The next federal election will be accompanied by a referendum which would allow direct Commonwealth funding of local government, a proposal that seems positively good — that is, until one considers the consequences of what is proposed.
Despite government claims, it is not a referendum on “recognition” of local government in the federal Constitution.
It does not propose any form of direct representation of local government in the federal government of Australia, nor does it enhance local government’s low representation on the Council of Australian Governments (COAG). Neither does it deal with the real problems of local government, including the massive loss of population in rural Australia, which has made many local councils unviable, or with the drift to the cities by young people.
The proposal simply allows the Commonwealth to directly fund local government.
It is important to understand that local government has existed in Australia for about 200 years. Originally, local government was established within each of the Australian colonies. After federation in 1901, the legal responsibility for local government continued to be within the province of the states.
The history of Commonwealth funding for health and education, both primarily state matters, indicates that federal funding always comes with major strings attached.
With direct funding of schools, for example, the federal government wants to control class sizes, oversee schools’ capital expenditure, impose a national curriculum, and set up its own parallel bureaucracy for the delivery of services. The same applies in health. And universities.
Direct funding of local government by the Commonwealth will lead to greater control from Canberra over where local government can spend its money, radically undermining the authority of local government. Do you want bureaucrats in Canberra deciding when your rubbish will be collected?
This is not a trivial matter. Some of the most damaging impositions on local government in recent years have come from the federal government through its National Competition Policy, which radically undermined the authority of local governments to employ local businesses in the delivery of local services.
With expanded powers, the federal government would be able to impose land-use conditions on farmers, for example, as they have already done in relation to forestry.
It is further inevitable that the existing small federal bureaucracy involved in local government will grow massively, as federal bureaucrats duplicate what already exists in each of the states.
It is also likely that the cost-shifting, which currently bedevils state-federal relations in both health and education, will spread to local government.
At present, state governments strongly support local government attempts to access federal funds. Direct payment from the Commonwealth to local government will inevitably cause state governments to cut funding to local government, in the knowledge that the federal government — with far greater financial resources at its disposal — will step in.
There is nothing in present financial arrangements which compels state governments to support local government, so it is likely that state governments will reduce their financial commitment to local government as a consequence. Is that really of benefit to local government?
Supporters of the proposed change in the Constitution have also argued that recent High Court cases undermine the power of the Commonwealth to directly fund local government. Two cases are regularly cited: Pape’s case and the School Chaplains’ case.
However local governments were not parties to either, with Pape’s case involving a challenge to the constitutional validity of the Rudd Government’s $900 “tax bonus” in 2009, and the School Chaplains’ case involving federal funding of the Scripture Union (Queensland) for the provision of school chaplaincy services.
Despite claims to the contrary by some legal academics, there is no threat to funding of local government by or through the states.
Professor Anne Twomey of Sydney University noted recently that supporters of the change in the Constitution, mainly from local government, believed that it would empower local government and give rise to “rivers of gold” in new funding.
She dryly commented: “As for the rivers of gold, they might yet turn to rivers of tears for local government bodies in the more populous areas if an equalisation approach to direct funding was taken by the Commonwealth as a consequence of a successful referendum.
“Funding would also most likely become tied to conditions that impose uniform Commonwealth policies on local government bodies, reducing their autonomy and their capacity to serve the particular interests of their own communities.”
The Labor government’s decision to give $10 million to the “Yes” case, and only a 20th of that sum to the “No” case proves that it will accept only one outcome.
The Australian people should reject this proposal.
Peter Westmore is national president of the National Civic Council.