Mark Coulton (Parkes, National Party) Share this | Link to this | Hansard source

I rise to speak to this motion on local government. There are some parts of the motion of the member for Lyne for which I have full sympathy. I spoke of the need for recognition of local government and the need for a regular funding stream to local government in my maiden speech in this place in February 2008. Local government has been meeting to discuss constitutional recognition and a conference relating to that was held in Melbourne last year. My concern is for regional local government—local government in rural areas. If we look at a funding stream and just bundle all of local government in together, I believe that regional local government will still be the poor cousins. What has happened over many years is cost shifting down to local government so that local government in rural and regional areas are responsible for many things that large metropolitan local councils are not.

I was the Mayor of Gwydir Shire Council before I came to this place, and not only were we responsible for the basics of local government—the three Rs: the roads, rates and rubbish—but also we were responsible for aged care and child care, we owned two medical centres, we employed an early family intervention worker, we were the RTA agency and we were the Centrelink agency. That is a whole range of responsibilities that, in larger areas, local government would not have to deal with. We were even involved in landcare type issues. We also had responsibility for a large network of very poor quality roads servicing highly productive areas.

While I agree that we need a regular funding stream, I think that we need to look at this not as a flat rate. If we receive this funding as a percentage of GST or if it is allocated on a per capita basis, once again the City of Sydney Council, Brisbane City Council, Hornsby Shire Council, Blacktown City Council and so on will be flush with cash. They have large rating bases and many people stacked up several storeys high but have nowhere near the responsibility of regional councils. I believe that we have got a way to go with this, but what I have been saying to the councils in my area is not to rush into something that is once again going to leave regional local government the poor cousin. Indeed, Gwydir Shire Council and Moree Plains Shire Council have formed the Australian Rural Roads Group to lobby on behalf of high-production agricultural councils and to speak of the benefit of local roads. Everything that we purchase on the supermarket shelf starts its life on a local road. Indeed, the economic capacity of this country is being impacted because these rural businesses—many of them are multimillion dollar businesses—cannot meet contractual agreements because of the poor state of the roads. We have seen a focus on metropolitan areas and the large arterial roads, and they are important, but the local roads are equally important. When assessing a government's commitment to country roads, a fund for the Pacific Highway really should not be taken into account. It plays a different role compared to the local roads. While I agree with the sentiment of the member for Lyne, I cannot agree to the detail or the intent of this motion. I will continue to lobby in support of a decent go for funding and recognition of local government in Australia.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I thank the chamber and the previous speaker for rolling on. There is another function on nearby, the fourth anniversary of the apology, and it is a very important day. The point of this motion is very much to recognise some of the points picked up by the previous speaker regarding the local road network in Australia. It is failing. In frank terms, it is buggered. It does need a completely new funding model to address some of the realities faced by local councils right throughout Australia, particularly for the growing burden of a failing road network.

For one council in my region the figures are compelling. They have a road backlog of over $250 million. Based on current Australian design standards, building a kilometre of local road costs about $1 million. To not go backwards any further they have to somehow put in $27 million a year—that is to remain with a backlog of $250 million. They have a rate base of around $10 million to $15 million. The maths simply does not add up. In New South Wales these are rate pegged councils and their capacity to do it themselves simply does not exist. We are beyond the point of simply blaming dodgy councils or dodgy councillors. We are beyond the point where we can continue to accept the argument that it is our money because of states' rights. In my view the money raised through taxes and rates at all levels of government is the people's money and we are not doing our job and not fulfilling our obligations if people are paying rates and taxes and not getting a return in quality services, such as local roads.

I would agree with another point the previous speaker made. The separation of highways—for example, the Pacific Highway was mentioned—is an important separation that needs to be made. I would also agree, taking it to the next step, that regional roads need to be separated. Both the highway network and the regional road network can receive an awful lot of money through Commonwealth and state revenues. It is that next tier down, the local road network, that has failed. I am not just using that as scare language. I think the various engineers associations that work with the road networks have been making that call for many years now. In a region such as mine, not only has the funding model led to failure of the local road network but we have once again over the last month just been through another flood, which increases the speed of the damage. That is on the back of a flood last year and natural disaster relief funding for those roads has yet to come through. So it is a flood upon a flood, damage upon damage and a bill upon a bill in circumstances where there is already an enormous backlog and a failed funding model.

