House debates

Wednesday, 5 June 2013


Constitution Alteration (Local Government) 2013; Second Reading

11:55 am

Photo of Michelle RowlandMichelle Rowland (Greenway, Australian Labor Party) Share this | | Hansard source

I rise to strongly support the Constitution Alteration (Local Government) 2013, and I do so as the Chair of the former Select Committee on Constitutional Recognition of Local Government and as a former Deputy Mayor of Blacktown City Council, the most populous local government area in New South Wales.

The road to financial recognition of local government has been long and it has been hard, but it has gained momentum in recent years due to a number of factors. These include, but are not limited to, a number of High Court decisions, which have in themselves cast some doubt on direct Commonwealth funding to certain entities. These cases include those of Pape and Williams, which I will explore later, which have placed some uncertainty around the way the Commonwealth can and does fund our local communities, including the roads, libraries, childcare centres and sporting facilities built and maintained by local councils and shires across Australia.

In local government circles and, certainly, in the wider community and amongst people who are interested in issues of constitutional reform, this issue has been on the agenda for decades. Anyone with a local government background would know this. The Independent Expert Panel on Constitutional Recognition of Local Government, chaired by the Hon. James Spigelman AC, QC, was appointed in August 2011 by the Australian government to consult with the community on whether Australia's Constitution should be changed to include local government. It reported to government in December 2011.

The expert panel did two very important things. Firstly, it specifically recommended that recognition of local government in the Constitution should take the form of financial recognition. It expressly ruled out other forms of recognition, such as symbolic recognition, or recognition through federal cooperation, which were two other forms of recognition that were explored. Secondly, the expert panel recommended the form of words that should be added to section 96 of the Constitution, which are:

… or to any local government body formed by State or Territory legislation …

This means that the proposal would change section 96 to read:

… the Parliament may grant financial assistance to any State or to any local government body formed by State or Territory legislation on such terms and conditions as the Parliament sees fit.

Following on from the work of the expert panel, the Joint Select Committee on Constitutional Recognition of Local Government, established under the unanimous remit of this place, was established by the parliament on 1 November 2012, and received full membership on 28 November 2012.

The committee assessed the likelihood of success of a referendum on financial recognition, amongst other things, and in March this year the committee handed down its final report, making one recommendation that:

Taking the major finding into consideration, the Committee recommends that a referendum on the financial recognition of local government be put to Australian voters at the 2013 federal election.

Finally, on 9 May this year, the Prime Minister announced that the government is planning to hold a referendum on 14 September to recognise local government in our Constitution. The government has proposed wording based on the wording suggested by the expert panel, and subsequently endorsed by the committee.

The issue then arises: why vote 'yes'? At the time of drafting the Constitution, local governments were not included in the section 96 Commonwealth funding head of power. The financial arrangements that were outlined in the Constitution over 100 years ago reflected the financial arrangements that existed at that time. The colony governments, soon to become state governments, were relatively independent and guarded that independence jealously. From a financial perspective they held the majority of the revenue-raising ability compared to the Commonwealth. Over time, this situation has of course changed. The Commonwealth is now the main revenue raiser in the nation and distributes its revenues to the states directly, as well as to local community and other projects, which includes local government. The Commonwealth has been providing substantial funds to local government for over two decades or, indeed, over four decades if you include factors such as the Regional Employment Development Scheme, which began in the 1970s.

What has been common practice for the benefit of local communities should indeed be recognised in the Constitution. This was a key issue that was considered in the joint select committee process. We heard from a variety of constitutional experts, including Professor Anne Twomey, Professor George Williams, Professor Alexander Brown and the Chair of the Legal Practice Section of the Law Council of Australia, Ms Maureen Peatman, on whether these forms of funding could be at risk. The committee also heard from Mr Ronald Williams, who brought the school chaplains case before the High Court, which found, amongst other things, that funding by the Commonwealth of the school chaplaincy program was unconstitutional. As noted by the committee in its preliminary report, the High Court's decision in that case was likely to bolster the confidence of people willing to challenge the Commonwealth on constitutional grounds.

As was noted in the initial report, the question arose as to whether it would not be a matter of 'if' but 'when' the presently understood ability of the Commonwealth to fund local government would or could be struck down. It was also noted in that interim report that those High Court decisions did create some uncertainty with regard to ongoing direct funding of programs such as Roads to Recovery, with some experts appearing before the committee giving views that it would most likely be found unconstitutional.

As all members would be aware, in response to this case the parliament passed remedial legislation, the Financial Framework Legislation Amendment (No. 3) Act, in June 2012 to remedy the decisions arising from these cases. Importantly, the reason I mention this is that, from the evidence given to the committee by Mr Williams, it was quite obvious that he expected to take these issues back to the High Court and again challenge the school chaplaincy program on constitutional grounds. As he said, 'While I was listening to parliament live'—on the financial framework legislation amendment debate—'I made my decision that we must take this back to the High Court.'

In light of all this evidence brought before the committee, we were determined to make an evidence based decision, and that we did. While opinions for and against the referendum varied, the 173 submissions from local government bodies and seven from local government associations were resoundingly in favour of holding a referendum to effect financial recognition by amending section 96 of the Constitution. The issues of constitutional cases are not, I believe, the most compelling reason to support this bill. As I mentioned previously, the role of local government has evolved dramatically over the past few decades, and a big part of that is the changing nature of the federal/local government dynamic. As someone whose first experience in public office was as a local councillor, I find few things give me greater satisfaction than delivering on things that make a tangible difference to people's lives, such as a new sporting field, a new playground, a new girl guides hall and even a new long-jump pit. That is because financial recognition of local government goes to the very heart of what it means to be a federated nation and people's expectations of what their government should provide for local communities.

In my local community this government has partnered with local councils to achieve great outcomes and I will just name a few: $7 million to Blacktown City Council for the Roads to Recovery program from 2009 to 2410; $450,000 to upgrade to the CV Kelly Park, in Girraween in Holroyd council's area, which has been welcomed greatly by the local community including the Girraween Little Athletics Association and many other sporting groups; $250,000 to upgrade International Peace Park in Seven Hills specifically for the benefit of Seven Hills Junior Rugby League Club and their clubhouse; and $4.5 million for the upgrade of Burdekin Road in Quakers Hill. And I am pleased to be on a unity ticket with the Liberal Mayor of Blacktown, Councillor Len Robinson, who has said on the issue of financial recognition of local government and the proposed referendum:

If we are not recognised in the Constitution, we won't have access to federal funding streams such as the Roads to Recovery and the Black Spot programs. This will cause a noticeable reduction in the work we are doing on our local roads.

This is an issue with widespread community support, and recent polling tells us that. It is also an issue with widespread political support, and I know that at the federal level.

I wish to acknowledge the presence in the chamber of the member for Ryan, a former councillor for the largest council area in Australia, that of Brisbane City Council, and also one of the other speakers on the list, the member for Parkes, who has a great recognition of the important role federal funding plays in his area, particularly when it comes to regionally focused funding programs. I also welcome the Leader of the Opposition's support for constitutional recognition of local government and I encourage him to lobby some of his state colleagues on the matter. In my home state of New South Wales, Premier O'Farrell's government once did support constitutional recognition, when they were in opposition. Since coming to power, unfortunately, they have walked away from this.

As noted by the committee, and I think this is a very important thing to address, the support of the states would greatly enhance the prospects of the referendum's success. I would encourage all members of this place and all state members of parliament to campaign with their local councils in support of this. Local councils expressed their great support to the committee and I am reminded of the evidence provided by the Mayor of Mount Isa, the Hon. Councillor Tony McGrady AM, who told the committee:

... the reality is that any politician who came out against this proposal would have to answer to his or her peers. I am quite confident that a campaign led by local councils would guarantee support for and the success of this referendum.

As I mentioned, in my local community this federal government has worked with local governments to achieve some fantastic outcomes for residents. I do fear that outcomes are at risk in the future, whether or not in the immediate future but certainly in the long-term future, unless this referendum is successful. Since 2009 the federal Labor government has provided $2,896,500 to local councils in my electorate to fund a variety of projects. In addition to those I have mentioned, they include road upgrades, playground upgrades, sporting upgrades and much more.

