Federal Budget 2005-06: Towards a Fair share
31 January 2005
Contents
- Letter to the Treasurer
- Executive summary
- Local government under pressue
- Action on cost shifting
- Action on local government financing
- Resolving the problems with current arrangements
- Specific initiatives for 2005-06
- Contacts regarding this submission
Letter to the Treasurer
Hon Peter Costello MP
Treasurer
Parliament House
CANBERRA ACT 2600
Dear Treasurer
ALGA Budget Submission 2005-06
Thank you for the opportunity to provide a submission for the 2005-06 Federal Budget.
Local government plays an important and expanding role in the Australian federation, delivering a broad range of important services at the local level. However, local government is under growing financial pressure, which hinders its ability to provide for the increasingly complex needs of 21st century communities.
Two issues need addressing - cost shifting, where other spheres of government impose additional burdens on councils without any, or adequate, financial compensation, and the failure of federal financial assistance grants to keep pace with the costs of providing for the needs of local communities.
The Fair Share report on cost shifting and local government financing, tabled in Federal Parliament in November 2003, reflected the difficulties faced by councils, including:
- local government's rapidly expanding range of roles and responsibilities
- a limited ability to generate own source revenue to meet service delivery demands
- the extent to which other spheres of government shift costs to local government, estimated to cost councils between $500m and $1.1b each year.
The Australian Government, state governments and local government have begun to work together to address some of the issues raised in the Fair Share report.
The report makes the case that local government is under-resourced and is not achieving a Fair Share of taxation revenue. However, the terms of reference required recommendations to be budget neutral to the Commonwealth.
ALGA therefore requests the Australian Government to pursue reform of the financial relationship with local government. In particular, we seek a permanent solution to cost shifting and, through phased reform, access to a Fair Share of national taxation revenue.
The Australian Government's Roads to Recovery program has been a much needed and very successful program that is helping councils to address the massive local road maintenance task. Other areas of community need serviced by local government can and should be considered for Roads to Recovery style funding. ALGA proposes a number of new initiatives that will assist the Australian Government meet its national objectives at the local level. These initiatives include funding for:
- information and communication technology
- regional aviation
- urban transport
- coastal zone management
- health initiatives
- indigenous housing
- regional development initiatives
- local government research.
Local government very much appreciates our growing partnership with the Australian Government and looks forward to developing that relationship over the coming three years. 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 2005-06 Federal Budget submission.
Yours sincerely
Cr Paul Bell AM
President
Executive summary
Local government continues to demonstrate its ability to deliver services directly to Australian communities and remains committed to a strong co-operative relationship with the Australian Government.
ALGA wishes to resolve many of the financial challenges highlighted by the Fair Share report on cost shifting and local government financing. This report, released by the House of Representatives Standing Committee on Economics, Finance and Public Administration in November 2003, draws further attention to the extent of cost shifting onto local government, as well as the increasing financial pressures faced by local government.
ALGA seeks a resolution to the cost-shifting problem. To date, the Australian Government's response to the Fair Share report has been positive and ALGA welcomes the commencement of work on an agreement on intergovernmental relations. This work will require a significant commitment from all spheres of government. However, while addressing cost shifting is vital to local government, resolving the issue of cost shifting will not in itself reduce the fiscal pressures on local government.
Most importantly, ALGA is seeking an increase in the quantum of assistance through changes in the way the Australian Government calculates Financial Assistance Grants (FAGs). The current program does not provide local government with sufficient growth in funding to meet increasing demand. The CPI-based escalation methodology has seen FAGs steadily decline as a proportion of total Commonwealth taxation 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.
Consequently, ALGA seeks to resolve this problem by linking the quantum of financial assistance for local government to an agreed proportion of total Commonwealth taxation revenue (excluding GST). In advocating this reform, ALGA proposes a graduated two-step approach. Initially, by amending the escalation factor to more closely align growth in FAGs with that of the Australian economy; and subsequently, setting the quantum of FAGs at an amount equivalent to 1% of total Commonwealth taxation revenue (excluding GST).
