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Wednesday, 31 May 2000
Page: 16785


Mrs MOYLAN (12:43 PM) —Within the boundaries of the electorate of Pearce there are 11 local government authorities. Seven of these represent country towns and areas; most of the others represent a mix of urban and regional areas. These areas grow a significant amount of produce for domestic and export markets. The pink lady apple, for example—which I am sure you would all have had the great pleasure of eating and enjoying—was developed in the southern part of my electorate by Illawarra orchards, which last year celebrated 100 years in orcharding. The electorate grows pears, stone fruits, grapes, dried fruits, olives, passionfruit, nuts and flowers. The broadacre farming areas of the electorate produce a significant amount of wheat, canola, hay, sheep for wool and meat, cattle, marron and yabbies. We have one of the most famous goat cheese producers in Australia, Kervella, and in the north of the electorate we have a major export crayfishing industry. Most of these industries are significant exporters doing their bit to help address the balance of trade figures.

In speaking on the Local Government (Financial Assistance) Amendment Bill 2000, I paint this sketch to show the great diversity of the electorate—which also provides much of the produce for the metropolitan areas of Perth—and to give some idea of the magnitude of infrastructure required to maintain such productive farming and industry. Roads, water supply, conservation and protection of the environment, tourist facilities, housing and land development all highlight the massive task of local government authorities in my electorate.

Since being elected in 1993 I have worked closely with local authorities in the electorate, and I have found elected and non-elected officers to be capable and committed to the development of their communities. In fact, there has been a great deal achieved by recognising the need for new and vigorous development to stimulate employment opportunities, resulting in some of the country towns in my electorate experiencing growth. I have to say in response to the member for Braddon that the Howard government has made a significant contribution to improved local government operation, not only through increased direct funding for local governments but also through many programs that have been put in place.

The rural health program, black spot road funding, which has been restored under the Howard government, and the Green Corps and Work for the Dole programs have significantly benefited the country shires. This was brought home to me last Friday when once again I travelled to a graduation of people in the Green Corps program. At that graduation there were a large number of people from the town and shire of Gin Gin who had made a significant contribution to the program, and we saw the results of the work of seven fantastic young people who had volunteered their time for six months of training and contribution in the Green Corps. They had worked with volunteers from the local community to clean out a very beautiful part of the Gin Gin brook and to restore the environment there. It is not just the direct funding that the Howard government has given, increasing the local government grant pool, but also that indirect funding that is so important to the infrastructure and the development of these communities.

This bill is to do with arrangements for the transition to the new tax system which are of great interest to local government in my electorate of Pearce. The amendments relate to the new tax system and make tax reform related amendments and procedural amendments to the Local Government (Financial Assistance) Act 1995. The main feature of the bill is that local government general-purpose assistance will continue to be indexed to population and inflation factors.

Under the current system, as most people would understand, local government assistance is broken into two payments: financial assistance grants and road funding. It is instructive to examine briefly the history of local government funding, as there have been considerable changes over the years and the funding in the past has not always been good news for local government. I think that local government has been very much the winner under the Howard government, for the reasons I have just outlined.

General purpose assistance was administered through the states until 1976. Under the 1974-75 provisions, the Commonwealth Grants Commission determined the size and distribution of the grants to local government. Changes made in 1976 to the Local Government (Personal Income Tax Sharing) Act specified that a percentage of net personal income tax revenue from the previous year should go to local government. Based on horizontal equalisation, the percentage received by local government was varied.

After a national inquiry in 1984, called to review local government tax sharing arrangements, these arrangements were scrapped and the Local Government (Financial Assistance) Act 1986 was introduced. Funding then took into account growth of local government general revenue, tying it to growth in general purpose funding to the state governments. There is provision in the Local Government (Financial Assistance) Act for growth, with linked indexation for population growth and the change in the consumer price index at state level. This ensures that local government assistance is maintained on a real per capita basis.

Under the new tax system, the Commonwealth will no longer pay financial assistance grants to the states. As my colleague the member for New England pointed out, even the Labor premiers—and in this case the Labor Treasurer in New South Wales, Michael Egan—have highlighted the benefit to the states, and to local government in particular, of the new tax system.

The old system will be replaced with revenue from the goods and services tax going to the states. This amendment ensures that the escalation factor for local government financial assistance continues on a real per capita basis for the previous year's grants. The Treasurer will have some discretion to vary the escalation factor under certain circumstances. There are new definitions for the term `population of a state' and `population of Australia' to be used when causing an escalation factor to be calculated and when applying to the requirements for estimates to be made by the Statistician on the basis of assumptions specified by the minister after consultation with the Statistician. Section 7(3A) requires the Treasurer, when making estimates regarding Australia's population, to consult with the Statistician.

Financial assistance to the states will be based on the two components of general purpose funding and local road funding, as it now is. Because of the tax changes and under the Intergovernmental Agreement on the Reform of the Commonwealth-State Financial Relations, Commonwealth, state and local government and their statutory corporations will operate as if they were subject to the GST legislation. Clause 18 therefore requires the states and the Northern Territory to withhold financial assistance grants for local government authorities in breach of clause 17 of the agreement. A sum representing the amount of any paid voluntary or notional GST payments should be paid to the Commonwealth. I think that is quite a reasonable arrangement, given the changes to the tax and the benefit this will give not only to the states but to local government—in fact, to the whole community.

