Australian Local Government Association

New beginning for federal-local government relations

Joint media release - Jim Lloyd/ALGA

23 June 2005

Developing an intergovernmental agreement to help stop cost shifting to local government, a Productivity Commission study on barriers to local government revenue raising and recognition of local government by Federal Parliament are key features of the Australian Government's response to a House of Representatives report on local government, tabled in Parliament last night.

Minister for Local Government, Jim Lloyd today said the Government would also examine the interstate distribution of the local roads component of financial assistance grants to ensure fairness to all states and provide a long-term solution to the disadvantage currently faced by South Australian councils.

The report - Rates and taxes: A fair share for responsible local government - identified cost shifting as a significant problem confronting over 700 Australian local councils. It made 18 recommendations to address this problem and enhance effective relations across the three spheres of government.

"Preliminary work has already begun between the Australian, state/territory and local government representatives to develop a meaningful intergovernmental agreement, which will seek to ensure fair and proper arrangements are negotiated when services and responsibilities are transferred to local government," Mr Lloyd said.

"Federal, state/territory local government ministers and the Australian Local Government Association will meet on 4 August to consider the development of the IGA.

"It is important that the agreement is strong. We need a positive outcome that will protect local government from the potentially crippling consequences of transferred responsibilities without proper funding arrangements. ALGA believes this practice currently costs local government between $500m and $1.1bn each year.

"The cost shifting report, chaired by David Hawker MP, also identified constraints on local government revenue as a significant structural problem confronting local government nationally.

"We will ask the Productivity Commission to study all revenue streams to local councils and identify areas where they are unfairly impeded from accessing the resources they need to service their communities in the 21st century. We will work with ALGA on the terms of reference for the revenue study.

"I'm also pleased that we will be recognising local government through a motion, to be developed with ALGA that will be put before both houses of Federal Parliament.

"The Australian Government will continue to explore opportunities to further develop partnerships with local government to the benefit of local communities.

"We are already working closely with local government to improve service delivery and infrastructure in areas such as transport, reducing red tape for home-based businesses, road safety, natural resource management, water supply, emergency management, natural disaster mitigation and public safety.

"The Government's response represents a beginning to the reform of federal-local government relations.

"The Australian Government values the important role local government plays within the Australian Federation.

"While local government is established under state legislation, the Australian Government recognises that the national interest is well served by improving local government's capacity to deliver services to all Australians.

"That's why we will, in 2005-06, provide more than $2bn in funding to help local government deliver services and infrastructure to communities across the nation," Mr Lloyd said.

ALGA President, Cr Paul Bell, has welcomed the Australian Government's response, saying it represents a significant milestone in local government's long march to fair funding, formal recognition and its treatment as an equal and valued partner within the Australian federation.

"While we still have a long way to go, I congratulate Jim Lloyd on his response and look forward to working with him and the Australian Government on the development of a robust IGA and the task of ensuring local councils have the resources they need to properly serve their communities.

"I welcome the proposal for parliamentary recognition of local government and see this as an important first step to Constitutional recognition. I am also keen to support further strategic partnerships with the Australian Government.

"The federal-local government relationship is all about improving the capacity of local government to deliver for the communities we serve. As we move into the 21st century, there are increasing community expectations of local government. We are expected to do more and more on a seriously restricted revenue base. We need to be well resourced to meet those challenges.

"Jim Lloyd's response to the Fair Share report signposts the way ahead. I now call on state and territory governments to formally commit to a meaningful and robust intergovernmental agreement that will bring about an end to cost shifting, once and for all," Cr Bell said.

Copies of the Government's response can be found at www.aph.gov.au/house/committee/efpa/fiparep.htm

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