In 2005-06, ALGA wishes to replicate more widely the success of the Roads to Recovery program and proposes a number of initiatives in areas where local government can best deliver services to the community. We anticipate that these initiatives will help the Australian Government meet its national objectives at the local level. Table 1 provides a summary of these initiatives.
| Initiative | Description | Department | $ Request |
|---|---|---|---|
| Information and communication technology (ICT) | If local government is going to participate fully in joined-up government, it will require additional funding. Given the success of the Roads to Recovery program, ALGA is seeking a similar style program for ICT. | DCITA | $45 million over four years |
| Regional aviation | ALGA seeks a commitment from the Australian Government to implement key recommendations of the Making ends meet report. | DOTARS | $50 million over three years |
| Urban transport | ALGA seeks national assistance for sustainable transport, including funding for a pilot program of transport initiatives at the local government level. | DOTARS | $5 million over four years |
| Coastal zone management | ALGA seeks funding for an integrated coastal zone management program. This program will help develop strong links between local government planning and regional natural resource management planning processes. | DCITA | $28.8 million over four years |
| Health initiatives |
|
DOHA | Total: $656.6m over four years |
| Indigenous housing |
ALGA proposes that Indigenous housing receive greater prominence in the 2005-06 Federal Budget. |
DIMIA | $100m over four years |
| Regional development initiatives |
|
DOTARS | Total: $700m over four years |
| Local government research | ALGA is seeking funding to improve local government's research capacity | DOTARS | $2 million over four years |
Local government under pressure
Local government is an integral part of the Australian federation and is responsible for ensuring the delivery of local economic, social and environmental outcomes. Uniquely positioned, local government:
- has an intimate knowledge of local communities and the diversity of their residents
- ensures the physical, social and economic environment of local communities is conducive to the overall well-being of Australia
- provides services and programs that are flexible and locally appropriate to the needs of local communities
- enables community participation in local decision-making and supports the development of community networks
- is a strong advocate on behalf of local communities with other government and non-government organisations.
This unique position entrenches local government's relationship with the community, reinforcing local government's ability to recognise, understand and respond to community needs. 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.
Two major reports - the Commonwealth Grants Commission review of the Local Government (Financial Assistance) Act 1995 and the Fair Share report - have confirmed that there is extensive evidence of cost shifting onto local government, and that the Financial Assistance Act is no longer achieving many of its objectives. Consequently, local government is struggling to meet the expanding needs of its constituency.
Addressing these issues will secure the ongoing delivery of essential services to the wider community, and underpin the Australian Government's ability to achieve its objectives at the local level.
Action on cost shifting
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 review of the Local Government (Financial Assistance) Act 1995, 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)."
Figure 1 shows this significant change in local government expenditure over the past 40 years.
Figure 1: Composition of local government expenditure,
1961-62 to 1997-98.
(Data source for Figure 1 not available. Please
contact Anna Hughes - anna.hughes@alga.asn.au
or 02 6122 9427- for information.)
Source: Commonwealth Grants Commission -
Review of the Operation of the Local Government
(Financial Assistance) Act 1995, June 2001, page
54.
The relative importance of transport related expenditure has significantly decreased, from 48.9% of Total local government expenditure in the 1960s to 27.1% in the 1990s. Over the same period, there has been a significant increase in expenditure on recreation and culture and housing and community amenities as a proportion of Total local government outlays. In 1961-62, these categories accounted for 11% of Total expenditure, increasing to 36% by 1997-98.
The Australian and state and territory governments increasingly require local government to undertake a regulatory 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 Fair Share report found that cost shifting, primarily by state governments and amounting to between $500 million and $1.1 billion each year, was placing severe pressure on councils.
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 overall cost effectiveness of government services and achieve significant savings.
The recent Productivity Commission Inquiry into the Economic Implication of an Ageing Australia and the Review of National Competition Policy Arrangements has reflected these findings.
The overwhelming conclusion is that cost shifting is only a symptom of deeper financial challenges confronting local government. To solve these problems, reform of local government financing, including access to a Fair Share of national taxation revenue is now imperative.
Action on local government financing
Local government has three major sources of revenue: municipal rates (38% of Total local government revenue), user charges (32%), and grants and subsidies from other spheres of government (12%). Local government does not underestimate the importance of Financial Assistance Grants (FAGs) which accounts for more than 50% of council revenue in some rural and remote councils where own-source revenue raising capacity is severely limited.