I know there is a campaign for the 'no case' underway. One of the things that I have seen mentioned in that no case is the issue of funding. I think that there are three important points to note in the issue of funding, and again I would acknowledge the member for Ryan who raised the issue of civics education in this. The three things I think we should be aware of are: firstly, it is the fact that if there is a no vote in either house by a member it would trigger the requirement for the Electoral Commission to produce both the yes and the no pamphlets, which will go out for any referendum. There is also the question of funding for partisan cases. It is always a government decision on the proportion of funding that would be given to the yes and no cases, but this is always informed and assisted by the vote in the parliament on the matter, which I think is very appropriate.

In addition, there is a national awareness education campaign so that people are aware of this proposed Constitutional reform, what is happening, what it would actually propose and what it would actually mean. We live in a democracy. People can make up their own minds about whether to vote yes or no, but I think that it is very important for people to know the facts about these issues, and I am sure that no-one in this place would disagree with that.

In conclusion, I would like to note that unless specific programs are supported by a head of power in the Constitution, then funds would need to be channelled through the states and through the states only if they are to reach local communities. I am concerned that any flexibility that the Commonwealth and local government enjoy could potentially be lost in the future. As I have said, I think that is a factor and it is certainly the evidence that we took in the joint select committee. It was the evidence that we heard. But more importantly, I think that it is very important to recognise that this is a modest change. We are recognising that we have three tiers of government in 2013 and we have had three tiers of government and of partnering between the Commonwealth tier and the local tier for a very long time. We need to recognise that our Constitution is a living entity. I think that it is important for the community to be ready to talk about the Constitution again. Sometimes we do it with regard to campaigns that have been often on the agenda and we need to remember that the last time we actually voted in a referendum was in 1999 on the issue of an Australian head of state. At that time, we did not have the same mechanisms that are available to us today to disseminate information, to conduct campaigns and to conduct them more quickly, and to involve so many more people. The advent of new technology since 1999, quite frankly, is beyond belief. I think that the more people we engage with, the more people we can let know about the relationships and partnerships enjoyed between the federal and local level that are important to our everyday lives, the more that people will come to understand how important it is to vote in this yes case. So I am very pleased to support this motion before the parliament and for everyone to be aware and to have their say and make an informed choice on this matter on 14 September.

12:10 pm

Photo of Jane PrenticeJane Prentice (Ryan, Liberal Party) Share this | | Hansard source

I rise to speak on the Constitution Alteration (Local Government) 2013, and I would like to start by acknowledging the very recent comments and contribution made by the member for Greenway. Local government is the real lifeblood of Australian politics. It is without doubt the level of politics closest to the people. That is not just a slogan; those words sum up a patently obvious reality. I make this observation as someone who has spent many years as a local councillor and member of civic cabinet in Australia's largest council, the Brisbane City Council. Being in this place emphasises the importance of local government, because the reality of federal and state politics is that parliamentary responsibilities take you away from your electorate so often.

So it is against this experience that I have made my judgement about this matter. Happily, my judgment coincides with the coalition's policy on this issue. This bill includes the official wording to be put to the Australian people to amend section 96 of the Constitution. The referendum to be considered at the federal election would amend section 96, to read:

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to a State, or local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit.

This bill has been a long time coming during this session of parliament. In August 2011, the government formed the Expert Panel on Constitutional Recognition of Local Government, the 'expert panel', to identify options for the Constitutional recognition of local government and to report on the level of support for such recognition among stakeholders and in the general community.

I was honoured to be the coalition representative on that expert panel and to hear many submissions from people all over Australia. The expert panel's final report in December 2011 stated:

The majority of panel members support a referendum in 2013 subject to two conditions: first, that the Commonwealth negotiate with the States to achieve their support for the financial recognition option; and second, that the Commonwealth adopt steps suggested by ALGA necessary to achieve informed and positive public engagement with the issue, as set out in the section of this report on the concerns about a failed referendum. Steps include allocating substantial resources to a major public awareness campaign and making changes to the referendum process.

As such, the expert panel was supportive of a 2013 referendum on financial recognition of local government through a change to section 96 of the Constitution, provided two conditions were met. The first condition was negotiation with the states to achieve their support for the government's proposed question and, secondly, to take steps as recommended by Australian Local Government Association to achieve informed and positive public engagement with the issue.

And what did the federal Labor government do? They did nothing. They sat on their hands. They did not engage with the states and they set this referendum up to fail. Then in November 2012, the government dallied and delayed further and then formed the Parliamentary Joint Select Committee on Constitutional Recognition of Local Government. It took this government until 29 May 2013—17 months after the expert panel's report—to finally introduce a bill to allow a referendum on the Constitutional recognition of local government at this year's federal election.

What are the issues that underpin this debate? Firstly, there is no doubt that there are issues with funding for local government. Indeed, the constitutional challenges to federal funding in the Pape and Williams cases demonstrated that there are issues going forward. As it stands, the door is open to legally challenge funding programs such as Roads to Recovery, Regional and Local Community Infrastructure, Pathways to Adaptation, Regional Partnerships and the Regional Development Australian Fund. This is, therefore, an important referendum. By including local government in the Australian Constitution it will confirm the federal government's ability to provide funding directly to councils and give local communities certainty about funding for vital infrastructure and community services.

More generally, as Professor AJ Brown said in his comments to the hearing held in Sydney earlier this year, this constitutional change should not be seen as anything more than a new conduit for funding to local government. It is not about taking away the rights of state governments; it is more about funding local government to provide specific services on the ground. Professor Brown's report states:

... this is a mechanism for local government to get a larger agreed share of the total financial pie. That is what local government is legitimately looking for and that is what it should be looking for.

State governments are incrementally allowing local government a larger share of responsibility and resources in the federal system as a whole, as is the federal government. When anything major happens, the first thing that both federal and state governments agree on, (once they have agreed that they need to do something,) is who is going to do it, and more often than not local government plays a huge role.

I think we have all seen that over the years. We have seen the shifting of responsibility from state and federal governments down to local government. Because local government is closer to the people, because it does have that community contact, they are in a place to deliver programs and projects more efficiently, more effectively and, quite frankly, with better financial value than many of the state and federal governments. Dare I say it, if local government had delivered the pink batts scheme, it would have worked. You are never going to achieve something like that from the federal government level.

Speaking to local government representatives in Queensland, they are very aware of the disparate relationship between revenue and service delivery. The Australian Bureau of Statistics has previously confirmed that Commonwealth government taxation revenue represents 80 per cent of taxation revenue for all levels of government. Approximately 16 per cent of revenue is collected by the states, with a mere four per cent going to local government authorities. If we talk about actual service delivery, those figures are reversed: the vast majority of services are provided by local governments.

Once again, it is all very well shifting the jobs onto local government, but we need to be able to fund them so that they can do it effectively. Local governments now do everything from running the bus and transport system to providing libraries and child care. Councils are responsible for making their regions better places to live through arts and cultural programs, recreational facilities, events and festivals, youth development programs, and healthy environments.

Through economic development initiatives, councils help create jobs in their communities. In fact, local government is one of the largest employment sectors. In Queensland, more than 40,000 people work for councils as full-time, part-time and casual employees and apprentices and trainees. Because they are closest to the people on a day-to-day basis they pick up the need in the community because they see and understand it. They know what their communities want. We need to be able to fund them effectively.

Federal funding for local government projects has been particularly important. The Roads to Recovery program has delivered $356 million in roads funding to Queensland communities since 2009; the Regional and Community Infrastructure Program has delivered more than $146 million since 2008-09; and the Regional Development Australia Fund has provided $54.1 million since 2011 to Queensland communities and councils.

In recognition of these successful programs, it is no surprise that local government organisations, including ALGA, LGAQ and the myriad of individual councils across this country, support financial recognition of local governments. They have worked constructively with federal governments in the past, but they need certainty that our Constitution will allow the federal government to continue this cooperative relationship. It is therefore crucial that we discuss how to supplement local government revenue, given the inherent constraints they face in raising revenue. As Professor Brown said during the committee hearings:

So we really need to recognise that this is about increasing, in a planned, sustainable way, the financial flows of resources to local government—growing them, even though that should occur necessarily as a result of both federal government and state government being prepared to share those resources with the third tier of government more effectively. That is what this is about.

The other issue that Professor Brown highlighted, and with which I agree, is that any change that could possibly pass as a referendum would need to leave regulatory control over local government with state governments, as it is currently. Once again, I highlight that this is not a conspiracy to wipe out state governments. We all agree that regulatory control over local government should be left with the states.

Constitutional recognition will not change the status of local government, its powers, or its relationship with the state government. Councils will remain the responsibility of state governments. The states will still be able to amalgamate councils, de-amalgamate councils, change council boundaries and dismiss nonperforming councils.

