducted in 2001. These highlighted the financial pressure facing local government and signalled the need for essential reform.

Two issues that must be addressed are (1) the shortcomings of financial assistance grants, and (2) cost shifting.

ALGA seeks an increase in the quantum of assistance through changes in the way the Australian Government calculates financial assistance grants (FAGs). The CPI-based escalation methodology has seen FAGs steadily decline as a proportion of total Commonwealth revenue. The scheme is more than 30 years old and does not reflect the changes in local government's roles and responsibilities. Nor does it reflect the real costs of providing services and maintaining infrastructure.

ALGA seeks to resolve these issues by linking the quantum of financial assistance for local government to an agreed proportion of total Commonwealth taxation revenue (excluding GST). ALGA is seeking at least one per cent of total Commonwealth taxation revenue.

Through its response to the Hawker Report, the Australian Government has moved some way to addressing the issue of cost shifting.

ALGA welcomes the Australian Government's commitment to an intergovernmental agreement to address cost shifting. This work is difficult and requires a significant commitment from all spheres government. We seek a meaningful and binding agreement. ALGA will continue to work with the Australian Government towards this goal. While addressing cost shifting is vital to local government, its overall financial position also needs to be resolved.

The Roads to Recovery model of direct funding to local government to achieve national objectives has been highly successful and ALGA urges the Australian Government to consider further opportunities for collaboration to support both the nation building and reform agendas.

Table 1 provides a summary of proposed initiatives requiring direct funding.

Nation building and reform

Strengthening the system of local government in Australia

Local government is an integral part of the Australian federation and is responsible for ensuring the delivery of local economic, social and environmental outcomes. There is clear evidence that both local communities and other spheres of government are demanding more from local government. Meeting this demand has resulted in a significant increase in the financial pressures faced by local councils.

Over several years, local government has actively engaged in reform that has considerably improved the efficiency and effectiveness of the sector. As part of the these reforms, councils undergone structural reform, and have introduced a range of corporate practices including corporatisation of council owned enterprises, outsourcing of services, and generally becoming more outcome focused. Local government acknowledges more can be done.

ALGA, state, and territory local government associations have shown considerable leadership in this area. Over the past 24 months, ALGA and several state associations have commissioned a number of major studies into local government's financial sustainability. While most of these studies are due to report next year, there is strong evidence that supports the need for significant reform of financial governance arrangements to secure financial sustainability of local government across Australia.

These studies follow the Australian Government's own inquiry into cost shifting from state and territory governments onto local government, as well as the review by the Commonwealth Grants Commission of the Financial Assistance Grant Act conducted in 2001. These studies highlight the financial pressure facing local government and signal the need for reform.

Addressing these issues will strengthen local government as an essential partner in the Australian Federation as well as secure the ongoing delivery of services to the community. It will also underpin the Australian Government's ability to achieve its objectives at the local level.

Local government's financial position

There is considerable evidence that local government is facing a financial crisis. Three major reports - the Commonwealth Grants Commission review of the Local Government (Financial Assistance) Act 1995, the Fair Share report, and the Rising to the Challenge Report⁴ - have provided extensive evidence that many local governments, especially those in rural and remote Australia are in significant financial trouble.

The Rising to the Challenge Report reached a number of conclusions regarding the financial viability of councils. Independent advice prepared for this review suggests that 33 of South Australia's 68 councils are in the financially unsustainable or vulnerable categories, covering about half of the state's population. Some 30 per cent of metropolitan councils and 40 per cent of country councils are in these categories. A further ten councils have the minimum margin of comfort. Only 25 councils could be categorised as having a very substantial, a substantial or a moderate margin of comfort. These councils account for 35 per cent of the state's population.

The position of local government in South Australia is not unique and similar situations are likely to exist in all other jurisdictions.

These studies suggest that the financial pressures faced by councils take three forms:

1. constraints on local government's ability to raise revenue
2. unfunded mandates or cost shifting from other spheres of government
3. rapidly rising expectations of constituents.