As the Fair Share report makes clear, under existing financial arrangements local government is struggling to meet increasing demand for its services. Consequently, local government faces the choice of either increasing revenue or cutting services. Cutting local government services is not usually a viable option and is counter to the objective of delivering equitable local services across Australia. 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% of total revenue. This revenue source now represents 32% of the total. Local government has also continued to increase municipal rates. However, compared to growth in Commonwealth taxation revenue (39% over the period 1998-99 to 2002-03), rates are a slow-growth tax (25% over the same period). Furthermore, 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 even more politically sensitive to change. The tax burden placed on property owners by state governments has increased from 30% to 39% of Total state taxation revenues over the past five 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, primarily for equity and political reasons.
In consequence, FAGs remain an essential component of local government revenue.
The Australian Government introduced FAGs in 1974-75 as a way of distributing taxation revenue to local government. The primary objectives of FAGs are to:
- improve the capacity of local government to provide their residents with an equitable level of services
- improve the financial capacity of local government
- provide certainty of funding
- improve the efficiency and effectiveness of local government.
The current FAGs program does not provide local government with a source of revenue that meets existing demand, nor does it reflect historical growth in demand for government services.
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 taxation revenue, as shown in Figure 2. The 2004-05 Federal Budget papers indicate that this trend is set to continue. The value of FAGs, as a proportion of total Commonwealth taxation revenue, will have fallen from 1.18% in 1993-94 to 0.97% in 1996-97 and to just 0.77% by 2007-08
While highly valued by local government, the FAGs program is now 30 years old and has not kept pace with the changing demands placed on councils. 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. This trend is set be exacerbated with the onset of an ageing population.
While the $1.2 billion boost in Australian Government funding for local roads through the Roads to Recovery (R2R) program has gone a long way to address the backlog of road maintenance, there is still significantly more work to be done. The Department of Transport and Regional Services 2002-03 Local Government National Report states that while R2R had almost halved the rate of decline in the condition of the local road system, there was still an annual deficit in expenditure of over $600 million.
Figure 2: Local government financial assistance grants as a
percentage of Commonwealth taxation revenue.
(Data source of
Figure 2)
Source: Australian Local Government Association
If local government is to continue to satisfy legitimate community expectations, while also coping with legislated responsibility transfers from other spheres of government, it is essential that the financial relationship between the Australian Government and local government be significantly reformed. A guaranteed share of total Commonwealth taxation revenue should replace the current FAGs arrangement.
Resolving the problems with current arrangements
ALGA recognises that the tasks of reducing the incidence of cost shifting and reforming local government financing are complex and will require a phased approach to resolving these issues. Preferably, reform should start by dealing with cost shifting and then tackle the broader challenges of local government financing.
Cost shifting
During the 2004 General Assembly of Local Government, the Prime Minister said:
I am constantly reminded that Australians are not the least bit interested so much in whose responsibility it is to solve a problem, rather they are interested in getting a problem solved. And one of the greatest turn- offs in a way to an aggrieved constituent or an aggrieved resident, wherever he or she may live, is to be told by the Prime Minister, by a Premier, or indeed may I say by a local mayor, well I wish I could do something about that but it's really the responsibility of somebody else, it's the responsibility of the state government or the federal government or it's the responsibility of the state government or the local government. Now whatever our views may be and whatever our politics may be I think we should collectively recognise that we all have a responsibility to make the system that we have work better.
To date, the Australian Government's response to the Fair Share report has been positive. Both the Prime Minister and the Minister for Local Government, Territories and Roads, the Hon. Jim Lloyd, have publicly supported the need for change.
ALGA welcomes the commencement of work on an intergovernmental agreement on cost shifting. The agreement should:
- be based on a number of high-level principles that increase the efficiency and effectiveness of the delivery of government services
- be underpinned by a compliance measure to stop cost shifting between all spheres of government
- address the extent of local government's involvement in the delivery of programs funded by specific purpose payments (SPPs).