With the Commonwealth maintaining local government funding on a real per capita basis, my main concern rests with the manner in which the state grants commission works out the formula for the distribution of funding to local authorities. I think it is appropriate for me to raise that in this place as I have had a longstanding interest in this issue. In 1999-2000 the financial assistance grants allocation for some shires in my state and in my area decreased. This occurred despite the fact that many of these shires experienced strong population growth, adding greater pressure for infrastructure expenditure. There are social pressures on many country towns as low-cost housing attracts people who sometimes have much higher support needs than the rest of the population and an increasing number of older residents require appropriate accommodation and day-care services within the area in which they live.

Given that there was an overall increase in federal assistance grants by the Commonwealth to the states last year, this decrease in general purpose funding to some rural shires made it difficult for those shires experiencing rapid growth and the decrease simply could not be justified, especially when some areas received substantial increases in funding. In my electorate of Pearce, I met with the state grants commission to express my concern for the Shire of Gingin and other country shires. Gingin experienced a cut in general purpose funding of about 12½ per cent, which is a very significant amount. It occurred against the backdrop of high growth and the administrative challenge for this shire of having three major centres, including a popular coastal tourist centre, within the shire boundary.

Chittering lost a total—that is, combined general purpose and road funding—of 4.57 per cent, and Toodyay and York, which are both growth towns in my electorate, experienced total cuts of about 16 per cent through the allocation process administered through the state government and their grants commission. The level of reduced funding in these shires represents a significant blow to them.

The federal government increased federal assistance grants last year by $34.6 million. Although the new arrangement changed the funding formula—because that was the argument that was put to me in relation to urban councils—I maintain that there is still scope to improve the way that the formula is administered by the Grants Commission when they apply the formula used to disburse funding to local government in rural areas. That is necessary so that a fairer outcome can be achieved. I do not think they have quite got that formula right. I believe that under the previous way in which the Grants Commission was administered, they did sort that out, they did have a fair system and people were happy with it. I am not sure why they had to change it to the extent that they have. I do not buy the argument that because the federal government has made certain stipulations in relation to the funding of urban shires it should still affect the formula that determines the allocation to rural shires.

In this year's budget local government is allocated $1.32 billion of federal government assistance, representing a four per cent increase, or $50.9 million, over the last year. In fact, local government has received increases totalling $158 million since the Howard government came to office. I think that is quite significant. The increase in this year's local government funding includes a total spending on roads of $406.4 million. I would like to point out to this chamber, as well, that added to that is considerable funding just announced in the budget to my electorate for major roads, bridges and black spots, which is pretty important, as I said, to the development of these rural and regional areas. Councils have the responsibility for local roads and in country areas the maintenance of these roads is critical to safety, economy and accessibility.

Local government is also going to benefit from the last budget from the $4.5 million allocated for regional development programs, and these are very practical programs. I sincerely hope that the shires in my electorate, particularly rural shires and councils, get a better deal this year than they did last in terms of the state government grants commission allocation of this particular budget. Local authorities in my electorate do much more today than just provide roads, as they did in times gone by. The public expects much more in terms of infrastructure development, in the rubbish collection and disposal, in town planning, in environmental work, and in a host of other services that improve the quality of life for people living in and visiting the area. They are knowledgeable and they are sensitive to local issues, and they work under considerably more pressure than they have done in the past.

Elected members of local government are not salaried. Most hold full-time jobs or run businesses. I know that differs from other parts of Australia but, certainly where I come from, that is the case. They are there on an honourary basis and they give that service on a voluntary basis to their community. Many of them have served their communities for many years. I think that we too often hear too much local government bashing and we hear them talked about as the poor relations. I think they are the most important part of government in that they are at the grassroots. They are in touch with their communities. They know what is going on and they are an enormously valuable tier of government. I do not think that we need to make distinctions which give them a lesser value than either state or federal governments. I think they do play a very important role, sometimes under the most difficult conditions.

I know, speaking to some of my local government non-salaried officers, that it is much more demanding today. They are feeling the pressures of the many issues they have to deal with—some quite sophisticated issues—within their community, as I am sure all of us in any area of government sense today. But they are across the local issues. They are generally very conscientiously endeavouring to look after the interests of the areas under their administration. Without exception, all the local governments within Pearce work constructively to meet the needs of their communities.

These amendments are important to local government, ensuring that at the federal level the real value of the grants is maintained. I particularly look forward to continuing to work with local government authorities in Pearce to ensure that they get a fair share of funding through the allocation of the states grants commission so that we can go on to continue to build on the tremendous projects that have been initiated within my electorate over the last few years—certainly, since I have been there. I was at Northam the other day and they have many projects in the pipeline that will increase the economy and job opportunities and ensure that the region has a viable future for many years to come.

Debate (on motion by Mr Wakelin) adjourned.

Main Committee adjourned at 1.00 p.m.