Constraints on local government's ability to raise revenue

Local government has three major sources of revenue: municipal rates (37.8 per cent of total local government revenue), user charges (30.5 per cent), and grants and subsidies from other spheres of government (12 per cent). The remaining revenue (19.5 per cent) comes from a number of sources including interest income, dividends, interest on grants and subsidies and fines. While only a small proportion of local government's revenue nationally comes from grants and subsides, it does not underestimate the importance of FAGs. These account for more than 50 per cent of council revenue in some rural and remote areas where own-source revenue-raising capacity is severely limited.

As the Hawker and the Rising to the Challenge reports state, local government is struggling to meet community demand for more intensive 'services to the people' as well as maintaining traditional services and ageing physical infrastructure. Consequently, local government faces the choice of cutting its services and letting its physical infrastructure deteriorate, or increasing its revenue base.

Over the past 30 years, local government has maintained its revenue-raising effort and has worked hard to expand own-source revenue. During the 1970s, fees and user charges comprised 13 per cent of total revenue. This revenue source now represents 30.5 per cent of the total.

Local government has also continued to increase municipal rates. However, compared to growth in Commonwealth taxation revenue (48 per cent over the period 1998-99 to 2003-04), rates are a slow-growth tax (34 per cent over the same period). In addition, state government restrictions such as rate pegging have limited local government's ability to increase rates.

State governments are also drawing an increasing proportion of their revenue from property taxes, making this form of revenue politically sensitive to change. The tax burden placed on property owners by state governments has increased from 30 per cent to 41 per cent of total state taxation revenues over the past six years. As the state governments take more from property owners, it becomes increasingly difficult for local government to increase rates in line with demand for local government services.

Given that the Australian taxation system is highly centralised (the Australian Government collects over 80 per cent of all taxes), the Australian Government is primarily responsible for addressing vertical fiscal imbalance (VFI)⁵, and delivering horizontal and vertical fiscal equity (VFE). VFE can be achieved either by redistributing taxation powers or redistributing expenditure functions or by transferring revenue from the sphere of government with the surplus to the other spheres of government through tax-sharing grants.

Tax-sharing grants should ensure that each sphere of government has the same financial capacity to provide services as each other sphere of government (i.e. VFE). Escalation of these tax-sharing grants should maintain VFE, based upon an appropriate cost index as well as resident population. FAGs to local government are essentially a tax-sharing grant.

FAGs are not addressing VFI. At present, the Australian Government annually adjusts the quantum of FAGs using an escalation factor based on inflation and population growth.

Over the past 20 years, the application of this escalation factor has resulted in a decline of FAGs as a percentage of total Commonwealth revenue, as shown in Figure 1.

The 2005-06 Federal Budget papers indicate that this trend is set to continue. The value of FAGs, as a proportion of total Commonwealth revenue, will have fallen from 1.01 per cent in 1995-96 to just 0.74 per cent by 2008-09.

Figure 1: Local government financial assistance grants as a percentage of Commonwealth revenue

Cost shifting and its impact on local government

Over recent decades, the range and scope of local government functions have expanded, moving beyond the traditional local government services, such as roads and waste management, to incorporate a growing range of human services.

In its 2001, the Commonwealth Grants Commission concluded that:

"… the composition of services provided by local government has changed markedly over the last 30-35 years and local government is increasingly providing human services (social welfare type services) at the expense of traditional property based services (particularly roads)."

The relative importance of transport related expenditure has significantly decreased, from around 50 per cent of total local government expenditure in the 1960s to little more than 25 per cent in the 1990s. Over the same period, there has been a significant increase in expenditure on recreation, culture, housing, and community amenities as a proportion of total local government outlays. In 1961-62, these categories accounted for 11 per cent of total expenditure, increasing to 36 per cent by 1997-98.

Federal and state and territory governments increasingly require, often through legislation, local government to undertake a greater role in the areas of development and planning, public health and environmental management; however, this has occurred without the provision of commensurate funding.

The Grants Commission acknowledged that these changes were, to a certain extent, the result of cost shifting on to local councils by other spheres of government.

