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Wednesday, 31 May 2000
Page: 16776


Mr ST CLAIR (12:04 PM) —I rise today in support of the Local Government (Financial Assistance) Amendment Bill 2000. The grassroots of Australian politics really is local government. In rural and regional Australia, and particularly in my electorate of New England, the local councils and shires are the basis of their respective communities. I am aware of this through my own experience in local government as a councillor on the Guyra Shire Council for 11 years, and in the position of mayor, elected annually for a period of seven of those years.

The local government financial assistance grants are vital to the communities of rural and regional Australia. As much as 70 per cent of some of the local government revenue of regional and rural Australia is made up of grants, which the financial assistance grants make up the bulk of, and the rest of the revenue is made up of rates and, of course, other grants. The coalition government is committed to building effective partnerships with local government and to helping councils contribute to the welfare of their communities and to the nation's overall economic performance and social wellbeing.

The Commonwealth is a major contributor to the funding of local government, in 1999-2000 providing around $1½ billion to councils around the country. The Commonwealth government has provided general purpose assistance grants to local government through the states since about 1974, and the Local Government (Financial Assistance Grants) Act 1995 is the basis upon which the Commonwealth financial assistance grant is provided to local government through the states and territories.

This financial assistance has two major components, as we are all aware—the general purpose funding and the separate, identified local roads funding portion. This act provides for local government financial assistance grants and road funds to be increased each year in accordance with an escalation factor. The Treasurer determines this factor in line with the underlying movement in general revenue assistance to the states. The escalation factor reflects the percentage increase in state financial assistance grants in the current year, and the state financial assistance grants in turn reflect indexation for population growth and the change in the consumer prices index. This has had the effect of maintaining local government financial assistance grants on an equal per capita basis.

Under this government's revised tax reform package the Commonwealth retains responsibility for providing financial assistance grants to local government. It is necessary to amend the Local Government (Financial Assistance Grants) Act 1995 to remove the nexus with the states financial assistance grants as these will be abolished from 1 July 2000 as a result of the intergovernment agreement on the reform of the Commonwealth-state financial agreement. A key feature of the agreement is the payment of all GST revenue to the states.

This bill allows an amendment so local government financial assistance grants can be maintained on a real per capita basis. This amendment bill will also clarify the roles of the minister and the statistician relating to calculation of projected population figures used in estimating state entitlements. The statistician will prepare the estimates on the basis of the assumption specified by the minister after consultation with the statistician.

This government, as part of its reform to the taxation system, proposed that the states and the Northern Territory assume responsibility for providing general purpose assistance grants to local government. At the 9 April 1999 Premiers conference, the heads of government signed an intergovernment agreement on the reform of Commonwealth-state financial relations which provided, among other things, that the states would assume responsibility for funding of local government. To ensure that the funding was adequate the states undertook to maintain growth in local government general purpose assistance on a real per capita basis and meet the existing Commonwealth conditions on the payment of assistance.

I have to say, being involved in local government as I was, it seemed crazy—and I listened to the debate yesterday—that in the 1988 referendum on the recognition of local government people did not support giving constitutional recognition to local government. I think it really is poor that all sides, our side included, did not support the fact that we should give constitutional recognition to local government. Having been involved, as I say, for some time, I think that was poor. I have to say that I am disappointed that still today local government is not recognised in the Constitution, and that creates a problem.

I have also been a strong supporter of seeing local government hook itself up on a financial basis of assistance grants to the states, because the total GST revenue was going to the states, as we know. We heard in speeches yesterday that agreements were reached in various states, particularly with the Beattie government. Queensland needs to be congratulated for entering into an agreement to give a fixed percentage of the GST revenue to local government. I think that is great because it was a growth tax. However, the powers that be within the Australian Local Government Association voted it down. Again, that is an opportunity, quite frankly, that was lost. I keep reminding local government of that opportunity that was lost.

Local governments generally opposed transferring responsibility from the Commonwealth, as we have discussed. Their main concern was that they would incur a reduction in funding. In particular, local governments were concerned that state governments would incur a reduction in funding. In particular, local governments were concerned that the state governments would renege on the undertaking with the Commonwealth and, should that happen, the Commonwealth would not, therefore, support local government.