Specific services, provided by local government on behalf of other spheres of government should be the subject of direct negotiation within an SPP agreement.
Recent deliberations of the Local Government and Planning Ministers' working group on a tripartite intergovernmental agreement are a positive step. However, meaningful resolution of the cost shifting issue will only be achieved through the collaboration and commitment of First Ministers. Consequently, COAG - as recommended by the Fair Share report - should host a forum in which all spheres of government can collectively resolve to institute cooperative governance in Australia.
Resolving cost shifting will require a commitment from all levels of government. Local government recognises the need for collaboration with all spheres of government and is prepared to work closely with each of the states and the Northern Territory. There also needs to be a commitment from all levels of government to develop joint compliance measures.
Reforming local government financing
ALGA congratulates the Australian Government on the strong performance of the national economy. Notably, however, 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. This revenue growth can only be achieved through the transfer to local government of a Fair Share of Commonwealth taxation revenue. ALGA contends that the Fair Share quantum should increase from its current (FAGs) level of 0.80% to 1% of Total Commonwealth taxation revenue (excluding GST).
By linking Australian Government revenue transfers to local government to a fixed percentage of Commonwealth taxation, councils will gain access to a revenue stream that grows in line with the growth of the economy. This approach would provide local government with financial certainty matching that of the other two spheres of government and ensure local government financial resources keep pace with demand for service delivery and infrastructure provision.
Adopting such a system would increase payments to local government from $1.61 billion to $2.01 billion in 2005-06. In light of solid growth in Australian Government revenue and substantial budget surpluses, ALGA considers the annual transfer of 1% of total Commonwealth taxation revenue to local government to be both justifiable and affordable.
Such reform would better 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.
A prompt move from the current FAGs system to a 1% share of Commonwealth taxation revenue would best serve the needs of the community. An alternative, but less effective approach would involve phasing this reform in three stages. These would be:
- amending the FAGs escalation factor from CPI and population to a methodology that better reflects growth in the economy (eg. average weekly earnings)
- changing the appropriation of FAGs to ensure local government receives an amount equivalent to the 1% of Commonwealth total taxation revenue
- move away from a grants program and link financial assistance to a fixed share of Total Commonwealth taxation revenue.
Specific initiatives for the 2005-06
ALGA urges the Australian Government to consider utilisation of the Roads to Recovery model of direct funding to local government to achieve national objectives through additional local level service delivery programs. Further opportunities to achieve national outcomes through local government are available in the areas of information and communication technology, regional aviation, sustainable transport, regional development, public health and indigenous housing. To help local government identify needs, share information and develop best practice models, ALGA also requests assistance for local government research, similar to that proposed in the Fair Share report.
Funding for information and communication technology
Since its establishment in 1997, the Online Council has worked towards achieving equitable and seamless access to Australian, state and territory and local government information and services for all Australians - i.e. joined-up government.
The Online Council has placed a high priority on interoperability and the urgent need for electronic service delivery to meet the needs of all levels of government and consumers. Without continued assistance, local government will not be able to contribute effectively to the overall goal of 'joined-up' government.
The establishment of the Australian Government's $45 million Local Government Program administered by Networking the Nation (NTN) was essential in assisting local government authorities in regional Australia to provide online access to information and services including the Internet. Local government acknowledges the extensive opportunities NTN funding has provided, particularly by enhancing its ability to utilise and share information. However, this program ceases on 31 March 2005.
Despite excellent progress made over the past five years, local government cannot match the pace of technological change achieved by other spheres of government. Of greatest concern is the growing digital divide between the larger, better-resourced metropolitan councils and many smaller, rural and remote councils.
Local government now needs new and additional funding to narrow this gap. ALGA seeks a minimum grant for all local government bodies, with the majority of funding going direct to those rural and remote councils who are most disadvantaged. We propose that support from the Australian Government would match the efforts of local government and would be similar in quantity to the funding provided under the Networking the Nation program.
A valuable possible starting point for both the Australian Government and local government would be the development of data and asset management systems for the local road network that could be linked to the AusLink National Transport Data Framework. Australian Government assistance would build on existing ICT initiatives by ALGA and state local government associations, to optimise the use of Roads to Recovery funding and improve the operation of AusLink's regional and corridor programs.