The Hawker Report also concluded that councils' functions have changed because other spheres of government expect local government to do more without providing any or sufficient funds to undertake them. The impact of cost shifting onto local government has been estimated at between $500 million and $1.1 billion each year.

The only way to resolve cost shifting, the report found, was for all spheres of government to work together.

Cost shifting is, ultimately, a symptom of what has become dysfunctional governance and funding arrangements. It is time to combine the best efforts of governments and choose a better way. (Hawker Report)

Rapidly rising expectations from constituents

As indicated above, the demand for increased spending on human services, such as health, welfare and public safety has trebled in the past three decades at the expense of traditional services such as roads, thus contributing to the severe run down of local roads and other infrastructure. The onset of an ageing population will exacerbate this trend.

A further factor affecting the demand for services is the strong performance of the national economy. Notably, strong economic performance generates growth in demand for government services at all levels and demand for local government services has increased accordingly. As such, local government funding must increase in line with the growth in the economy if local government is to continue to satisfy legitimate community expectations, while also coping with legislated responsibility transfers from other spheres of government.

Reforming local government financing

Given the constraints on local government's revenue, revenue growth can only be achieved through the transfer to local government of a fair share of Commonwealth taxation revenue.

ALGA contends that the quantum of Commonwealth transfers should increase from the current level of 0.81 per cent (provided through FAGs), to at least one per cent of total Commonwealth taxation revenue (excluding GST). This would ensure that councils would gain access to a revenue stream that grows in line with the growth of the economy and keep pace with demand for service delivery and infrastructure provision.

Adopting such a system would increase payments to local government from $1.69 billion to $2.09 billion in 2006-07. In light of solid growth in Australian Government revenue and substantial budget surpluses, ALGA considers the annual transfer of at least one per cent of total Commonwealth taxation revenue to local government to be both justifiable and affordable.

Such reform would better address VFI and meet the specific objectives of the Financial Assistance Act by:

• improving the delivery of services to local communities
• maintaining and improving the quality of social and physical infrastructure across Australia
• helping to counter growing regional inequality
• assisting in the repair of environmental degradation across Australia
• improving community cohesion.

A prompt move from the current FAGs system to a percentage share of Commonwealth taxation revenue would best serve the needs of the community. An alternative, but less effective approach would involve introducing this reform in three stages. These could be:

1. amending the FAGs escalation factor from CPI and population to a methodology that better reflects growth in the economy (eg. average weekly earnings)
2. changing the appropriation of FAGs to ensure local government receives an amount equivalent to 1 per cent of Commonwealth total taxation revenue
3. move away from a grants program and link financial assistance to a fixed share of total Commonwealth taxation revenue.

A local government development fund

An important objective of public policy should be the financial viability of local government. Determining the amount of funding required by local government and ensuring its viability should be based on accurate data. Local government does not have the resources and request that the Australian Government consider funding for a local government development fund.

Local government has done much to improve its financial governance and viability and has invested substantial amount of its own revenue into developing and supporting inquiries into local government's financial sustainability. For example, the Local Government Association of South Australia funded an independent inquiry into local government finances and the Local Government and Shires Association of New South Wales has commenced its own inquiry. ALGA is undertaking its own research project starting with the collection of financial data. However, quality data to support research into local government is extremely limited. To assist local government with its need for more research and better data, ALGA seeks $500,000 each year over four years.

A properly resourced and targeted research and information program would significantly enhance the knowledge of local government, build on the valuable work undertaken by the state associations and the Australian Bureau of Statistics, and complement the Commonwealth and state/territory Grants Commissions. While enhancing these data sources is a priority, there is an immediate need to add value to existing information through greater coordination, analysis and interpretation.

Total request: $2m over four years

Eliminating unfunded mandates and cost shifting

Addressing the issues of VFI by improving the financial relationship between the Australian Government and local government will make a substantial difference to the duplication of effort between the spheres of government as well as reducing the amount of unfunded mandates and cost shifting onto local government.

The development of the IGA is a once in a generation opportunity for all spheres of government to address the fundamental problem of unfunded mandates.