However, it is true that Commonwealth funding via state governments is inefficient, ineffective and can result in a reduction of the money flowing to local government. The referendum will simply formalise what has already been happening for more than ten years. This is about providing a more effective and efficient conduit for financial delivery for the states.

The coalition supports this referendum. A successful outcome will provide local governments across Australia with the financial security that allows for proper and sensible planning. That planning will, quite simply, provide for more effective local government with better outcomes for local communities. It will also reflect the reality that the implementation of most decisions regarding our nation's infrastructure are carried out at a local level. This reinforcement of the role of local government will provide for better, more informed decision making as local government's role is constitutionally recognised and legal certainty as to funding and the role of the Australian government's support of local government is provided.

This is a win-win situation. Local government will work more effectively. The states will retain their role. The federal government can provide financial support in response to the needs identified by those closest to the people. Most importantly, the real beneficiaries will be the people of Australia—better served, better represented and with better outcomes through more informed local input through effective local government.

12:22 pm

Photo of Julie OwensJulie Owens (Parramatta, Australian Labor Party) Share this | | Hansard source

I am pleased to stand to speak on the Constitution Alteration (Local Government) 2013 which is a bill to alter section 96 of the Constitution to specifically state that the Commonwealth may grant financial assistance to local government bodies formed by a law of the state. The bill simply recommends the introduction of 17 words to section 96 for consideration at the referendum on 14 September. Those 17 words essentially put into the Constitution what is already happening in our system of governance in this country.

When the Constitution was first drafted 100 years ago, the role of councils was significantly different compared to now. The roles of the states were incredibly important. They were the principal governing bodies and they are well and truly recognised in the Constitution. But the role of councils, which were very new, was essentially to grade a few roads to keep them clear for horses and to deal with rubbish collection and not much more than that. So we had councils which were never recognised in the Constitution. Perhaps at the time there was no reason to do so, as the federal and state relationship was the major one that needed to be dealt with. Now, of course, our local councils are remarkably different to that.

I have two councils in my electorate, Holroyd and Parramatta, that cover most of my electorate but Auburn and Hills have little bits on the edges. All are remarkably different councils but they all provide an incredible range of services, from child care to sporting fields to rubbish collection to footpaths to road maintenance, coordinating and assisting a whole range of groups from bushcare groups to people who help the homeless.

In fact, so great is the role of local councils that when I am doorknocking—and I do a lot of doorknocking; I managed to pass the 70,000 houses mark a couple of week ago but unfortunately half of them are in another electorate now due to a redistribution—it is the local council issues that are most often raised. It is the state of a road, whether a local road is being used as a major thoroughfare or whether a footpath needs to be replaced. It is the things that affect daily lives of people. These are the things where the people of our community interact mostly with government and in the most cases their major interaction is with local government.

I find when I am dealing with community organisations, particularly the grassroots organisations, so strong is the influence of council and the support that council provides those organisations that they tend to fall within council boundaries. So the bushcare organisations in the Parramatta area will fall under the umbrella of the Parramatta City Council and they will all know each other, or they will fall under the umbrella of the Holroyd City Council and they will know each other. People who work with the homeless, and particularly the grassroots organisations, will tend to work within one council area or another as the level of financial and other kinds of support given by councils leads to this sort of separation along council lines.

Federal governments over time have recognised this and increasingly we are seeing federal governments contribute directly to local governments. In the past five years alone, the Commonwealth has partnered with local government to deliver over 6,000 community projects which range from things such as libraries, indoor and outdoor sporting facilities, pools, walking trails and bike tracks to bridges, in virtually every single community right across Australia. The practice of the Commonwealth government providing funding directly to local councils is a longstanding one that is well received at local council level and by our local communities.

In the electorate of Parramatta there have been some extraordinary projects funded. In fact, there has been over $2.3 million given for 17 black spots across the electorate since 2007 when I was elected. I had been out to a number of those spots and talked to residents before the funding was given. I had gone out later to see the effects on the local community of that funding. We have received several grants to improve energy efficiency. Our local council of Parramatta, in particular, received more than $550,000 for the upgrading of lighting, heating, cooling and ventilation and the building management system at Riverside and for new lighting in a number of council car parks in the area.

If you then look at sporting and recreational facilities, there was $450,000 for the Kelly Park upgrade—the park playground equipment. That was funded directly in Merrylands. The MJ Bennett Reserve upgrade provided playground equipment and a memorial wall and resurfaced the basketball court. There have been a number of national bike path projects through Parramatta. Most people, including the Attorney-General, know that I am a cyclist and I have ridden over those bike paths probably three to four mornings a week for most of the last 10 years. Every time another bit of it turns up, there is a major celebration.

We have an extraordinarily beautiful river in the Parramatta River, if you are down there at full tide early in the morning or late at night when the river is calm and full. The bike paths that have been funded through that project have opened up some of the most beautiful parts of our foreshore and well and truly linked incredible infrastructure like the great parks at Homebush to Parramatta right through to Richmond now. It is important. We cyclists have well and truly enjoyed that.

The bushcare groups tell me they like it as well because it lets them get into some areas that they could not get into and replant seagrass and such things. There is also an upgrade of Sturt Park, upgrades of parks and reserves at Carlingford and Epping and improved access for a pedestrian path at Harvey Murray Park. There was also quite extensive funding for disability access to buildings and to bus stations which again form an incredibly important funding flow for our local community.

So what does this change actually mean? We have a terrible history in Australia of voting for referendums. I and my local councils really hope this one will be significantly different. The change in many ways is a minimal change. It is the smallest change you could possibly make in order to capture in the federal Constitution what is already happening. The change is worth talking through. The section 96 heading is 'Financial assistance to States'—because, again, a hundred years ago that was the relationship between state and federal governments and councils were mostly very small organisations at the time—and it changes the heading to 'Financial assistance to states and local government bodies'. So the change adds four words—'and local government bodies'.

The next paragraph, as it is now, reads:

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State …

I am wondering whether we could lose the words 'During a period of ten years after the establishment of the Commonwealth', Attorney-General, because I think the 10 years has passed. The change adds another 13 words. It adds 'or to any local government body formed by a law of a State'. So it would then read: 'During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State, or any local government body formed by a law of a State'. I point out again that the provision of financial assistance to a local government body formed by a law of a state is something that already happens and has happened for many years, and I have outlined already some of the projects funded under that practice which is currently in place.

This minimal change leaves alone any question of Commonwealth involvement in the management of councils. That is well and truly a role for the state. States form councils, they can amalgamate them, they can abolish them and they have oversight of them. This change to the Constitution leaves that as it is. There is no change to the relationship between the Commonwealth government and local council, except that it recognises that Commonwealth governments do provide financial assistance to local councils. This is an incredibly minimal change that recognises the reality of the three levels of governance in Australia.

I should also add that these words were developed in incredibly strong consultation with local councils. They are, in fact, the choice of local councils. As a person who spends a lot of time trying to remove words from every document I ever write, I have to say that this is an incredibly efficient way to make a minimal change that simply recognises the existing relationship between Commonwealth government and local councils in terms of funding, and leaves alone the responsibility for local councils with state government. I commend the bill to the House.

12:33 pm

Photo of Mark CoultonMark Coulton (Parkes, National Party) Share this | | Hansard source

I rise here this afternoon to speak on this bill, Constitution Alteration (Local Government) 2013, and to add my support for the referendum to recognise local government in the Constitution. In February 2008 when I made my very first speech in this chamber, I mentioned local government and the important role that it plays in local communities and the relationship between local government and the federal government. It was my involvement through local government that found me leaving my former occupation as a farmer and coming down here. While local government is the government closest to the people, quite often it is the decisions that are made here and in different state capitals around the country that impact on local communities. So that relationship between federal, state and local governments is very important.

I would like to say from the outset that I am disappointed about the process. I believe that we are undertaking this process at five minutes to midnight. Indeed, going back to the hearing of the committee that was set up to look at the success of this referendum, back in January the Electoral Commission said that they believed that optimally they would need six months to conduct a referendum. I will not go into the reasons why that was delayed, but to have it announced when it was, four months out, is going to make it that much harder. But, having said that, the decision has been made to have this referendum, and therefore the Australian people need to get behind it.