By supporting such a partnership, the Australian Government will be able to build on the successes of the NTN program and achieve its goal of 'joined up' government.
Total request: $45m over four years
Regional aviation
Regional aviation provides essential social and economic links for non-metropolitan Australia. Regular, accessible, affordable and viable air services are a vital factor in regional development. Country communities with air services show economic growth nearly twice that exhibited by those without them. Regional aviation is also a key element in equity of access for many country people, and can be a matter of life and death in rural and remote areas.
The House of Representatives Standing Committee on Transport and Regional Services released its Making ends meet report in December 2003. The report provides powerful arguments for better resourcing and federal assistance for local government owned regional airports. The Australian Government is yet to respond to this key report. ALGA seeks an Australian Government commitment to implement key recommendations of the report that call for the introduction of a new airport subsidy scheme and the maintenance of the Remote Air Service Subsidy Scheme.
The report did not estimate the cost of such initiatives and ALGA would envisage that at least $50 million would be required over the next three years. To determine the detailed scope and costs of these programs, the Australian Government should establish a working party that includes ALGA representation.
Total request: $50m over three years
Sustainable transport
As Australia's transport systems increasingly compete for public funding, all levels of government need to find ways to make these systems more sustainable - in economic, social and environmental terms. Within cities, 'density' causes problems of congestion, noise and pollution. In regional and rural areas, 'distance' is the issue, and long distance public transport services (whether coach, rail, air or shipping) must meet basic community needs and be both economically and socially sustainable.
ALGA recognises the very considerable contribution the Roads to Recovery program has made to improve the sustainability of the local road network. However, the benefits of this infrastructure-upgrading program can be multiplied by complementary changes in travel behaviour - especially by encouraging alternatives to car use. This would help make local transport more sustainable in both supply and demand terms.
The Australian Government is in a unique position to promote, co-ordinate and disseminate information on sustainable transport initiatives across all levels of government. While the state and territory governments will need to take the lead on larger programs, many beneficial changes in transport use, such as ride sharing, multi-purpose trips and more walking and cycling, are better promoted at the local community level. Accordingly, ALGA seeks national assistance for sustainable transport, including funding for a pilot program of transport initiatives at the local government level. A program of $5 million over four years would allow consideration of key issues such as integrated land use and transport planning (where local government is a core player), traffic congestion, safety, travel demand management and accessible transport.
Total request: $5m over four years
Coastal zone management
The Australian Government is in the process of finalising an implementation plan for the Framework for a National co-operative approach to integrated coastal zone management. This document, developed in accordance with a Natural Resource Management Ministerial Council resolution, sets out strategic priority areas, objectives and measures required to address coastal management. Objectives of the framework include:
- assisting local government involvement in coastal zone management issues
- improving the understanding of the impacts of climate change on the coastal zone
- better planning for population change in these areas
- building the capacity of coastal zone managers.
Local government needs adequate resourcing and capacity to undertake natural resource management (NRM) activities, including implementation of the framework. At the same time, coastal councils are working to understand and participate in the regional NRM process, develop their own environment projects and manage significant increases in population and tourist numbers. Notably, councils are experiencing difficulty in satisfying the infrastructure demands of burgeoning coastal populations. Increased planning and NRM capacity will assist councils to manage their natural resource base in these instances.
The Australian Government has funded ALGA's current coastal zone management project, which is examining the capacity of councils to undertake NRM and coastal zone management. Initial results indicate councils are struggling to cope with the rapidly rising population and tourist numbers and their impact on natural resources. This growth is accelerating and consequently, many councils do not have the capacity to adequately plan for and manage the pace of change. This has significant impacts for not only the councils and their communities, but also the natural environment.
To contain and control this problem, ALGA seeks $28.8 million over four years. This figure represents $80,000 per high-growth coastal zone council per year (based on about 90 councils). This assistance will build councils' capacity for planning and NRM management in these rapidly expanding areas as well as assist the Australian Government in achieving its environmental outcomes.