Another concern was that local government funding would fall behind funding of other sections of the community. While indexation for population growth and inflation places a floor under the assistance, indexation does not really provide any growth. Local governments were also concerned that they would be further disadvantaged financially by the GST. I will talk about that in a moment.

One of the issues that is always raised, I think by everybody on either side of the House, is the issue of the lack of funding for local roads for local government. Whether we talk about local government in the Northern Territory, Victoria, New South Wales or wherever, we are faced with that problem of not providing sufficient funds to local government to be able to carry out the level of maintenance that keeps their roads in a proper condition.

Following the opposition's rejection of the greatest change in the history of Australian taxation, the government negotiated a revised package with the Australian Democrats. Under the terms of the agreement that was reached on 31 May 1999, it was agreed that the Commonwealth would retain responsibility for payment of financial assistance grants to local government. I think that is poor. But never mind; the decision was made. The Local Government (Financial Assistance) Amendment Bill 2000 is the outcome of that process.

The Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations was revised to take account of the changes to the GST agreed to between the government and the Australian Democrats. The coalition's tax reform package will greatly benefit local government in Australia. The new tax system will remove embedded wholesale sales tax and other state taxes from Australian local government. The new system will allow councils to claim a full refund of all GST payable on their purchases. Councils will save massive amounts on the operation of their vehicle fleets under the new diesel fuel credit arrangements. Councils in my electorate and in the rest of rural and regional Australia with vehicles with a gross vehicle mass of over 4½ tonnes will save about 23c a litre on their diesel purchases. All councils will also be eligible for a saving of 7c a litre for all other petrol and diesel purchases.

It is interesting to note that I have 14 local government areas in my electorate of New England. Some are very much moving forward in being prepared and ready to accept the savings from 1 July onwards, and I have to say that some are the exact opposite of that. So only time will tell, but there are certainly great opportunities for savings to be made. Let us see that these savings are being passed on in the form of increased services and increased maintenance of roads, et cetera.

General rates will be GST free. Charges for water and sewerage will be GST free. Regulatory and licensing services such as zoning and planning fees and dog licence fees will be GST free, and fines and penalties such as parking fines will be GST free. There are not a lot of parking fines in the little village that I come from. However, I know that in the larger regional cities, if you overstay the half an hour park in the middle of the city, you normally get a bill. So a lot of people shop in the towns that do not have them.

In spite of a scare campaign by the federal Labor Party and some elements of local government, any sensible and authoritative assessment clearly shows that local government will do well from the GST. In fact, in the Senate estimates committee hearings in February this year, it was revealed that the Labor Treasurer in New South Wales had acknowledged that local government stood to be a major beneficiary following the introduction of the GST. The New South Wales Treasurer, Mr Michael Egan, in a letter dated 22 December last year, stated, amongst other things:

Local government also stands to be a major beneficiary in funding arrangements following the introduction of the proposed goods and services tax.

Mr Egan's letter was further evidence that councils throughout Australia would gain financially through the GST. In addition to an independent report by Arthur Andersen for the Victorian government and the comments by many councils and mayors around Australia, the confirmation by the New South Wales Labor government clearly shows that local government will do well out of the new tax system. I can assure members in this place that we are looking forward to the dramatic increase in funding from state governments to local governments, particularly for roads and road networks. When we look back at some of the funding that used to be supplied by the state government for state roads or main roads, we have seen that situation change dramatically and the cost has been transferred to local government, which does not have the resources. I am certainly looking forward in particular to the state of New South Wales increasing substantially the amount of funds that will go through to local government in my electorate of New England.

When Labor were in government for 13 years they did nothing except undermine the effectiveness of local government by stifling innovation by seeking to impose new layers of regional bureaucracy. The Labor Party set up many regional development organisations in competition with long established local groups and duplicated the capacity of local government organisations. I also believe that local government had a role to play in this. Instead of hiding its head, as some ostriches do from time to time, they should have taken the lead within their communities and regions and provided competition to some of those organisations that were being duplicated.

Since this government came to power in 1996, it has had a number of priorities. It is continuing funding programs for black spots and local roads. In one of my regional cities, Armidale, a black spot area was fixed by providing a good roundabout, which has certainly made a huge difference. I am sure that that happens in other places. There are other black spot programs with respect to local roads. The government is continuing funding to local government for the provision of aged care. Many in this House have heard me debate repeatedly the need to keep our senior citizens, our oldies, in our towns and villages, and to make sure that they are suitably funded. We have also continued the provision of disability and children's services.