The key objective of the IGA must be to provide a framework that guides the assignment of responsibilities to local government by the Australian Government and/or state and territory governments. The IGA must ensure that mandates assigned to local government:

1. are agreed with local government by prior negotiation
2. are based on clear principles guiding the allocation of roles and responsibilities across and/or between spheres of government, but without reference to determination of program specific rights and obligations
3. include adequate, 'locked in' mandate funding arrangements
4. incorporate a transparent compliance mechanism to ensure any breach of the Agreement is remedied.

ALGA welcomes the Australian Government's response to the Fair Share Report, particularly its commitment to the IGA. This work is difficult and requires significant commitment from all spheres government. It is critical that the agreement is meaningful and binding. ALGA will continue to work with the Australian Government to achieve this goal.

Reform initiatives

Local government considers that Australia's prosperity needs continued economic reform.

National competition policy

The reforms achieved by the 1995 COAG agreement to implement National Competition Policy has contributed significantly to the improved living standards Australians are experiencing today. ALGA supports the current NCP review and examination of a new reform agenda being undertaken by COAG.

Further challenges are facing the Australian economy including international competitive pressures with the emerging economies of China and India, population ageing, and the slowing down of the incremental benefits achieved by the 1995 reforms.

Development of skills and capability of the Australian workforce

Skills shortages are an important issue nationally and specifically for local government. While there are some common difficulties, the nature of skill shortages varies across jurisdictions and between councils. In all states and the Northern Territory, there are a major shortage of town planners, and environmental health officers. However, in many states there are considerable shortages of finance managers, engineers, plant operators and qualified trades people. ALGA welcomes initiatives of the Australian Government that will address skills shortages. When developing these initiatives, ALGA asks that the Australian Government take into consideration the impact on local government. ALGA is working with the state and territory associations and would like to work collaboratively with the Australian Government to:

• address skill shortages in local government
• address more broadly in the community labour supply issues. This might include improving the effectiveness of the education and training system and facilitating learning for life programs. It may also include increasing the workforce participation of mature workers.

Further specific initiatives

The Roads to Recovery model of direct funding to local government to achieve national objectives has been highly successful. ALGA urges the Australian Government to consider further opportunities for service delivery through collaboration with local government. Nation building opportunities exist in the areas of information and communication technology, ageing, immunisation, sustainable urban development and Indigenous housing. ALGA also asks the Australian Government to consider the development of a framework for producing infrastructure of national significance (including water supply), better coordination of emergency management at the local level, better coordination of water supply and water quality programs, and extending local climate change programs.

Funding for information and communication technology - Better Rural Services

ALGA welcomes the Connect Australia package and looks forward to working with the Australian Government on the development of guidelines for the proposed programs as well as developing further programs as part of the sale of Telstra.

The Better Rural Services Strategy developed by ALGA (with funding from the Australian Government Information Management Office), investigated the ICT capacity of councils across Australia. It found that local government in metropolitan areas is doing relatively well in how it uses ICT to improve the services it offers residents. However, rural and remote councils are at a significant disadvantage because they face an ICT capacity divide. This is caused by a lack of resources, lack of specialist staff, and - in some cases - lack of access to affordable broadband solutions.

As a result, many councils find it difficult to undertake tasks such as:

• move services online
• participate in innovative programs to reduce overlap and duplication in regulation
• access to secure networks that allow them to deliver serves for Australian Government agencies or easily use services such as the Centrelink Customer Confirmation service.

The Networking the Nation (NTN) Local Government Fund enabled local government to take the crucial first steps towards delivering services online. Each state and territory local government association undertook a range of innovative programs that enabled all councils to establish a web presence. However, additional funding is required to take the next, more difficult steps to improve delivery of services by rural and remote councils.

ALGA is proposing a five-year Better Rural Services (BRS) program to improve and transform the way rural and remote councils deliver services to their communities. The BRS program would deliver essential ICT infrastructure for use by all rural and remote councils and would support councils in their use of the new ICT infrastructure. Training and support services would be developed within a national framework to ensure quality but would be delivered at the regional level.