I represent 17 local government areas in the electorate of Parkes. One of the issues is that in regional areas the relationship between the federal government and the local entity is more important than in the larger metropolitan areas, because a lot of the services that are taken care of by either state or federal governments or, indeed, private enterprise in a large metropolitan area are left to the local councils in regional areas. Professor Anne Twomey, back in January when she addressed the committee of which I was a member, spoke in opposition to this referendum. One of the reasons she gave was that she believed this change would unfairly favour local governments in regional areas. Indeed, that would be one reason why I would be supporting it. But I think that this is minimal. In some ways I believe we should be going further, because what we have here is a minimal change.

It has been very frustrating that some of the state governments and some quite well-known commentators and ex-members of this place have been very vocal in their opposition to this. Their position in opposition was before the wording was even known. I wonder how you could be strongly opposed to something when you do not even know what was being proposed. When the wording did come out, this was seen as a minimal change. The previous speaker, the member for Parramatta, indicated that this is a minimal change. It is basically fixing up the loopholes that would make direct funding vulnerable to a High Court challenge. I believe the Williams case on school chaplaincy and the Pape case on the stimulus program, which are well-known challenges in the High Court, have put the relationship between the Commonwealth and local government in jeopardy, and I do not believe that we can be sure that we can continue on with the programs we do if we are subject to another High Court challenge.

This is not a change to the relationship between state and local government. Local government is the creature of the states; it is pretty well wholly and solely owned and controlled by the states. This change does not alter that. Some of the website comments I have seen—that this is some sort of power grab from Canberra—are nonsense. The great conspiracy theorists of our country are coming out and speaking about Agenda 21 and a whole range of other quite bizarre movements as being behind this. I find that a nonsense. This is a bit of housekeeping—a minimal change—and should be seen as that.

Historically, some successful programs have come out of this place. In the previous Howard government my predecessor in the now abolished seat of Gwydir, John Anderson, was very much involved in the Roads to Recovery program. It has been a very successful program right across the country. All but maybe three of my councils would be unviable without that program. In more recent times, there has been the rollout of funding under the stimulus programs during the global financial crisis. There has been a lot of discussion about how some of those programs were disasters—look at the pink batts program and at the mismanaged school halls program. But I can tell you there is one program that was rolled out under the Rudd government which you do not hear any complaints about, and that is the funding for regional infrastructure that went out to every local government in the whole 500-odd local government areas in Australia. I have not heard any complaints that that funding was not spent in a timely manner; and it also leveraged other funding in those communities. That funding, which came from the federal government during that period, was multiplied to great effect. I can take you right around my electorate to see programs that were rolled out under that program at that time; programs that were a success because they were under the management of local government. We should acknowledge that.

During the time that I was a former mayor of Gwydir Shire Council, the council ended up having two medical centres—one in Bingara and one in Warialda—that were partly funded by the federal government. Indeed, when I was mayor, the Warialda centre was, I think, funded under the health infrastructure fund under the Regional Partnerships program. That was a program that was very well regarded in regional Australia, despite the attempt by the current government during 2008-2009 to try and destroy the reputation of that program, and Regional Partnerships was a very effective program. Indeed, if you go right around Australia you will see some magnificent pieces of community infrastructure funded by that program. But going back to the medical centre, towns like Warialda now have doctors—because we have a community-owned medical centre that was funded by the local council with assistance from the federal government. In many regional areas, the local healthcare facilities are owned by the council. I have quite a few of those in my electorate. That is another relationship where the federal government directly funds local government through health care. I could go on and on about how that is needed. I find it very frustrating that we seem to be getting into a philosophical argument on this without an understanding of the practical ramifications. One of the positives of the programs that go straight through to the local government is that they do not have to deal with the state bureaucracy; the local government can target the money to where it is needed. I am not sure what the Roads to Recovery program involves now but I understand that when it was established there was only a handful of bureaucrats that managed that program, and pretty well every cent of the money ended up being laid out as roadworks, and not gobbled up by state bureaucracies.

Mr Deputy Speaker, the Australian people do have a decision to make on 14 September: as well as deciding who is going to be the government of the day, they need to decide where they stand on this. I believe that due to the short time frame, every council right across Australia should be campaigning to make their residents aware of the importance of this referendum. They need to calm down—hose down—the conspiracy theorists and they need to point out to people that the sporting fields that they train on, the local pool that they use, and the local medical centre that they attend have all been possible because of a relationship between their council and the federal government. This is a bipartisan referendum, and I will acknowledge that it is the policy of the coalition, as it is of the government, that we support this referendum. Indeed, I believe that all members in this place should be doing that.

Australia does have a poor record when it comes to supporting referendums. I would just ask that the Australian people look at this and realise that it is a minimalistic request; realise that it is not going to change the balance of power or the relationship between the three levels of government; realise that it is just going to give certainty to programs of which they would be aware and from which they are gaining benefit in their communities; and get in and support this referendum. Dismiss the nay-sayers, dismiss the conspiracy theorists and dismiss those who may be trying to find their time in the sunshine again and get a public profile over an issue. This is basic housekeeping, it is not major reform, and not only should this House get behind this referendum but, indeed, everyone in Australia should support this. It is just common sense.

12:46 pm

Photo of Geoff LyonsGeoff Lyons (Bass, Australian Labor Party) Share this | | Hansard source

I rise in the House to add my remarks to the proposed Constitution Alteration (Local Government) 2013. The Australian Constitution is the nation's founding political and legal document, and was developed in a series of constitutional conventions in the 1890s. It came into effect at Federation in 1901. Australia has changed significantly since then, and it is quite sensible to recognise local government in that document.

It is notable that in the last five years the Commonwealth has partnered with local government to deliver over 6,000 community projects to generate local employment and provide long-term benefits for local communities. These are in addition to the repair and upkeep of roads that have taken place at 16,000 road sites across Australia under the Roads to Recovery scheme. Working with local government, we the Labor government have invested billions of dollars in constructing sporting grounds, libraries, ovals, parks, gardens, town halls and community centres.

In my electorate of Bass this partnership is evident in many projects. During May this year the federal government announced Black Spot funding and community heritage grants. In the last five years, federal Labor money has gone to Aurora Stadium, to the regional tennis centre, to the regional swimming centre and to many other sporting and cultural facilities. The federal government and the local government have worked together to build lasting infrastructure during the global financial crisis and to keep jobs in local communities.

To give some background on this particular issue, local government is now recognised in all state constitutions. The Commonwealth Constitutional Convention, established by the Whitlam government, recommended at a number of sessions between 1973 and 1985 that local government be given recognition in state constitutions and/or the Australian Constitution. As a consequence, all states recognise local government. Proposals to recognise local government in the Australian Constitution have twice been put unsuccessfully: by the Whitlam government in 1974 and by the Hawke government in 1988. This issue is once again on the agenda and in August 2011 the government appointed an Independent Expert Panel on Constitutional Recognition for Local Government. I was pleased to attend one of those hearings in my electorate of Bass on 25 October 2011.

I am, however, alarmed that the opposition seem a bit divided on this issue. At a local meeting in Bass, the Liberal candidate for Bass followed and agreed with Olga Scully in saying that there should not be constitutional change to recognise local government. Indeed, those opposite seem divided on a number of issues lately, including paid parental leave and electoral funding. On the big issues, it seems that they just cannot get their act together.

In December 2011, the expert panel presented its final report, concluding that financial recognition of local government through an amendment to section 96 of the Constitution was a viable option in 2013. In 2012 the parliament established a Joint Select Committee on Constitutional Recognition of Local Government. The committee released its final report in March this year, and the committee recommended that a referendum on the financial recognition of local government be held in the 2013 federal election.

The alteration to section 96 would specify that state and Commonwealth 'may grant financial assistance to local government bodies formed by a law of the state'. The financial assistance can be for a wide range of services and facilities and, without limiting the generality of the specific provisions, the long title of the act refers to grants of financial assistance for community and other services typically provided by local government bodies.

The Prime Minister, on 9 May, announced that the government was planning to hold a referendum on 14 September 2013 to recognise local government in the Constitution. The terms of the proposal were publicly released on 16 May. This is a modest but important change to ensure our Constitution remains relevant and reflects all spheres of government in Australia.

If you know how to swim today, the chances are you learnt to swim in your local pool. If you kick a footy with your mates on weekends, the chances are you learnt to do that on the council-run oval and of course there is the example we all know of, when you pull out of your driveway, the chances are that the street you are on is maintained by your local council. Many of these facilities are provided in partnership with federal government. Despite this modern reality, the Constitution is silent on the role of local government. We are asking the Australian people, on 14 September, to support a modest change to the Constitution. It is a common sense change, which should be supported. It is about saying 'yes' to retain important community benefits; it is about saying 'yes' to our communities.