We are assisting rural and regional councils in flood-prone areas to undertake flood mitigation works to protect lives. That is certainly happening in Tamworth and Inverell. We want to protect homes, businesses and community infrastructure. As I mentioned, in the regional city of Tamworth in my electorate, great work is being done with the council in providing flood mitigation work.

The Anderson-Howard government have a number of initiatives that have helped councils in rural and regional Australia. I would like to point out some of these initiatives to the House. I refer to the establishment of a $45 million local government online program to help regional local government authorities to access new technologies, including interactive services. The government has funded a new local government incentive program to the tune of $7 million in 1999-2000 and 2000-01. The grants will be targeted to achieve assistance for local governments in relation to necessary implementation costs incurred in complying with the requirements of the GST legislation; streamline regulatory practices that otherwise inhibit economic development; the adoption of best practice and sharing of technical expertise across councils; and the promotion of an appropriate role for local government in regional development. Certainly, local government has a very strong role in regional development. I hope that some of the leaders that we elect to these positions take that forward.

The $20 million Regional Flood Mitigation Program which the government has announced will financially assist local agencies in flood-prone rural and regional areas to undertake protective works. In 1999-2000, $6 million will be available to commence those top priority projects. The projects supported under the program will include levees, channel improvement works, retarding basins, upgrading and replacement of existing flood structures, flood warning systems, protection levees for key infrastructure, and voluntary purchase of flood prone homes.

An allocation has been made of $3 million per year from 1999-2000 to develop disaster mitigation strategies, to plan and identify ways to minimise the cost of natural disasters to local communities. I might comment that, although we had a foot of snow last night in my little village, we are fortunate in being high enough not to be flooded out.

The 1999-2000 budget announcement of benefits to local government included a further $37.8 million for the highly effective Black Spot Program, which we have talked about, an extra $195 million for the Roads of National Importance Program and the National Highway Program, and a new $20 million program for bridge upgrading on the National Highway. That is tremendous: having 400 kilometres of the No. 1 highway, the New England Highway, coming through the middle of my electorate, I understand the importance of that initiative. In addition, the budget announcement stated that the local roads component of financial assistance grants to councils amounted to nearly $390 million.

In the budget which was handed down by the Treasurer earlier this month, the government announced federal assistance of $1.32 billion to local government. This represents an increase of about $51 million, or around four per cent, over the last year and an increase of almost $158 million since the coalition came to government in 1996. Of the $1.32 billion, approximately $915 million is for general-purpose grants and $406 million for local roads grants. I would like to see that increase dramatically next year. We should re-tie the roads component of federal assistance grants to the councils, to make sure that they actually spend that money on road networks and not on other infrastructure.

This government is aware of the importance of these financial assistance grants to councils, particularly councils in rural and regional Australia. Some two-thirds—nearly $881 million—of these grants will go to more than 580 rural and regional councils. That may seem an awful lot of councils. I think there are 177 councils in New South Wales, and I know that some are looking voluntarily to make some changes. In my electorate of New England we have just had council elections in Armidale and Dumaresq, with 10 new councillors, and I would like to take this opportunity to congratulate those 10 new councillors on their elevation to the position of elected representative on the Armidale-Dumaresq councils.

In my electorate there has been an increase in financial assistance grants of $1.135 million from the last budget of the Labor government, in 1995-96, to the 1999-2000 budget of the National-Liberal government. That includes an increase of more than $368,000 for local roads in New England. An amount of $4.5 million will be made available for special grants programs. Another bonus to local governments and communities is the $1.5 billion for the Natural Heritage Trust, a massive program of conservation and resource management activities which have a huge capacity to generate regional job opportunities. I have had the pleasure, over the past couple of weeks, of meeting all the groups in my electorate which received funding last year—$1.2 million, put to 41 different projects.

This government, unlike the Labor Party, recognises that local government can do much to foster regional economic development. The coalition will continue to work with councils to reduce business costs and sponsor regional economic development initiatives. The government will continue to help councils improve the range and quality of local government services by supporting continuous improvement initiatives and the introduction of new technologies, and by promoting innovation and the implementation of best practice. I commend the bill to the Main Committee.