The GST review is on. John Brumby and Nick Greiner are good men and I would hope they are not just going to serve up a no-change model. I think there is an opportunity over the next couple of months to really consider all options in light of the circumstances that Australia faces. This motion is trying to get the local road network on the agenda, if not via direct funding to local councils then by somehow changing the funding model so that we can start to address what is a failed network. I urge the Treasurer, the GST review committee and government members to put in some thought and reflection on that and not allow this GST review to just say that horizontal fiscal equalisation is the way to go, that there should be no change because of the current parliament and away we go.

There is an urgent need on the ground. I repeat that the network has failed. Unless there is a substantial change in funding models from the Commonwealth then this is going to create all sorts of productivity problems for the nation. I am not in the camp that says a Pape case in the High Court rules it out. I am watching closely to see another case, the Williams case, to see whether it does. I think we should buy some time on constitutional recognition and make it a financial issue and address it.

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

I support the general thrust of the member for Lyne's motion. While I would not specifically single out the GST as the revenue source, it is clear that local government does indeed need access to growth funding. Local government rates keep going up and up and that is hurting families. It is clear that there needs to be a better way of funding councils to deliver the local infrastructure that is vitally needed in the community.

There are limited options for councils to raise revenue. I have some detailed experience, having been a local government councillor for the better part of six years. About 83 per cent of the revenue that councils have to play with across the nation is their own sourced revenue. Rates make up about 37 per cent of that, and that is a direct slug on many families out there. We have charges for goods and services, and increasingly councils are moving towards a user-pays system for basic services. For example, a person dumping a ute load of rubbish at the tip is now charged for doing that. This is what councils are moving to, and 29 per cent of their revenue comes from those charges. Other charges, such as fines and developer contributions, make up around 14 per cent of their revenue. Again, that is a hit on the community. It is indirect in some cases, such as developer contributions, which flow through to the cost of owning a new home. These are the sources that councils currently get their finance from. Every time that new infrastructure, or even maintenance of existing structure, is required they look to ratchet up those fees.

I say you cannot just do that. I remember being in a private council meeting where we were looking at the budget numbers and the list of infrastructure that was needed. It turned out that there needed to be a 13 per cent rate rise to fund only what was required. Rates were going up to about $2½ thousand per household. My reaction was, 'When do we hit the limit here?' It gets to the stage where you cannot charge the community any more. You will get a situation where people just cannot afford to live in their own homes. There were blank stares and nobody knew the answer to that question, because infrastructure costs keep going up and up. In Queensland, 88 per cent of council funding comes from own sourced revenue. That is a direct result of the state government pulling out. They had subsidies in place for water and sewerage infrastructure. But they removed those subsidies, so now that burden falls on homeowners. There is a lot of uncertainty for councils as a result, because they just do not know in situations like that, where the states pull out. That really stuffs up forward budgeting. About 8½ per cent of funding to local government comes from the federal government and about 8½ per cent comes from the states, but that goes up and down. There needs to be some certainty.

With regard to the constitutional recognition issue, I disagree with the motion before the House. Constitutional recognition is vitally important. The Pape case showed that there was great uncertainty about direct federal funding to local government. In fact, George Williams, renowned legal expert, says that there is no constitutional validity for it. That is ultimately deserved and it will stop situations like that which we had in Queensland, where the Beattie government, with the support of the current Premier, Anna Bligh, and the then local government minister, Andrew Fraser, rode roughshod over local communities and amalgamated councils left, right and centre, where there was no community of interest for those councils. There is no better reason than that than to have constitutional recognition. So, to sum up, there needs to be growth funding— (Time expired)

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

I am feeling a sense of deja vu this week, firstly, being back in my role as the Deputy Speaker from the last parliament and, secondly, completely with respect to the motion before the House.

One of the first committee inquiries that I was involved in in this place was a cost-shifting inquiry into local government. We handed down a phenomenal report in October 2003 entitled Rates and taxes: a fair share for responsible local government. Now, in 2012, we are again having the same debate, we are arguing the same issues and we are looking at the same things. The committee that handed down this report worked incredibly hard. We went to every state and territory and to every local government that we could. The inquiry received more submissions than any other inquiry I have ever been involved in—even more than the inquiry on the clean energy bills, which I have just done.

We raised a level of expectation that we would resolve something, and of course, tragically, we did not. I think it is one of the failures of the committee system. We went out, asked people to give us ideas with which to produce something, and here we are dealing with a motion to do with what the report looked at originally—cost-shifting. At the time, the federal Liberal government was looking at the issue of Labor states pushing things back onto local councils, but of course we found that everybody was pushing back onto local councils. It was across the board: local council was pushing back onto states and the states were pushing back onto the feds and everybody, in turn, was pushing back onto the poor taxpayers.

