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Thursday, 1 June 2000
Page: 16910

Mr ADAMS (10:20 AM) —What a good speech by my colleague the member for the Northern Territory outlining the total bankruptcy of policy that the government has in trying to look at distribution of taxes to local government and how it can make an impact on improving some people's lives and equalising the opportunities by putting in services for some very poor people. I am sure that the member is going to continue to raise this issue, as he said, and make it into a major policy debate.

The Local Government (Financial Assistance) Amendment Bill 2000 is to give effect to the government's undertaking to retain responsibility for payment of general assistance to local government and maintain the level of such assistance in real per capita terms. That is what it is supposed to do. However if we start looking at the detail and dissecting the figures it is clear that it was the pushing and pulling in the Senate and the debates down there and the amendments that were moved by the Labor Party and the minor parties that made the government rethink the abolition of general assistance to local government. There does not seem to be any maintenance in the levels of assistance in real terms for local government.

We, in Tasmania, are very worried about this because, although it is stated in the background papers that the interstate distribution of local government financial assistance grants was on an equal per capita basis, in fact Tasmania did have a formula to deal with its small population. This formula allowed a positive skew to help local government in Tasmania deal with small populations and the big land masses particularly for things like roads, bridges and other infrastructure that affect local government. This has particularly disappeared and now another ogre has popped into place other than the vagaries of the FAGs and this is, of course, the goods and services tax.

Councils will have to include 10 per cent in the price of council services. Many of these services are essential community services that are not provided by private sector operators or the private sector within these municipalities or shires around Australia. No-one is really quite sure what is in and what is out of the GST. We are very close to its implementation but we still do not know. There are still all these vagaries and people not understanding what is going on and not able to get the information. Although government is saying they are spending $410 million we still have these situations. We do not know what is in and out of the GST. We do know whether senior citizens centres hire fees will be in or out. Parking fees, swimming pool admission fees, netball court hire—these are things that if the council did not provide them in the communities no-one else would, and they are really hardly commercial enterprises.

In fact, in some of the smaller country councils there would be no services at all in the community if the councils and the communities themselves on many occasions did not get together and provide them. That is what local government is about to some degree. Local governments have discovered that they are supposed to comply with the GST legislation. They have been given around $2,000 to make them compliance ready—$2,000. And where is this money to come from? From my understanding most medium sized councils face a bill of around $150,000 for merely complying with the new regulations alone, let alone upgrading all their computer programs. And what about the time and work undertaken by their employees to ready councils for all the new costs they are going to have to charge? Obviously it depends on how well equipped these councils were in the first place, but in Tasmania some of the smaller councils are still trying to get themselves up to date with computers. They also have the problem of access to the Internet in the format that many of the city councils have had for some time in the city areas.

The idiotic thing is that the reason why many essential services provided by councils are provided at low cost is that they are subsidised by rates. With the introduction of the GST on many of these services, ratepayers will now be paying for these services twice—once through their rates and then again through the imposition of the GST. I am sure these things will emerge in a very short time. Add all the taxes that will be left, and maybe some state taxes and charges as well, and you could say that people may even be paying three times for the one service. Of course, that will be just a fraud if that occurs, and I believe that it will. Therefore, I would suggest that the rural and regional councils are at a greater disadvantage than their city counterparts. They have fewer resources to start with, they have huge areas to cover, and their funds are dwindling. This bill is not going to assist them with these problems at all.

Tasmania has been forgotten in this process altogether. Just imagine if my regional councils had access to this $410 million Unchain My Heart campaign. How does Unchain My Heart tell anyone anything about the GST, about the introduction of a new tax? It does not. If the money was distributed to my local regional councils, they would put that $410 million to much better use than it presently is. It would certainly help the whole 29 councils and local government areas in my state, and the ratepayers who they represent.

Tasmania recently has been hit very hard by a terrible drought, which I know some parts of mainland Australia find difficult to recall. Someone said to me this morning, `I suppose you're used to it being this cold.' I had to say, `No, not really, it's extraordinary this weather in Canberra.' We have had a terrible drought for several years in my electorate. We have not had rain for some time, or very little rain, and it has taken its toll. I was visiting one of my constituents the other day and I witnessed the remains of the last grasshopper plague that had also come through, and I can tell you that it was a very sorry sight on that particular property.

Local councils have been pleading for assistance in this drought and doing their utmost to put forward to this government the need to have recognition that the exceptional circumstances apply within one particular region within the electorate of Lyons. The minister has now given it a tick after being badgered into coming down and announcing some assistance. They have been calling for this measure to help drought proof their municipalities as well, and they are looking positively for that into the future.