Total request: $28.8m over four years
Health initiatives
Public health partnerships
Australian Government expenditure on health is approximately four per cent of GDP. Forecasts suggest that this will continue to grow by 2.3 per cent per annum. Health related expenditure is therefore likely to be a major contributor to increased Australian Government spending in the future. The most pronounced areas of growth will be medical services and benefits, hospital services and pharmaceutical services and benefits.
From both a national and international perspective, there is growing awareness of the need to find new ways to minimise illness, injury and disability through cost effective public health initiatives.
In late 1996, the Australian and state and territory governments established the National Public Health Partnership (NPHP). NPHP is an ongoing multilateral mechanism between the Commonwealth and state and territory governments that sets out the roles and responsibilities of the Commonwealth, states and territories in public health. Local government is also represented on NPHP.
The current public health priorities of NPHP include addressing issues of healthy weight, nutrition, physical activity, communicable disease control, environmental health, injury prevention, child public health, information development and workforce development and planning. In addition, the Australian Government has developed a wide range of specific public health strategies, priorities and programs. These include but are not limited to asthma, cancer, cardio-vascular health, diabetes, injury prevention, immunisation, nutrition and physical activity.
The strategies, priorities and programs of the Australian Government, including the work of the National Public Health Partnership, are excellent initiatives. However, at the local and regional level, the very existence of multiple strategies can be confusing and lacks coordination. The scarce resources provided to these programs often severely limit the impact and effectiveness each and/or all of these initiatives on the ground.
ALGA considers that there is an urgent need for an efficient, effective and direct strategy to deliver Australian Government public health programs and initiatives to local communities.
ALGA proposes the establishment of 25 Public health packages each of $200,000 a year for four years. The Public health packages would be delivered under the auspice of an Australian Government/local government partnership.
Targeted through councils, and/or groups of councils, this initiative would be subject to a competitive process. Each package would require successful applicant/s, being councils and/or groups of councils, to design and deliver local/regional public health outcomes. Initiatives that build synergies with other council initiatives such as public safety, environmental health, food safety, sport and recreation programs should receive priority.
Request: $10m over four years
Community care
The Home and Community Care (HACC) program represents the major Australian and state government effort in community care and provides services to approximately 700,000 Australians each year. In many states, local government is a major provider of public sector community care services including those provided as part of HACC.
The cost to local government of community care services is far greater than funding provided by the Commonwealth and state/territory governments. Funding has failed to keep pace with carer wages and the growing demand for services. Current service levels are already insufficient and estimates suggest that the number of older Australian requiring assistance by 2021 will increase by 160 per cent.
Government policies must ensure the equitable distribution of current and future community care needs. As such, ALGA seeks an initial 20 per cent increase in funding to HACC and at least six per cent real growth per annum thereafter.
Request: $635m over four years
Immunisation
Immunisation is a vital public health service that protects the wellbeing of all Australians and provides lifelong protection from infectious diseases. Nationally, local government provides 18 per cent of preschool immunisations.
Despite rising costs, the increasing complexity of immunisation schedules and introductions of new vaccines, Australian Government support for immunisation by local government has not increased. The Australian Government should commit to regularly reviewing recurrent funding levels to local government to ensure that subsides reflect changes in the cost of delivering immunisation services.
Request: $11.6m a year over four years
Total request: $656.6m over four years
Indigenous housing
There is a clear relationship between housing, living standards and the health and well-being of indigenous people. ALGA proposes that Indigenous housing receive greater prominence in the 2005-06 Federal Budget.
ALGA acknowledges that Indigenous housing is a responsibility of all levels of government and commends the Australian Government for its existing contribution to Indigenous housing. Currently, indigenous housing accounts for 20 per cent of the Australian Government's Total spending on public and community housing.
ALGA notes the commitments of the Housing Ministers' Conference in May 2001, when all ministers adopted a ten-year statement of new directions for indigenous housing, Building a better future: Indigenous housing to 2010.
In addition to these directions and their associated measures, there is still much more to be done. In many remote and rural indigenous communities, housing and related infrastructure are grossly inadequate. An estimated 32 per cent of indigenous families own their own homes; however many low income families find it difficult to obtain finance or meet loan repayments.
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.