The BRS program aims to give all rural Australians access to local government services both online and at their nearest council shop-front. The BRS program will enable the seamless delivery of high quality, secure government services at any council shop-front in rural Australia.

The funding would be allocated to three main programs:

1. Transforming the way rural and remote councils use ICT to provide services through essential IT infrastructure, training and IT support ($200m)
2. Extending existing Australian Government broadband programs to provide the essential communications infrastructure that is required to enable councils to share common 'back office' systems ($37m)
3. Projects to pilot the delivery of Australian Government services through rural and remote council offices ($38m)

Total request: $275m over five years

Ageing

The Productivity Commission research study - Economic Implications of an Ageing Australia - made it clear that demographic change would have a substantial impact on local government.

As an ALGA survey has shown, councils already have a high level of awareness of population ageing issues and the impact demographic change will have on municipalities.

The survey also demonstrates that councils across the country have begun to respond to the impacts of population ageing. Some have developed, or are considering developing, local strategies to support an ageing community.

However, with just one-quarter of local councils having developed a strategy, there is scope to enhance the response. By considering this issue now, councils have the opportunity of minimising the negative impacts of population ageing and maximising the benefits.

ALGA has, with the assistance of the Australian Government, developed a local government population ageing action plan. The Minister for Ageing, Julie Bishop MP, launched this in 2004. The plan encompasses a range of policy, research and practical projects that are greatly enhancing the capacity of local government to plan for ageing communities.

Building on the achievements of the plan, ALGA recommends that the Australian Government established a new initiative, the Local Action on Active Ageing, in the 2006-07 Budget.

The centrepiece of this new initiative would be a national grants program providing funding for local projects designed to enhance the capacity of local government to bring about effective local area planning and provision of services to ageing communities. The program would also produce a range of resources to assist councils and communities take action to plan for population ageing.

The object of the grants program would be to provide practical and flexible support for councils to:

• undertake a regional/local needs assessment
• develop a strategic approach to population ageing
• implement ageing initiatives, programs and services
• review and evaluate implementation of ageing strategy, achievements/outputs and forward direction.

ALGA suggests $1 million to be made available each year over four years.

Total request: $4m over four years

Immunisation

Immunisation is a vital public health service that protects the wellbeing of all Australians and provides protection from vaccine preventable diseases. Since the introduction of mass immunisation in the 1930s, Australia has seen a significant reduction in vaccine preventable disease. However, there is no room for complacency. Low rates of some preventable diseases continue and, in light of a possible influenza pandemic, maintaining the health gains of the population achieved through immunisation programs relies on renewed efforts.

Nationally, local government provides 18 per cent of preschool immunisations. Despite rising costs, the increasing complexity of immunisation schedules and the introduction of new vaccines, Australian Government support for immunisation by local government has not increased. The Australian Government should commit to a new national immunisation strategy that would clearly define the roles and responsibilities of stakeholders as well as the goals and targets. A national immunisation strategy would provide substantial benefits, including better use of resources, reduction of waste and duplication and an improvement in the delivery of immunisation services.

Total request: $10m over four years

Substantial infrastructure projects

ALGA acknowledges the Australian Government's leadership in developing both AusLink and the Australian Water Fund. However, in addition to these two programs, ALGA calls on the Australian Government to develop a new, innovative strategy to provide infrastructure in high growth local government areas and isolated rural areas.

The strategy should first investigate the condition of ageing infrastructure as well as determining the demand for new infrastructure particularly in high growth urban areas. The Australian Government should then investigate innovative ways of delivering infrastructure to rural and remote councils who lack the independent financial resources to fund directly large-scale infrastructure projects from current expenditure or reserves.

ALGA supports the development of a new funding model for regional infrastructure combining finance from all three spheres of government. Such a model would reduce the risk and cost of borrowing capital for local governments through additional financing provided by federal and state governments. A flexible repayment schedule incorporating short and medium-term loans from the Australian Government and state governments would minimise the risk of long-term loans to local government.