I note that there is no hope within this budget that has just been brought down. There is nothing that local government can do to retrieve a little of the disappointment that so many rural people have felt in the circumstances when these circumstances are beyond their control. I know many of my country colleagues know what drought is like. It is soul destroying to see stock dying in paddocks, to have to go out and shoot your prize animals because there is no hope of getting assistance to save them, even when the long paddocks no longer give you any grass.

I would like some of our city colleagues to have to look at this, especially those like the Treasurer who have agreed to spend all this money on the promotion of the GST. What possible good is this government's self-promotion doing to help the greater understanding of the GST? Unlock my heart? Madam Deputy Speaker, what does unlocking my heart do to give me an understanding of the GST?

Fran Bailey —Unchain it!

Mr ADAMS —Unchain my heart, unlock my heart—it is the same term. When I look at the advertisements being run at the moment it makes me very angry, especially when I see so many of my constituents contemplating giving up their businesses or occupations because it will cost them too much to comply with the complexities of the tax legislation, if they understood what they were supposed to do in the first place. I just hope this booklet that is supposed to explain everything has a little more to offer than the rest of the junk that I have been obliged to pass on to people because of the lack of any reasonable material.

Local government plays a very important role in the development of communities and the retention of communities that are under threat from bigger centres. This government has not recognised this role, nor has it understood that those in rural and remote areas do not have a similar capacity to their city counterparts to involve the private sector in their activities. In many cases, if the council does not provide the service there just is no service. It is really a matter of understanding that there are different areas and different regions of Australia. When interest rates go up to slow down the economies of Melbourne and Sydney, I can assure you that the Tasmanian economy does not need slowing down, it is just starting to come up, and those fiscal measures affect it as it is starting to rise.

In a few cases where councils have followed the suggestion for competitive tendering and turning one of their core services into a business unit or completely privatising it, there is no real capacity to look for alternative work when a bid for work fails. This has been used as a process to get rid of some of the workers within local government in regional areas. It was forced upon local governments, as the Kennett government did in Victoria. That means that they go bankrupt and that a larger, more secure, usually city council, perhaps from another side of the state, or a private company from a city or the capital will take over the contract for the period stipulated. Of course, they undercut to get in and then there is no competition because the other work unit has already gone, it has been dissolved, the jobs have been lost, usually the income coming into that community has been lost, and, therefore, there is a decline in the turnover within that local government region.

Without that funding and with the imposition of the GST, we will see many councils fight for their very existence. I would suggest to you that many of the country and regional councils probably will not make it. It is a great service to the regions that this government is imposing on them! So much for the Prime Minister's bush walk—his akubra must have been right over his eyes as I do not think he saw what was going on out there at all; I think it was right down there and he missed seeing any points. When you fiddle with one part of the system like tax, you have to make sure that it is fair all the way through. And this tax is now proving that there is no way that it will be fair to anyone, even for some of the people that it is supposed to be helping the most.

Tasmania is so vulnerable to this sort of tinkering, and it is not a state that is going to take it lying down. The effects of this bill allow the link between local government financial assistance grants and state government financial assistance grants to be broken. It is now at the whim of the Treasurer to increase or to decrease the escalation factor in special circumstances. This government has attempted to shift the responsibility for local government to state and territory governments, but luckily someone noticed that this might not be such a good idea. It will fundamentally change the role of state governments in relation to local government, and now the states have the power to withhold FAGs in cases where a local government fails to collect the GST whatever the circumstances. For states to do this, in light of the lack of information and financial support to implement the GST, would be an extreme punishment, especially as the tax determination on local government activities was only finalised on 1 March this year. There will be amendments to this bill to at least try to make it workable, and we will be moving those.

FAGs funds have been reduced in real terms by about $15 million since 1997-98. There is no commitment to provide for growth by providing additional financial support for this sector of government. I addressed some local school children this morning and talked to them about the three tiers of government and what their responsibilities were, and here we are having one really disadvantaged. The whole thing has placed an impossible burden on local government which is totally unfair and unjustified. Local government is the closest form of government to the people. It is the area where people most notice that services are or are not available. Even children know whether they are going to get their skateboard ramp or whether their local community centre is closing or needs repair or the swimming pool has closed through lack of funds. It is at this government's peril to be so cavalier about so many people's lives and activities.

I am not happy with this bill but it is attempting to place some sort of system in place to deal with all the rest of this nonsensical tax. I cannot see how to oppose it without doing more damage, but we will try to amend it. I will be extremely vocal about it where it matters. The councils and the people of Tasmania will not be forgotten. Tasmania, in particular, has lost out. Those Tasmanian Liberal senators that represent Tasmania in this place in the other chamber should be ashamed of themselves for allowing these circumstances to occur. I will be supporting the amendments moved by the shadow minister.