But I would not like to see this change that is being proposed in any way diminish the role of states with regard to administration of local government. Recognition in the Constitution does not alter the fact that local governments are created by and are accountable to state governments. Constitutional recognition has never pretended to address the issue of financial sustainability. Local governments remain responsible to the states. From time to time, the Commonwealth continues to contribute in the form of financial assistance, grants and other support.

I thank local councils in my electorate for the work they do in making our community a better place to live. I enjoy a great working relationship with the councils in Bass. Local government is important to Australia and that is why I support this change to the Constitution. It is time for a sensible, modest change to the Australian Constitution to reflect the reality that, for many years, the Commonwealth has partnered with local government to deliver services and infrastructure that are essential to our local communities.

12:52 pm

Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | | Hansard source

I rise to speak on the bill: Constitution Alteration (Local Government) 2013. Our Australian Constitution is not just another piece of legislation; it is the document that is the heart of our very democracy. In drafting our Constitution, our forefathers well understood the dangers of centralisation of powers. They understood that decisions about how our nation is governed are best decided by those closest to the coalface. So our Constitution was designed with built-in checks and balances, to limit the power of politicians and government bureaucrats so that no particular person or group had total control. It has served our nation well for over 100 years. Therefore, we should not make any change to our Constitution lightly.

I suppose it is the sceptic in me but I believe that, when considering any change to our Constitution, no matter how small or how superficial, we should apply the Adam Smith test. Over 200 years ago Adam Smith warned in The Wealth of Nations:

The proposal of any new law or regulation … ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.

And that is the test that we must apply to any proposed change to our Constitution.

These changes that are being proposed are being marketed under the slogan of recognising local government. 'Recognising' is certainly an emotive word—everyone wants to be recognised—and with some notable exceptions the majority of our local councils are doing a very fine job. The electorate of Hughes, which I represent, overlaps three local council areas: Liverpool, Bankstown and Sutherland. All three councils are doing a fine job in very difficult circumstances. They are providing a wide array of services: child care, sporting fields, swimming pools, libraries, local roads, disability programs, arts festivals and galleries, buses and more. We would all like to see our local government recognised for the great work that they are currently doing.

But, coming to the proposed changes, the word 'recognised' does not actually appear in these proposed legislative changes. Section 96—excluding the short preamble—of the Constitution currently states:

… the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

The proposals will see 13 words added to that; so, if amended, it would read:

… the Parliament may grant financial assistance to any State, or to any local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit.

So the word 'recognition' is not in these changes.

There have been two previous attempts to pass constitutional changes regarding local government, and both have been defeated. If we all agree that our local councils are doing such a good job, despite two previous questions being defeated, why is there a need for change and why is there a need for change now?

I understood that the central argument underpinning the yes case for this proposed referendum question being put arose from two recent High Court cases, Pape v Commissioner of Taxation and Williams v Commonwealth of Australia, and that the High Court's decision in those cases brought into question the legality of direct federal funding to local governments. At first glance, it seems that these High Court decisions gave an overwhelming reason to support the yes case. However, what I found surprising is that these very central arguments about these two court cases, which apparently brought the legality of direct federal funding into question, were not even mentioned anywhere in the explanatory memorandum; nor was this argument used or were these two cases mentioned even once by the Attorney-General when he delivered his second reading speech. So it was with great interest that I read the comments of Anne Twomey, professor of constitutional law at the University of Sydney. The professor has noted:

… neither case threatened, at all, the capacity for the Commonwealth to fund local government, as this may still validly occur through s 96 grants.

… … …

… The Pape and Williams cases appear to be being used to manufacture a ‘problem’ which constitutional amendment can purportedly fix. … Whether there is a genuine ‘problem’ … and whether an amendment will give rise to any tangible benefits … remain matters of debate.

The professor continued:

It is difficult to argue that the potential unconstitutionality of such grants is the ‘problem’ that needs to be ‘fixed’ by a referendum, when there is another, clearly valid, way of giving the same amount of money to the States for the same purposes without the need for a constitutional amendment. In effect, there is no ‘problem’ – merely a perception of a problem …

So what appears to be the very central argument of this referendum appears to carry little weight. The so-called threat to local council funding, according to one of our most respected constitutional experts, appears to be a furphy.

The second argument for the yes case appears to be the thought that local councils will end up with more money in their coffers. According to the ALGA submission to the expert panel on this bill, it appeared to be based upon the assumption that simply changing the Constitution will result in more funding for local government and that funding will be secure. It is simply not clear how this would result from this amendment. If the yes case were successful, the Commonwealth would still increase or decrease its funding to local government as it does now. As Professor Twomey notes:

Arguments that constitutional recognition of local government is ‘required to guarantee Commonwealth funding of local government’ are flawed, because the mere fact that the Constitution is amended to permit the Commonwealth to make grants directly to local government, rather than through the States, does not in any way guarantee that it will give more money, or indeed, any money. It is not an obligation to fund local government, or to fund it to a particular level.

So, rather than more money for councils, could the opposite happen? Could councils get less money from these amendments? This is exactly what Professor Twomey warns—and again I quote:

Most supporters of the campaign, who are by and large members of local government bodies, appear to think that constitutional recognition will improve their status and the respect accorded to local government and that it will give rise to rivers of gold.

…   …   …

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.

We need to be clear: there is the potential—through these amendments—that councils in New South Wales, in my electorate of Hughes, could end up with less funding and not more.

There are other concerns but, on balance, although the arguments for the 'yes' case at first blush appear to have merit, upon further analysis they simply do not stand up. So we must closely examine if there are risks of unintended consequences from such a change of little substance. This is exactly what former Prime Minister Howard warned of when he said:

… even a casual reference to local government in the Constitution would end up having legal implications far beyond what might be advocated by the proponents of such a change.

And there does seem to be the real possibility of unintended consequences. There appears to be the chance that this change could give more power to Canberra. So the first question would be: is this a good or a bad thing? There are certainly some on the other side of the chamber that would say more power centralised in Canberra is a good thing. I say it is not. I believe that our local governments know best how to undertake local projects—far better than any state government and definitely far better than any unaccountable bureaucracy in Canberra—and we cannot risk that changing.

In considering this proposed constitutional amendment it is import to consider the full words of the amendment, which finish with: 'the money may be given on such terms and conditions as the parliament thinks fit'. This means that there are no limits whatsoever on the terms and conditions that the federal government can tie to giving a grant. And as the old saying goes, 'He who pays the piper calls the tune.' So if a local council receives federal money to re-turf a local sporting field, a federal government could make it a term and condition of that grant that that local council had to provide greater power to the union movement—or any other term and condition that the federal government might like to come up with. Professor Saunders has rung the bell loud on these dangers. The professor notes:

This is not constitutional recognition of local government. Constitutional recognition is about dignity. There is nothing dignified about receiving conditional grants under these kinds of arrangements.

Professor Saunders warns that this proposed change may mean that federal bureaucrats will be running local councils. A yes vote could see cash-strapped local councils being bullied and dictated to and forced to spend money in line with Canberra policies and priorities—contrary to what is what is good for our local communities.

Professors Aroney and Prasser in their submission to the expert panel also raised these concerns. They said:

Affirming the power of the Commonwealth to make financial grants to local government, though superficially attractive, will not necessarily strengthen local government, but have every potential, especially in the long term, to increase the power of the Commonwealth … over local government.

Local government may appear to benefit from a relatively greater level of independence from the States and from the establishment of a constitutionally secure source of funding, but it would do so at the expense of greater subordination to the Commonwealth, a much more distant government that is inherently less likely to be responsive to the concerns of particular local communities

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.

That is definitely a serious concern about this proposed amendment.

The other concern is that the panel itself accepted that there is a very real doubt about the constitutional validity of direct grant programs that do not fall under a head of Commonwealth legislative powers, but they acknowledged that they could be made under section 96. The panel further went on to note that one of the reasons it had been argued as to why this was needed was that the Commonwealth was more likely to fund local government if it can do so directly 'with all the political advantages that entails'. This is simply an argument in favour of the Commonwealth government pork-barrelling local councils. If bureaucrats in Canberra can be directed to direct the funding of our local governments based on political agendas and priorities of the Canberra based federal government, how is this in our nation's best interests?