The report, at page 115, summed it up for most people:

Following a meeting of the Local Government and Planning Ministers’ Council in July 2003, the President of MAV—

Municipal Association of Victoria—

was quoted as saying:

Unless we see a reappraisal of the current tax base of local governments, councils will need to continue to go out to ratepayers cap in hand on an annual basis.

… The MAV would investigate several options, including a suggestion that part of the State Government’s GST funds be set aside for councils.

That was the original suggestion in the first Howard GST bill. He actually came out and said that they wanted to propose that the states resume responsibility for providing financial assistance grants to local government from 1 July 2000. So the feds would get out of this space all together, the GST would go to the states and the states would then have responsibility for passing everything on to local government, overtaking what we now know as the FAGs system. Payments would be made under the terms of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, with heads of government signed at the 1990 Premiers Conference.

But under the agreement between the government and the Australian Democrats to modify the goods and services tax and implement a package of other proposals, the government agreed to retain responsibility for assisting local government, and that was a good thing, otherwise local government would have been ripped off at the time. There was not going to be any more money; there was actually going to be less. The Dems got a bit of a caning at the time for introducing and doing this, but they actually saved local government from getting less than their fair share.

I am not saying that this motion is not important and I am not saying that my committee inquiry was not important, because we now know—and we have known for years—that the push-back is onto ratepayers and is onto local government. And, as all the other speakers have said, one of the things we looked at is: what is the responsibility of local government? It is, 'How long is a piece of string?' Each council does something different. Look at Brisbane City Council. Look at the ACT government, which acts as the local council. Look at shire councils around the place which run ports and airfields. In my community they run nursing homes and childcare centres. What are they responsible for? The difficulty is that they become responsible for whatever the community wants or demands. They become the last man standing and they fill the void. This happens in rural settings in particular, where it is harder to say to your community that you are not going to fund that youth worker this week because the state government has pulled out the funding or that you are not going to fill that pothole because you did not get any federal money to do that. So local council becomes the meat in the sandwich.

The main aim of this inquiry and this report was to say that the three levels of government need to get together and work better together. They need to understand what each is doing, what each is raising, and then work it through, as opposed to just buck-shifting. Councils also need to learn to say no to ratepayers, state governments and the federal government. They need to say it is not their responsibility and they are not going to fill that void. That is really hard. I have said to my local councillors that their job is a lot harder than mine. Everybody knows who they are. When a bin is not picked up, it is their fault. But if something happens at a federal level nobody is going to find and abuse their federal member of parliament. So local councils do find it difficult to say no. I think it is a really difficult thing, but we need to get the three levels of government together and resolve this now so that we do not keep going around in circles.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

I endorse the remarks made by previous speakers on this extremely important topic, especially the member for Parkes and the member for Dawson, who have considerable experience in local government. I also acknowledge the remarks made by the member for Chisholm. Indeed, everything falls back on local government to provide absolutely everything in their community. As the member for Parkes so correctly pointed out, it is not just about roads, rates and rubbish anymore; it is everything from childcare centres to counselling services. You name it, local government has to provide it. That is why recognition of local government in the Constitution is so important. We have seen all too often where federal government money intended to go to local government ends up going through the bureaucracy of state governments and so little of it trickles down the line to where it is most needed.

When it comes to roads, that is where local government does provide such a great service, but they do it with such little funding these days and there is only a limited revenue base for local governments to get their money from. In my local government area the Wagga Wagga City Council has just imposed parking fees at the local airport in an endeavour to raise more funds. Tumut Shire Council is desperately seeking funding at the moment for Gocup Road. Prior to the 2010 election the coalition committed $11 million of funding to this state road. Gocup Road provides a vital service in the Snowy Mountains area for tourism but more importantly for Visy Industries, a multi-billion-dollar industry providing many hundreds of jobs for the Tumut shire. This road, which is very winding and very narrow, has to support not just heavy haulage B-double trucks and semitrailers but also school buses. It is not a good mix and it is going to end in tragedy if something is not done to help Gocup Road. The new mayor of Tumut Shire Council, Councillor John Larter, and his very hardworking general manager, Bob Stewart, have asked me to lobby the government to provide much-needed funding for Gocup Road. I have written to the Minister for Local Government and Regional Development, Simon Crean, to seek a meeting as an avenue to provide funding for this vital piece of infrastructure, which is so important to the Riverina and Tumut shire. It has been said that there is no argument for recognition of local government in the Constitution. In the Pape v Commissioner of Taxation matter it was determined that:

… the Commonwealth does not possess the power to fund whatever bodies and activities it desires. It may only directly expend federal money in areas where the Commonwealth can demonstrate that it has a specific power under the Australian Constitution to do so.

