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Tuesday, 25 November 2003
Page: 22822


Mr NAIRN (5:34 PM) —I rise today to also support the report by the House of Representatives Standing Committee on Economics, Finance and Public Administration entitled Rates and taxes: a fair share for responsible local government. I will start off where the member for Grayndler almost finished, by talking about the good work that is done in the parliament and in the committees. It is one of the constant frustrations, I guess, of members of parliament that out there in voter land they think that parliament equals question time, which occurs for an hour or so each day. Meanwhile, some great work is being done at a committee level.

When you look at some of the good policy that is around—and it does not matter which government you talk about—coming from either side of politics, a lot of it starts in the committee process. It starts through an inquiry. An inquiry takes place and more often than not all sides of politics—I should use `all' rather than `both' with the member for Cunningham sitting opposite—get together and nut out something, compromising a little bit here or there to come up with a final result. There is no better example of that than this particular inquiry and the way this committee worked. I was very pleased to be part of the committee and the inquiry.

I got to most of the hearings and visits. I missed a couple but I was, along with the member for Cunningham, chasing bushfires during part of that period as well. It was a difficult time and I did miss a very small number of those hearings. But I really worked hard to get to as many of them as I could because it was such an important inquiry. Each member of parliament, with numerous local government jurisdictions in their electorates, clearly had an interest.

I have eight local government areas within my federal electorate. Many of those participated in the inquiry and provided submissions. Eurobodalla Shire, Bega Valley Shire and Cooma-Monaro Shire all put in submissions to the inquiry. In addition, Eurabodalla, Bega Valley, Bombala and Yarralumla participated in one of the hearings that was held down in Moruya. Certainly I found the evidence of those various councils extremely useful in the overall context because there are huge differences—and I think this is one of the things that has come out of this report—in local government between the states.

That is why this report, over and above the recommendations in it, will be extremely useful as a reference guide. It has accessed information from all around Australia. Each state has a local government act. That is how local government exists; there is no local government act at the federal level in that sense. The creation of local government is done at a state level. But they all then apply it differently. Their acts are different and the way in which local government is treated is very different. That in itself was a challenge for the committee because various things that were working well in one state did not even exist in another state, so to speak. We had to find a way in which to come up with recommendations that can be applicable right across the nation. This is particularly a role for the federal government—to take a leadership role in this. Our recommendations allow that now to occur. In the recommendations there is that element of leadership from the federal government, so we can get state and local government together and nut out some agreements so that we know who should be doing what and who is paying for what.

Some of the big differences I noticed between states were some of the funding aspects. In particular, local government in New South Wales is restricted quite substantially because of rate capping, which does not exist in other states. Philosophically, I have a problem with that because if you have a democracy where people stand for election and they stand for election on a particular platform then they should be able to be tested against that. If a local council and local councillors propose to increase rates by a certain amount and to put charges in at a certain level in order to provide certain services then that should be able to be tested democratically.

That effectively is not happening in New South Wales because councils are forced to do all sorts of interesting accounting exercises because of this rate capping that the state government puts on them. They can theoretically go to the state government and ask for an allowance for one year to go over the rate pegging for specific things. But history shows that that is a very difficult exercise and becomes a very political exercise in the process as well. It works against those councils substantially. One of the councils in my electorate—Bombala Council—made a comment in talking about rate pegging. They said:

Without a mechanism for recouping the forgone revenue over the longer term a degree of flexibility has been removed. This has a larger impact in the rural areas as rate increases cannot be put through cycles matching the good and poor agricultural seasons.

I guess that is a good indication of the difficulties of rate pegging.