Another concern is that there are currently two lines of authority. Councils at the moment are agencies of the state; they take their directions from the state. But, if passed, this referendum would see local government bodies being in the invidious position of being slaves to two masters: being responsible to both Commonwealth government and state government. They would be subject to the conditions imposed by the Commonwealth on its funding, with conditions that could well extend beyond the use of the grants to any type of policy that the Commonwealth wished local governments to pursue, as well as being subject to state laws, ministerial directions and policies. We would simply have two masters that local councils would be responsible to.

On balance, at best the yes case is weak. Even if direct Commonwealth funding of local government is in peril, which our constitutional experts question, exactly the same amount of funding can be given to local governments under section 96 grants. The problem with this referendum proposal is that it is difficult to find any compelling reason for it, other than it being symbolic.

I am a great supporter of local councils. I want to see our local councils remain independent and strong. It is for this reason, due to the clear risks of the adverse unintended consequences and the potential that it may harm our local councils, as detailed by our most highly respected and recognised constitutional experts, that at this stage—and only by a very fine margin—I cannot support these changes to our Constitution. The process for the proposal that has been brought forward by this government has been deeply flawed. I have doubts about its merits. I know I am not alone in this. The public is yet to be convinced of its merits. Until there is momentum, this process should not go forward, so at this stage I cannot support the proposal. (Time expired)

1:07 pm

Photo of Stephen JonesStephen Jones (Throsby, Australian Labor Party) Share this | | Hansard source

With great pleasure I rise to speak on the Constitution Alteration (Local Government) 2013, which would provide a modest amendment to our Constitution for the recognition of local government for the purposes of financial grants from the Commonwealth to local governments. I listened with great interest to the member for Hughes in his contribution and was surprised to hear some of the claims that he made. I will deal with them first before addressing some of the substance of the bill.

If you listened to the member the Hughes, there were two concerns raised in his contribution. The first concern was that somehow this was a massive overreach of central government into the affairs which have traditionally been the privilege of state governments and that this is somehow improper. We have seen similar claims made by a former senator for South Australia, Nick Minchin, and more recently by others on that side of politics. I find it very strange that these claims are made because they come from the only party, as far as I am aware, which has introduced laws and come to arrangements in this parliament, together with other parliaments around the country, which tie to grants made to independent organisations political requirements that those organisations do not speak out against the policies or decisions of the government of the day. If the member for Hughes or the former senator for South Australia were so concerned that financial grants via this or any other level of government would somehow tie, inhibit or constrain the political independence of a local government or any other organisation in this country then I suspect those concerns would be best voiced in their party rooms and not in the parliament. It is the Liberal and National parties in this country that have a track record of ensuring that there is political constraint on the grant finances to independent organisations, not those on this side of the House. If they are concerned about the political interference in independent bodies, raise them in their party rooms. Raise those objections, particularly in New South Wales and Queensland, but also in Victoria, where coalition governments in those states are including those constraints within their contractual arrangements with independent bodies at this very point in time.

The second point that was raised by the member for Hughes was that he is a great advocate for local governments, particularly in our own state of New South Wales, and he wished them to continue in their independence, financially and otherwise. The member for Hughes has probably not picked up a newspaper or has not been following the raging debate that is going on in New South Wales, where there is a debate about the financial sustainability of local governments—and, I suspect, local governments in New South Wales do not have a monopoly on this issue. It goes to the nub of the issue. We know that there are financial constraints on local government. It is a part of what we like to call in public finances the vertical fiscal imbalance—that is, the imbalance between the responsibility for delivering services and the capacity to raise revenue to pay for those services. At no level of government is that constraint greater than in the area of local government.

I know this very well in my own electorate, where we have the Shellharbour City Council, a fine council, with a relatively low ratepayer base and a great need for provision of new services—particularly new roads and infrastructure services to new urban developments within its local government boundaries. The Shellharbour City Council is faced with a situation where it can seek to increase rates—and there is a debate going on within the Shellharbour City Council about its capacity to do that. The ratepayers in this region are within the lower band of socioeconomic status. They are not high wage and salary earners in that particular local government area. So there is a limited capacity to raise those rates. The other area you can turn to is developer levies—placing a levy on the developers who are proposing to put new subdivisions into a particular area. There are also constraints on the capacity to do that, particularly when you are trying to develop affordable housing within the electorate. So a council like Shellharbour relies on the grants that it can gain from other sources, whether that is direct financial grants from the state government or direct financial grants from the federal government.

The member for Hughes in his contribution quoted some constitutional scholars, including Prof. Anne Twomey. Students of constitutional law would be familiar with the work of Prof. Anne Twomey, but she is not the only voice in the debate. Whilst I respect her expertise in this area, she is not the only voice in this debate. People who have been following this particular area of constitutional law would be very familiar that there is a big question mark over the capacity of the Commonwealth level of government to provide direct financial grants to local government.

So if you are concerned about the political independence of local governments or you are concerned about the financial viability of local governments, as I am, in their capacity to deliver services, then you should be standing in this parliament and voting and speaking in favour of this bill and then going out to your community and talking in favour of this modest constitutional amendment. It is, if anything, directed at ensuring the independence and the political security of local government—but, more importantly than that, the financial security of local governments.

Of the three tiers of government in Australia, local government and the services they provide are of closest proximity to us. We each rely on local government services every day as we go about in our communities. Local governments carry out a great service to our community that is simply beyond the capacity of any other tier of government—certainly Commonwealth and also state, in my view.

Their services are broad and expanding. They include not only planning and development services and development approval but also parking, immunisation, public amenities such as toilets and parks, waste disposal and the cleaning and maintenance of local streets, footpaths and roads. There is also an extensive range of community services including libraries, public gardens and sports grounds. I am very pleased to be speaking on this bill today because the bill is directed at ensuring that local governments continue to have financial viability and that they can continue to grow and expand in the delivering of these services.

Many Australians would be surprised to hear that local government is not already recognised in our federal Constitution. We are going to hear all sorts of things in this debate, and they need to be addressed head-on. I have already addressed the concerns raised by the member for Hughes, but I simply say this: it is important to note at the outset that this bill does not give the federal parliament any power over local governments. It does not change the status of local councils and it does not intrude in the relationship between local and state governments. What it does do is provide certainty over the federal government's ability to provide funding directly to local governments such as already occurs through the popular Roads to Recovery program, a program initiated by the previous coalition government and continued by this Labor government.

A short historical interlude: I understand that Adelaide—I see the member for Boothby at the table; he can probably correct me on this—claims the establishment of the first elected municipal council in 1840, followed by Sydney and Melbourne in around 1842. Local government in Australia preceded the establishment, obviously, of our own national government. It is true that the 1901 Constitution ignores the existence of local government and many might ask why local government was overlooked in the first place. According to a 1984 study of this matter by Chapman and Wood, it is believed that 'at none of the three constitutional conventions held in the 1890s was local government discussed; it was not important for the creation of the federation'.

Despite the early establishment of local councils in our system of government, it is interesting to note that local government did not come under much consideration during the 1890s constitutional conventions that led to Federation. This is because many present at the conventions, such as Sir Samuel Griffith, saw local government as purely a domestic responsibility of the individual states which had no relevance to federal discussions. Alfred Deakin, a future Prime Minister, apparently suggested at the Australasian Federal Convention in 1897 that some individual 'localities' might be funded directly by the Commonwealth; however, another future Prime Minister, Edmund Barton, saw this as a risky financial proposition. I interrupt myself to say his concerns were about the financial viability of the federal government, not about any political concerns about that tier of government funding the local governments. Barton's response reflected the consensus view that Australia's Federation was an agreement between the existing states to create a future nation on mutually agreed principles. It is interesting to note that some estimate that nearly 30 per cent of the first federal parliamentarians elected in 1901 had served in local government. A survey of today's federal parliament would probably yield a similar result.

The proposal for this bill today to enable a referendum on this question has a lengthy period of consultation and deliberation behind it, led by this government. In August 2011 the government approved an Expert Panel on Constitutional Recognition of Local Government. In December 2011 the expert panel presented its final report, concluding that financial recognition of local government through an amendment of section 96 of the Constitution was a viable option in 2013. In November 2012 the parliament established a Joint Select Committee on Constitutional Recognition of Local Government. The committee released its final report in March 2013. The committee recommended that a referendum on financial recognition of local government be held at the 2013 federal election after a lengthy consultation process, engaging with the community—importantly, with all tiers of government as well as with the community—on the questions to be considered at a future referendum.