The Commonwealth does not have any general power under the Constitution to regulate or fund local government.

That is why it is so important that local government be recognised in the Constitution. The Commonwealth, as the overarching government in this nation, has to be able to provide money directly to local government so that money can go to the areas where it is so desperately needed. Road funding is one of those all-important areas.

In New South Wales the percentage of own-source revenue in 2005-06 was 84 per cent, so you can see how limited local government is in providing its own revenue when there are so many demands to provide avenues of community help and assistance. Particularly in New South Wales, where rates are capped, there are very limited opportunities for local governments to be able to provide the sorts of infrastructure that people demand and expect of their local shire councils. Roads, as the member for Parkes pointed out, are the lifeblood of this nation. Every grocery item that ends up in a metropolitan supermarket starts its life on a local government road in regional Australia. It is high time that local councils were able to access more money from the federal government to provide that infrastructure.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I thank the chamber for the opportunity to be able to speak briefly on this motion moved by the member for Lyne. I know there is keen interest among all of us in our local governments, and many members of the House were formerly members of local governments across the nation, as the member for Dawson was. Over the years, many constituents in my electorate have brought up this issue and the subject of taxes and the GST. They have often said to me that, when the GST was implemented back in 2001, their understanding was that it would result in the elimination of stamp duties and a whole range of other taxes across the board by the states. They relay all this to me: they voted in a GST back then because they were told it would cause the abolition of all the state taxes that were dogging them in their private and public lives at the time. People believed that would be the case in the post-2001 period—that is, with the introduction of the GST many taxes were going to be taken off, including the stamp duties in the states—and they feel that they did not get that deal and that they were perhaps dudded or conned. That is the feeling of the constituency out there; that is what I am hearing.

When we look at the GST and we look at what the proceeds could or should be used for, I always go back to that deal that the members of the community in my electorate thought they were signing up for originally and the fulfilment of that deal. As far as I am concerned, that deal has not yet been fulfilled. People expected stamp duties and a whole range of state taxes to have been abolished and they are still waiting for it a decade on. That is the impression out there in the real world. I think we should see how that particular deal the former government spoke about back in 2000 and 2001 can be honoured. Only after it has been honoured would I look to other things that could be done with the proceeds of the goods and services tax.

I do not have an objection to funds raised by the Commonwealth going directly to local governments, and we see that happening across the country more and more. For example, recently in my own electorate, in the suburb of Glenelg in the local government area of the City of Holdfast Bay, we saw a brand new bridge built. Nearly $3.5 million came directly from the federal government to Holdfast Bay to partially fund the replacement of a bridge that had concrete cancer. Mayor Ken Rolland—a very good mayor who does an extremely good job in Holdfast Bay—was running to local and state governments, everywhere, to get the funding for the bridge, but he could not secure it. We then tried to get funding through the federal government, and can I say that I was very pleased to be able to secure the money for the bridge in the Holdfast Bay council area. The old King Street Bridge has now been renamed the Michael Herbert Bridge. I was very pleased to be with the mayor not that long ago to conduct the opening of this wonderful bridge, which carries about 10,000 vehicles every day. This is an example of direct funding from the federal government to a local government.

As I said, I do not have an objection to Commonwealth funding or any funds being raised by the Commonwealth going directly to local governments; but, at the same time, I cannot support this motion as it would delay or further diminish the likelihood of the deal that was struck between the previous government and the public being honoured. It so happens that that deal included more taxes than stamp duty. Some have been abolished, to be fair; but the matter is not settled. It seems that representatives from the community, including the business community, are not content with the situation as it stands. They, too, acknowledge that there is more work to be done towards the fulfilment of the original promise of displacing all state taxes with the GST.

The tax summit that was convened by the government in October 2011 bore witness to this perspective by everyone who submitted or contributed to it. The tax summit concluded on a desire to reform state based taxation with the states and to develop agreement across the country on a system of taxation which diminishes the economic drag of taxation— (Time expired)

Debate adjourned.