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Tuesday, 25 November 2003
Page: 22829


Mr KING (6:00 PM) —The inquiry into local government and cost shifting, which has just concluded, has resulted in one of the most important reports that has been submitted by the House of Representatives Standing Committee on Economics, Finance and Public Administration, at least since I joined that committee. As a former Mayor of Woollahra in the electorate of Wentworth, which I now have the honour to represent, and as a councillor and chair of several council committees, having been involved in several local ratepayer and other action committees and groups and having advocated a bigger role for the Liberal Party in local government affairs in New South Wales, I am a great believer in local government and its role in the three levels of government in this country. This report is indeed very significant, and I consider it an honour to have participated in this inquiry.

The committee was very ably led by its chair, David Hawker, the member for Wannon. We went right around Australia. I remember visiting, in particular, Barraba, which is said to have the lowest per capita income of any part of Australia in the most recent census and which is near where I was born, Bingara, which is only some 50 kilometres away. So it was of great interest to me to hear the views of those involved in local government in that part of Australia as well as in the remote areas and in the big cities and to read the various submissions and hear the evidence.

It seems to me that there are three critical outcomes of this report that need to be addressed. Firstly, the time has come for a complete revamp and review of the relationships that the Commonwealth and the states have with local government. One of the reasons for that is that since 1996, when the Howard government was first elected, a fundamental dysfunction in respect of Commonwealthstate relations has been resolved—namely, vertical fiscal imbalance, which had plagued Commonwealthstate relations at least since the Second World War. That has been resolved by the A New Tax System, through levying the goods and services tax and referring those revenues to state governments. So it can never be said fairly by any state administration that they do not have the wherewithal to address their basic responsibilities and that, ultimately, it is a decision for the Commonwealth.

That vertical fiscal imbalance having been addressed, it seems to me that, in the same way, the imbalance between what has been happening to local government and the Commonwealth needs to be addressed. That is why this report is very timely and why its substance is of great importance for the future administration of the Commonwealth as a whole and, most particularly, for ensuring that amenity in local areas and the quality of the lives of people who reside in those areas is improved and addressed, that no part of the country is left behind and that an equitable financial relationship is established between the third tier of government and the state and federal governments.

The first recommendation sets out to address that by proposing that there be set in place a federalstate intergovernmental agreement clarifying and specifying the roles, limits and boundaries of the three levels of government. That is important, as is the third recommendation, which proposes that this House recognise local government as an integral level of government of Australia. I have to say to some extent that looks a bit like tokenism, and the fact that two previous referenda on this topic have failed suggests that the real question to be faced by legislators with respect to local government is not one of recognition—even though those involved in local government think it is—but rather one of addressing the core issue which is at the heart of this report: the proper financing and proper responsibilities of local government. It is the cost-shifting issue that is the key to the resolution, it seems to me, of both the problem of recognition, which recommendation 3 is all about, and the structural flaw, which is at the heart of this report.

Recommendation 8 calls for the Minister for Finance and Administration to issue a direction to all federal agencies to ensure that negotiated and future federalstate specific purpose payments describe clear federal government objectives and measured outcomes. There are also other proposals specifically in relation to the FAGs arrangements and a proposal that a body along the lines of the UK IDeA to address capacity building be established. It seems to me that if those measures are adopted, as they ought to be as a result of the intergovernmental agreement referred to in the first recommendation and the subsequent agreements that would follow from that, then the sorts of outcomes that we are all looking for—and which were at the heart of the proposal brought forward by the minister—will be addressed.

As I put in a motion to the House this week there is a basic problem of infrastructure reform in this country at the moment. It is not just a question of addressing the problem of the rural areas specifically in relation to water and the myriad issues that concern that great national problem—not only in the country but also in the city. In our cities, where most Australians live, there is also a real problem with respect to infrastructure reform, stretching from basic issues such as roads, public transport systems and alternative transport systems to infrastructure issues such as the ageing of infrastructure—sewerage, drainage and so on—that need to be addressed now. That is the second reason why this report is particularly timely.

I am pleased that the report seeks to address that basic infrastructure question in the way that it does in recommendation 9. It seems to me that the idea of tied specific grants directly from the Commonwealth to local government or, alternatively, general purpose grants which come with a covenant to the states so that infrastructure questions of the type that I have referred to are addressed in the longer term is the way forward. I know that there are some people who argue that untied money is what is required by local government and that people on the ground can make these decisions. But the evidence that came before us suggested that that leads to inequities. That means that the basic infrastructure questions, which the Commonwealth through its leadership is best able to address in terms of national issues, would not otherwise be addressed.

The measures for capacity building and the measures for funding of local government that are set out in the other recommendations are the way forward, it would seem to me. The COAG summit in 2005 on intergovernmental relations, if pursued as a result of the intergovernmental agreement that is referred to in recommendation 1, will establish a comprehensive program that is meaningful and effective.

At the end of the day, this report is about addressing inequities—the fact that over the last 20 or 30 years local government has been required to do much more than ever before. Some shires and councils are even delivering security services now. Some are delivering fire services, and others are not. Some of them are being asked to deliver family benefits and family services. So the scope of the work of local government has increased dramatically. If that is to continue and if local government is not to crumble under the weight of these added responsibilities, proper financing and a dedicated role model are needed; otherwise, we are putting off, as it were, the evil day.

This is a very important report. I commend the staff who prepared it. I thank those who made contributions by way of a submission and I particularly thank those who turned up to give evidence. Finally, I thank our chair, the member for Wannon, who did a sterling job, along with the deputy chair, the member for Chisholm, who also worked very hard on this inquiry to get such an important outcome. I also want to commend the opposition for taking a couple of deep breaths and addressing some of the issues. The spirit of the outcome is going to be supported by both sides of politics, because that is how important this issue is. It illustrates that there is a general understanding at all levels of politics in this country that the issue of cost shifting is real and that governments at all levels must address it. I think that state governments in particular are at fault and have been for about the last 20 to 25 years, but the Commonwealth government also has had some involvement in the problem. In conclusion, I hope that this report is acted upon by government and I look forward to supporting the outcomes through this parliament and through the work of the government.