The real root of the problem is that a lot of councils, for various reasons, had kept rates down at a certain level and when rate pegging was put in it was then applied to probably too low a level. The difference between that council and other councils has therefore become greater and greater as things have gone on. When you compare the rate pegging with, for instance, the fire levy—something that was of great interest to me in the other committee—and the increase that occurred there, things get out of whack. In New South Wales, for example, the average annual increase in the fire brigade levy between 1993-94 and 2002-03 was 6.9 per cent per annum, whereas rate capping was limited to 2.6 per cent. So councils were being hit with those additional fire levies but effectively the rates that they were able to put up could only go up by a much smaller amount.

As an illustration, Eurobodalla Shire Council have commented that the council is paying $100,000 more in levies to the fire brigade and rural fire service while its rate revenues have increased by only $30,000 due to the rate cap. So they are the hard, cold facts. They have only been able to put up $30,000 of the $100,000 that they have been hit with for fire levies. That is one particular aspect where recommendations have been made that ought to be looked at, but it requires some political will at the New South Wales government level to make those changes. If they are so keen on democracy, then they should let the councils go out there and argue their case to their constituents. There is an election in March next year for local government, so let the state government have democracy operating properly.

One of the other examples that I will pick up on from one of my councils concerns infrastructure. One of the problems that councils are having is that they will be offered funding that they have to match to set up certain things—to put in place particular infrastructure or a particular service. But, more often than not, that funding—and it happens to come from both federal and state governments but primarily from state governments—to set things up then disappears after a period of time and the council is left holding the project and having to fund the full cost. It all looks wonderful in the first place. Governments say, `We're giving this council so much money to do this,' but the council then gets into strife a couple of years later.

Consequently, some councils are saying, `We're going to have to knock back money,' which sounds ridiculous. That was one of the things that the Bega Valley Shire Council said. In talking about this issue with respect to infrastructure grants, they said:

We basically said as a council, `It is fine to get the funding for some new infrastructure—a new toilet block or a new boardwalk or whatever—being matched fifty-fifty, but do we really need that or are we better using that $100,000 or $200,000, or whatever the matching figure is, to do something that the community really needs, like fixing the roads or upgrading some old timber bridges?' We made a conscious decision to reduce the matching grant funding and use it for only stuff we really need rather than stuff that looks nice and maybe has a nice community feel.

So that is an example of how councils are being put into that particular circumstance—a difficult circumstance—where it is tempting to say, `It would be nice to have that nice new thing,' but at the end of the day it could mean that they cannot put money into much needed maintenance as well. As a consequence of that, they make difficult decisions.

We have tried as a committee to put forward some recommendations to overcome those difficulties, to look at some of the funding formulas. I think there is scope for some specific programs and formulas that can be applied to funding between the federal government and local government—for Roads to Recovery, for instance. Everywhere we went, people said what a great program it was, not only because it was additional money to fix local roads—and, yes, that is right—but overwhelmingly, no matter where we were in Australia, because the actual model worked brilliantly. It was easy to comply with the bureaucracy in administering that program.

So I think there is great scope for that. We have not been prescriptive about that in this report, in saying it should be done with particular programs; we have just said that it is an excellent program. There will be many opportunities, I would think, in the future where that could be applied equally as well so that it can work directly. It was a way of getting taxpayers' funds right there on the ground, where they were needed, with virtually no loss even in administration, particularly with the money not going through the state government but going directly to local government. It is a great formula, and we have had scope there for that as well.

I was pleased to be part of the committee and that report. It is an excellent result. We worked well as a committee, as we always seem to in that committee in the various things we have done, which is terrific. It is very pleasing to be part of this sort of process. As the member for Grayndler said, and I will support him strongly, there was great leadership shown by the member for Wannon and by the deputy chair, the member for Chisholm. We had superb backup from the secretariat, particularly from Susan Cardell and Vanessa Crimmins. Vanessa, having come from the department and knowing a fair bit about local government issues, was of great benefit to the committee as a whole. The whole team worked really well together. I very strongly recommend not only to the House but also to all people who have an interest in local government the report as a resource document and particularly the recommendations, which we would like to see implemented as soon as possible. We always try to do that. I am sure the report will be looked at very closely by government.