The Grants Commission Report on Indigenous Funding concluded that the backlog for indigenous housing is close to $4bn. The Australian Council of Social Services anticipates that the allocation of funds would be over a period of ten years. ALGA expects that a proportion of this funding would be allocated to local government commensurate to its level of involvement in the delivery of indigenous housing.
Total request: $100m over four years
Regional development
Zonal Tax Rebate Scheme
Introduced in 1945, the Zonal Tax Rebate Scheme recognised the impact of isolation, climate and high costs of living for people living and working in regional Australia by providing a concession tax rebate. However, the value of the rebate has continued to decline over the past fifty years and now offers little encouragement for workers to settle in regional areas. The last review of the Zonal Tax Rebate Scheme occurred in 1981 with the last increase in the value of the rebate occurring in 1992.
Inflation during this period has effectively eroded the value of the rebate to the point that in some areas it is now equivalent to just 0.4 weeks' average earnings. In 1945, the rebate was equivalent to 4.5 weeks average earnings.
ALGA seeks a review of the scheme and a commitment of $500 million to restore the real value of zonal tax rebates to meet the stated objectives of the scheme.
Provisions that should accompany this commitment include:
- regular indexing of the rebate
- removing eligibility for the rebate from those people who are employed under fly-in/fly-out arrangements
- better aligning the boundaries for receipt of the rebate with generally accepted Australian Bureau of Statistics definitions for 'remote' and 'very remote'.
Request: $500 million over four years
New funding arrangements for regional infrastructure
Local government and regional bodies 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.
Operating additionally to existing grant financing of infrastructure, ALGA seeks $200 million over four years to initiate a new mechanism for funding regional infrastructure and leveraging contributions from state, territory and local governments.
Request: $200 million over four years
Total request: $700 million over four years
Funding for local government research
The Australian federation is widely acclaimed as one of the world's most democratic systems of government. Despite a range of persistent challenges such as cost shifting and fiscal imbalance, our three spheres of government serve the Australian population well.
The 675 local government bodies in Australia make an enormous contribution to our national well-being. For example, local government owns and manages around 85 per cent of the nation's public roads, and is solely responsible for municipal waste services and a range of public health, community and physical planning.
Despite the significance of local government, other spheres of government and the public do not properly understand local councils and their modes of operation. ALGA and the state and territory local government associations, as the peak bodies representing local government, are able to provide significant input and insight into local government. Further, these associations provide a vital source of information and a mechanism for the exchange of best practice. However, these associations and through them, other spheres of government and interested stakeholders, have limited access to high quality quantitative data and detailed qualitative information on the roles and activities of local councils throughout Australia.
A properly resourced and targeted research and information program would significantly enhance the knowledge of the local government associations, build on the valuable work undertaken by the Australian Bureau of Statistics and complement the Commonwealth and state/territory Grants Commissions that provide useful but limited data and information about local government. While enhancing these data sources is a priority, there is an immediate need to add value to this existing information through greater coordination and targeted analysis and interpretation.
The Fair Share report identifies the importance of capacity building in local government and cites the specific example of the United Kingdom's establishment of the Beacon Council Scheme to "foster learning and change in local government through recognition and sharing of good practice".
While ALGA and state/territory associations do not support the adoption of the UK approach in the Australian setting, this example demonstrates the importance that other national governments place upon supporting research and capacity building in local government.
ALGA therefore proposes the establishment of a research unit jointly governed by ALGA and the Australian Government. Major stakeholders would collaboratively determine research priorities with the outcomes available to the Australian Government and local government as a whole. To assist local government with its need for more research and better data, ALGA seeks $500,000 each year over four years.
Total request: $2m over four years
Contacts regarding this submission
Mr Ian Chalmers
Chief Executive
Australian Local Government Association
8 Geils Court
DEAKIN ACT 2600
Tel: (02) 6122 9400
Fax: (02) 6122 9401
Website: www.alga.asn.au
Mr John Pritchard
Executive Director, Policy and Research
Tel: (02) 6122 9400
john.pritchard@alga.asn.au
Mr Rohan Greenland
Director, Public Affairs
Tel: (02) 6122 9434
Mob: (0412) 859 434
rohan.greenland@alga.asn.au