The bill before the House today is a bill to alter section 96 of the Constitution to specifically state that the Commonwealth may grant financial assistance to local government bodies formed by a law of a state. Item 1 of schedule 1 alters the heading to section 96 of the Constitution by including the words `and local government bodies'. Item 2 alters the Constitution by inserting in section 96, after 'to any State', the text set out in the schedule. As amended, section 96 would be as follows:

Financial assistance to States and local government bodies

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State, or local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit.

The alteration of s 96 would establish specifically that the Commonwealth may grant financial assistance to local government bodies formed by a law of a State.

That is an important point. The Commonwealth would thus no longer need to rely on other, less specific sources of power to provide financial assistance to local government bodies. The wording was specifically designed to give assurance to state governments that, under the proposed change, local governments would remain the responsibility of state and territory governments. I know that is a matter of some concern to many local government bodies, particularly in New South Wales and Queensland where the authorities—some may say the tyranny of central authorities—in Sydney and in Brisbane, and previously in Victoria with the central authority of Melbourne, have run roughshod over the views of local councillors and local citizens in either merging or demerging, or taking over, local government bodies and putting in place administrators. Nothing in this legislation will impair the ability of a state government to do, or not do, any of those things. It goes merely to the financial arrangements between the federal government and the local government.

This bill provides long overdue Constitutional recognition for local government. I commend it to the House. I urge voters in my own electorate of Throsby and across the country to support the proposition and to vote yes at a referendum to be held at the federal election on 14 September 2013. I commend the bill to the House.

1:22 pm

Photo of Alex HawkeAlex Hawke (Mitchell, Liberal Party) Share this | | Hansard source

I rise to speak on the Constitution Alteration (Local Government) 2013. It is quite frightening to listen to some of the Labor Party's backbenchers, including the member for Throsby, and their lack of sufficient understanding about our Constitution and why it is structured the way it is—and, indeed, the role of local government in that Constitution.

It is not accurate to say, as he said, that in New South Wales there is a financial problem with councils, and therefore the Commonwealth has to step in and fund them. It is accurate to say that the viability of very small councils is what is at stake, and the purpose of that report was to provide for mergers and acquisitions of two small councils, two small political units, and the mismanagement of those finances. The member for Throsby bells the cat when he says: 'It's just money. It's just finances. What's everybody worried about?' That is the attitude of a government that is heading towards $300 billion of debt, where money does not matter, because money always matters and who controls the money controls the power. It has always been thus. Changes to our Constitution that affect financial arrangements between our Commonwealth and state systems very much affect the power balance between the Commonwealth and state governments, and to imply differently is to either be disingenuous or hide a broader agenda.

I oppose this change to our Constitution because I believe it is another attempt to change the political conversation that this government has put forward, to mask from the Australian people what is really going on. I note the dissenting report from coalition members and senators, which particularly noted that the preconditions for success of this referendum, highlighted by the expert panel and other stakeholders such as the Australian Local Government Association, have not yet been met. I also record that this is the third time this referendum will be put to the Australian people. The governments that have put it before are: the Whitlam government in 1974, which saw a 53 per cent 'no' vote in all states except New South Wales; and the Hawke government in 1988, when 66 per cent said no and every state voted against it.

Bad governments that are nearing an election should not distort our politics by trying to change our Constitution in this shameless way. I agree with Peter Reith, who says that the yes case will saturate the airways in the week before September 14, and the no case will be silent for lack of funds. The process is the ultimate constitutional fix and besmirches Australia's record of clean elections—more on that later. This is certainly a referendum that the government has set up to fail, and that the Prime Minister has set up to fail. Indeed, constitutional lawyer and vice-chancellor Professor Greg Craven said:

This will be a rushed referendum on words drafted in haste for political purposes.

I also turn today to the real essence of why I oppose this referendum. It goes to the heart of why I am a Liberal, and an argument we hear too little about in debates on modern governance—that is, correct political structure and how political structure is vital to providing the checks and balances inherent in protecting rights and liberties limiting the power of government. Any change to our Constitution should be made rarely enough to allow careful consideration and due thought. This is the inherent view of the Australian people, who have rejected the vast bulk of referendum proposals. An inherent scepticism of government politicians and requests for additional power is an essential precondition of a free society. It is a great virtue that Australian people have this understanding inherent in them, and it is something that I commend.

I point to Isabel Paterson and her treatise on structure in government, The God of the Machine. She wrote about the importance of a society being correctly structured to balance power between levels. The balance was important, and must function correctly for the intended impact—in this case, the limitation of power—to function correctly. Simply put, in an Australian context what that means is that the balance between the state and the Commonwealth—that is, our federal compact—must be maintained. The reason I oppose this constitutional change is that it will alter the balance between the state and the Commonwealth. The balance will shift, again, towards the centre, this time through a level of government that can directly deliver services, duplicating that already available in our states in so many ways. That is why several premiers have argued against this referendum. It shows the threat that this constitutional change represents to state reform. Barry O'Farrell said directly:

We do not support local government getting a financial power in the federal constitution because that can fundamentally change the relationship that local government has …

Local government across Australia is set up by state parliaments, this financial recognition essentially changes the relationship, gives it a more direct relationship with the federal government.

He is correct about that. Cheryl Saunders AO, a constitutional lawyer, said:

Even more importantly, this proposal would increase not only Commonwealth power but executive power, exacerbating what already is too prevalent a tendency for the Commonwealth to regulate through the expenditure of public moneys, using executive schemes.

This goes to the heart of why we need this proposal now to change our Constitution. We had a national government, and our national government was formed for particular reasons—particularly the defence of our nation. Given that Defence expenditure—the reason for us having national government—as a percentage of GDP is at its lowest level since 1938, I find it disingenuous for members of the Labor Party and the government to say we should be fixing potholes in local roads when we are starving our nation's Defence forces of funds. I find it furthermore wrong that our diplomats overseas are starved of the funds they need to do their vital jobs at the moment, and that posts are closing. They do not have the funds they need to adequately provide for Australia's interests in trade. Free trade agreements are not being conducted. Billions of dollars are being wasted in debt and deficit. And yet the priority of this parliament is to expand the ability of the Commonwealth to spend money on local roads and local issues—is that seriously the priority of this national government? Is now really the time to say: 'Let's loosen the purse strings of the Commonwealth. Let's let them spend money more easily. Let's let them spend it in more ways'? The pink batts scheme would indicate we need more limitations on the expenditure of Commonwealth funds. The disasters this government has mismanaged would indicate we need more limitations, not more openings for the Commonwealth to spend more money.

This argument by members, which is essentially 'Let's get our federal government into matters that are not its domain', is hardly compelling to me. It is, essentially: 'Let's fix the state government's potholes. Let's fix the local government council's potholes. Let's not focus our national government on its real purposes—defence, administration of the federal law, diplomacy, trade—all of the things our federal government has done.' I accept that it might be a naive statement of many members here when they say they have no intention to wipe out the state powers of so many MPs in this place, but the intention here is not the same as the effect. MPs in this place saying that it will not do something bad to our political structure is not a sufficient protection. Changes to the Constitution which act to limit power in Australia must, of necessity, be checked for impact against that imperative.

I would like to point out that local government is a creature of the state subject to state laws and governed by state ministers and state acts, and I believe it should remain so. There has been no case made by members today about why that should change. Why shouldn't local governments be the purview of state governments? Why shouldn't they be funded by state governments? What is the problem that exists such that the Constitution needs to be altered today? In fact, all of the projects that member after member have listed have occurred. The money has reached them. The Commonwealth has funded them. The objectives have been met already. There has been no articulate, cogent case made about why the Commonwealth needs to more easily send money to this layer of government.

Certainly I also believe that, as Professor Anne Twomey stated:

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.

We have local government because it is local, because it responds to local voters in local electorates. To then tie these local government decision-making bodies to a Commonwealth grant which, as we heard from the changes that are proposed, will be subject to the decision of the executive on what, how and why they can spend money will remove that direct distinction of local government and why we have local government in the first place.

It is certainly the case that I agree with the view of our nation's second-longest-serving Prime Minister, the former Prime Minister John Howard, who said 'even a casual reference to local government in the Constitution would end up having legal implications far beyond what might be advocated by the proponents of such a change.' 'The Constitution is, of course, the founding document of our nation. It is unacceptable that politicians can abuse public money to change the Constitution that limits their power'—that was Julian Leeser.