Water supply and quality

Ensuring a consistent supply of good quality water to the community is critical and has broad reaching economic, environmental and social consequences. Water infrastructure includes supply, storage and treatment facilities required. The infrastructure currently available is both inadequate and in urgent need of maintenance and upgrade - a job beyond the scope of councils.

Local government is already undertaking projects at a local level, however there needs to be more collaboration between all levels of government to achieve integrated water outcomes that will optimise the opportunities resulting from funding under the Australian National Water Fund. Water Smart Australia projects program and organisations such as the Australian Water Association can provide important examples and ALGA must be engaged in the development of solutions.

Specifically, local level projects that will need support from all three sphere of government include:

• upgrading and expansion of some water infrastructure
• storm water harvesting plans - councils will need assistance in implementing them
• the development of water sensitive urban design principles - a national approach can reduce water use and councils encouraging reduced water use through initiative programs
• encouraging the use of recycling technologies - some councils have accessed funding under the Australian Water Fund to assist with this.

Development of a Sustainable Urban Development Framework

Australian cities are under increasing pressure as they grow rapidly. This growth causes significant stress. ALGA supports the creation of a sustainable urban development framework to help alleviate this stress. Such a framework would aim to:

• encourage improved urban planning outcomes incorporating the urban design values of connectivity, diversity, robustness and safety
• strengthen the health and social inclusiveness of Australian communities
• improve the integration of strategic transport systems development with land use planning in all areas of public and private development
• develop a sustainable freight transport system to correct the economic inefficiencies and environmental detriment caused by growing road congestion
• improve the provision of housing opportunities and housing choice within a framework that fully acknowledges the social, environmental and economic needs of communities
• address environmental pressures in an integrated manner, be it related to water, ecological biodiversity or climatic conditions
• enhance governance systems and policy evaluation and review mechanisms.

ALGA also calls the Australian Government to provide funding for 'bottom up' pilots.

Total request: $20 million over four years

Indigenous housing

In 2001, the Housing Ministers' Conference adopted a statement of new directions for Indigenous housing, Building a Better Future: Indigenous Housing to 2010. This, among other things, recognises the clear relationship between housing, living standards and the health and well-being of Indigenous people.

While Indigenous housing, health and education are the responsibility of the Australian and state/territory governments, local government acknowledges its role, particularly in the Northern Territory where community councils provide and run Indigenous housing programs.

In this capacity, ALGA commends the Australian Government's existing contribution to Indigenous housing, especially the additional funding provided to the Healthy Indigenous Housing program in the 2005-06 Federal Budget. However, we call upon the Australian Government to provide further funding in the 2006-07 Budget, as the needs remain great.

The Australian Government also has at its disposal data that supports the need for more Indigenous housing. This includes the provision of over 11,000 bedrooms in the Northern Territory alone.

In many remote and rural Indigenous communities, housing and related infrastructure - including local government infrastructure - remains grossly inadequate. The Grants Commission Report on Indigenous Funding concluded that the backlog for Indigenous housing was close to $4 billion. Solutions to Indigenous housing will involve a range of agencies. Additional measures are required to ensure that all relevant government agencies work more closely together to bring their combined resources and expertise to address this backlog.

There is an acute need for additional housing. However, there is also an acute need for services and infrastructure that support new housing. This includes roads, sewerage and stormwater drains, waste management and other property-related services.

Local government requests an additional $400 million over the next four years to assist local government authorities provide infrastructure and services associated with new housing.

With the abolition of the Aboriginal and Torres Strait Islander Commission (ATSIC), it is timely that the Australian Government reviews all national strategies for the delivery of improved Indigenous housing and associated infrastructures. ALGA seeks to develop a direct strategic partnership with Australian Government and relevant state and territory agencies to ensure satisfactory housing outcomes.

Total request: $400m over four years

Integration of all hazards emergency management

The Australian Government's $33 million Working Together to Manage Emergencies program is both much needed and warmly welcomed. Importantly, the program provides opportunities for the Australian Government to work directly with local government.

The development of a national strategic local government planning framework has the potential to fully engage local government as well as coordinate and support local government's diverse activity in emergency management across Australia.

