Cost shifting
Resolving cost shifting is a core business for ALGA. As part of its contribution to the Cost Shifting Inquiry, ALGA made a submission as well as a supplementary submission.
The Fair Share report tabled in Federal Parliament in November 2003, supports local government's claim that other spheres of government have undertaken extensive cost shifting which is costing local government 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.
The report concluded:
If local government were involved earlier in the process of determining service delivery, this could reduce areas of unnecessary overlap or duplication between the spheres of government. Further, the reduction of duplication in advice and service delivery between the spheres of government would improve the overall cost effectiveness of government services and achieve significant savings.
In its response (RTF 41 kb) to the report, ALGA focussed on the development of an intergovernmental agreement (IGA). We consider the IGA to be such an important agreement that it should be developed at the Commonwealth Heads of Government level.
On 23 June 2005, the Australian Government formally responded to the report. The response has four key elements:
- Intergovernmental agreement on cost shifting
- Productivity Commission study on barriers to local government revenue
- Recognition of local government by both Houses of Federal Parliament
- Review of interstate distribution of the identified roads component of financial assistance grants.
For more information see ALGA's Fair Share Report media kit