We have seen what has happened in this debate. We heard from the member for Greenway. I do not believe that the member for Greenway, in chairing her government panel, has convinced states, convinced stakeholders or made a public case for change to our Constitution. Instead, the member for Greenway listed the items of pork-barrelling that she thought were good in her electorate. But, if Australians had any doubt about what this is about, they should listen carefully to the contributions of members here. What is this really about? She did not list one project in her electorate that has gone unfunded because of the current arrangements. She did not cite where a local government would have done something if it had access to this constitutional provision.

It is of course ridiculous for many members to go forward and say, 'If you learnt to swim, it was in your local pool and funded by a local government authority.' Surely our debate about constitutional change has not reached such a low juncture that we are debating local swimming pools. This is about the structure of the Commonwealth and states and balancing and limiting power, providing for the checks and balances that our nation needs to ensure we have limited government in Australia.

I am also very concerned about the public funding of this campaign. Currently, $21.6 million of public money for the 'yes' case has been allocated and zero has been allocated for the 'no' case. That is very concerning. Even before the campaign the 'yes' argument has been allocated three times the public funding of the 1999 referendum. If we are talking about spending public money, it does not seem this government has any problems already. No constitutional change is needed.

It is certainly the case that, even with the High Court cases in relation to Pape and Williams, the federal government has now conceded that these cases do not justify a referendum. The case was not even referenced in the Attorney-General's second reading speech of the Constitution Alteration (Local Government) bill. If you do not even reference the case and do not need to make a case about it then why again are we pursuing this constitutional change? The Attorney-General cannot come forward and reference why we are doing it.

It is certainly the case that, when you look at this proposal before us, we have perhaps the worst government in Australian history. This is a government that spends money like it is going out of fashion. We have government members who in this debate have said, 'Why would money provide power?' I have to say to those members of parliament that this is not just about the money but it is 'just about the money' because who controls the purse strings makes a big difference to the power of government. It is a ludicrous argument for the members of the Labor Party to suggest that money does not mean power. Governments function through expenditure. One of the prime functions of a government is to deliver a budget which outlines its expenditure and incomings. And yet we have members of the Labor Party saying: 'Hey, don't worry about this. This is just about a few bucks—just so we can send some bucks down to the local government to spend.'

We have a constitutional structure. We have a federation, and that federation has been critical to the success of our nation because it does balance the roles of government. It balances the role of states, it balances the role of the Commonwealth and it allocates to them different purposes and functions which, if they got on with and fulfilled themselves instead of trying to shift, would produce a better compact in this country.

Look at what will happen if this referendum does not get up. What would be the consequence if this referendum failed, if what I am saying comes to fruition—that a 'no' case wins the popular vote and the vote in the states? There is no consequence. The federal government would still be able to fund local government. The condition, of course, would be that the money is paid by state governments as currently allowed by the Constitution and as has happened since the 1920s. Nobody can point to any other consequence that may happen, so why again are we changing the Constitution?

I think we should listen to the voices of so many experts in this field. I think we should listen to the voices of former federal minister Peter Reith, a Liberal minister, and former federal minister Gary Johns, an ALP Special Minister of State. Too often today there is a push in our nation to centralise power in Canberra. Too often there is a lack of understanding in this place of why a balance of power between states and the Commonwealth matters to the success of our society. But political structure matters. It matters in Australia as our federation hinges on a correct balance of power vested in states against the centre, the Commonwealth. Voting 'no' to this referendum will ensure that we retain that balance, we retain the best elements of federation and that competitive federalism continues to deliver great benefits. Local government can keep on doing the work it is doing beholden to the people it should be beholden to: its own local ratepayers.

1:36 pm

Photo of Dennis JensenDennis Jensen (Tangney, Liberal Party) Share this | | Hansard source

I oppose the Constitution Alteration (Local Government) 2013. Section 96 currently allows the Commonwealth to 'grant financial assistance to any state on such terms and conditions as the parliament thinks fit'. The referendum would amend section 96 so as to allow the Commonwealth to grant financial assistance to any state or to any local government body formed by a law of a state.

The argument put by the government early in the piece was that decisions by the High Court in the Williams and Pape cases meant that there was a lack of certainty in the Commonwealth's ability to directly fund local councils under section 96, so it had to be amended. Senator Ryan queried this on 30 May in the Senate Rural and Regional Affairs and Transport Legislation Committee, stating:

… one of the justifications for the referendum is that the Williams decision has put the funding power the Commonwealth has direct to local government not using section 96 in doubt …

The Minister for Sport, Minister for Multicultural Affairs and Minister Assisting for Industry and Innovation, Senator Kate Lundy, replied:

… no, it is not one of our justifications at all.

Therefore Minister Lundy has expressly admitted that other and ulterior motives are behind this bill.

Similar referenda have been defeated before, in 1974 and 1988. However, two recent High Court decisions—the Pape and Williams cases—have elevated the issue. This whole debate should pivot on local communities being able to provide services based on local need, not Canberra's priorities. The 20 May edition of The Australian Financial Review reported a Nielsen poll showing 65 per cent in favour, but not actually in favour of the government's proposal—just in favour of 'recognising local government in the Constitution'. Back in 1988 the Hawke government went to the people. The Hawke proposal aimed to recognise local government but not to give the Commonwealth additional powers. The current question is completely different: there is no explicit recognition, but there is a new power for Canberra to fund local government directly, on such conditions as it sees fit. How can this not be an affront to the natural rights of the states?

It is not coincidental that the few referendum questions that have been approved—the last ones were in 1977—have generally been those that cannot be represented as increasing federal power. The bill in question is clearly not in that category. The government has said that the amendment would only add 17 words to the Constitution. Words matter. What of but one word, 'republic'? The changes being proposed to the Constitution are significant in both practice and principle. Whether it is the Gillard government's intention or not, this referendum will permit further federal government expansion into affairs where it does not have original formal jurisdiction. This change to the Constitution would create new opportunities for Canberra to impose its priorities on the states. To echo the words of former Prime Minister Howard, this enabling piece of legislation would:

… distort the Federal structure, give rise to unforeseen and unintended consequences and will lead to an eventual eclipse of the States and their eventual irrelevance as a balance against the centralist power of the Commonwealth.

Currently the federal government provides approximately $2.7 billion to local governments annually. Around 80 per cent of this funding is channelled through state governments, but the remaining 20 per cent is direct funding from the federal to the local level and is used to finance programs such as Roads to Recovery and a number of other smaller infrastructure projects. This proposed referendum is a naked and insidious play to increase the power of Canberra and the central government. It is the antithesis of what a Liberal at heart is about. A true Liberal cannot stand for the slow creep of regulation over the rugged individualism and reason of self-determination—local people making local decisions about issues of local importance. The question is: why is Labor doing this, and why now? Labor at its core is about big government, higher taxes and higher spending. Labor is about government running people's lives. Labor is about having a greater say in all aspects of society. That is not the Liberal way and that is not the Australian way. This bill in essence is un-Australian. This bill would enable the diminution of local sovereignty and democracy, and no Liberal member should, or can, respectably support less democracy.

There are several other issues to which I direct the attention of the House, the first being local knowledge and the present system of checks and balances. In my electorate of Tangney, we have two large councils. One council, Melville, works relatively well, whilst the other, Canning, has been endemically corrupt and is now under a commissioner. The major and indisputable advantage of having sole state responsibility for the council, apart from having a clear chain of command, is having a clear chain of control—a control that is strengthened by proximity to the councils and key stakeholders and actors, and unique local knowledge. I put it to any member of this place that oversight committees based in far-off Canberra will have no effective understanding or control of councils in my home state of Western Australia. Concomitantly, if I am to continue to represent Western Australia in this place then I must surely honour my contract with the people of WA. The people of WA have through the ballot box at the last federal election and the last state election voted overwhelmingly for a party that prides itself on telling Canberra to back off.

It was Thomas Jefferson who spoke of education being the first defence against tyranny. I oppose this bill because of the inadequate time given to the AEC to educate on the substance of the bill. The AEC has said that it needs 27 weeks minimum to properly have the argument for the yes and no cases. The reality is that we will have only about eight weeks to debate the issue, as this issue will be completely drowned out in the heat of the election campaign. It is my belief that, if the government is to go ahead with this referendum, the first act of good faith and good practice would have been to invest in a Senate inquiry. Let the Senate fulfil its constitutional role before seeking to dilute and erode the constitutional role of the states. Another act of good faith would have been to give equal weight and, as a corollary, equal funding to both sides of the argument. This is particularly clear given that it is clear—

Photo of Bruce ScottBruce Scott (Maranoa, Deputy-Speaker) Share this | | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour, and the member for Tangney will have leave to continue his remarks.