ALGA has commenced work to assist the development of the framework. Early indication from this work is that, given the expanding scope and complexity of the roles and responsibilities of local government, additional resources will be needed to support collaboration and integration of all hazards emergency planning approaches (including counter-terrorism) within local government over the next four years.

It is proposed the Australian Government:

1. support collaboration on the national strategic framework and coordinate integration of the local government emergency management under the initiative ($0.8 million over four years)
2. facilitate participation of local government in national emergency preparedness exercises such as Mercury 2006 ($1.2 million).

Total request: $2 million over four years

Enhanced information sharing for critical infrastructure protection and emergency management

Local government possesses geospatial and other information that may be critically important when responding to terrorist activity, natural and civil disasters or health-related emergencies. However, this information is not generally accessible to the Australian and state and territory governments due to governance and technological barriers. Intervention is needed so that local government data may be assimilated with other information sources, including those managed by various agencies or emergency management stakeholders.

The Trusted Information Sharing Network for Critical Infrastructure Protection, the National Information Management Advisory Group and the National Counter Terrorism Committee have all recognised this vulnerability. While there are some plans in some jurisdictions, the capacity to integrate local government information into across-jurisdictional emergency management response does not currently exist.

In this context, a proposed "smart network" would support the ability for local government to participate more productively in the emergency management arena.

It is proposed that specific resources be allocated to build an integrated solution that leverages existing infrastructure such as the AusDIN Portal. This "smart network" may integrate virtual spatial information libraries, operational and surveillance data and communication and notification functions. The system will increase intelligence gathering capacity and local government's ability to coordinate cooperate and respond to major emergencies.

In the event of a regional disaster where there is a total failure of information technology infrastructure, there will need to be continuing operations and delivery of local government services. In this context, the proposal develops and implements a national disaster recovery capability that would:

• be a secondary offsite data repository for councils
• enable council business functions to be delivered remotely over appropriate telecommunications technologies following a disaster
• augment spatial data libraries using an all-hazards emergency management approach, including counter-terrorism, so that complete, accurate information is accessible to agencies responsible for managing crises.

The initiative will assist local government to support communities in their recovery, particularly in the first crucial weeks after a major disaster, where research shows the ongoing psychological and economic implication of the event can be minimised.

Total request: $10 million over three years

Climate change

Climate change is occurring and is likely to have wide-ranging impacts. The longer it takes governments to respond to climate change, the greater will be the cost of undertaking mitigation activities. Undertaking adaptation strategies now can reduce future costs. ALGA welcomes the 'no regrets' adaptation local government projects currently being undertaken by the Australian Greenhouse Office. However, more work is required.

Councils are aware of climate change and the potential impacts. Councils already undertake a broad range of adaptation strategies, such as for flood mitigation. These skills can be built upon to undertake broad ranging climate change adaptation strategies. Decision support tools to assist councils to develop these strategies are required. A clear understanding of liability issues surrounding council's decisions is also needed.

There is a need for the development of a generic strategic assessment framework to assist councils in their decision making when undertaking climate change adaptation strategies. Also required is accurate, reliable and up-to-date local level data and modelling to assist with decision-making.

An assessment of any jurisdictional or legislative impediments to planners developing adaptive measures is required. Issues surrounding planning decisions and strategies, such as setback areas and re-zonings must be defensible in court. Planners require tools to provide guidance to support adaptation measures. An understanding of council's liability should they do nothing to address adaptation or if they introduce inappropriate measures must also be clearly understood. Australian Government financial support to further progress the work undertaken by the Planning Institute of Australia (Qld Division) in this area would be welcomed.

Contacts regarding this submission

• Mr Ian Chalmers
• Chief Executive
• ian.chalmers@alga.asn.au

• Mr John Pritchard
• Executive Director, Policy and Research
• john.pritchard@alga.asn.au

• Australian Local Government Association
• 8 Geils Court
• DEAKIN ACT 2600
• Tel: 02 6122 9400
• Fax: 02 6122 9401
• www.alga.asn.au