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Joint Select Committee on the Constitutional Recognition of Local Government
Majority finding of the expert panel

BERESFORD-WYLIE, Mr Adrian, Chief Executive, Australian Local Government Association

PICKARD, Councillor Troy, Vice President, Australian Local Government Association

PRITCHARD, Mr John, Executive Director, Policy and Research, Australian Local Government Association

RHOADES, Councillor Keith, Vice President, Australian Local Government Association

RUSSELL, Mr Christopher John (Chris), Acting Chief Executive Officer, Local Government Association of South Australia

TRAINER, the Hon. John, Vice-President, Local Government Association of South Australia

Evidence from Mr Russell and M r Trainer was taken via teleconference—

CHAIR: I welcome representatives of the Australian Local Government Association as well as the Local Government Association of South Australia. The second group is joining us by teleconference. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a formal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. I would like to proceed to a brief presentation by the ALGA, if you would like, and then we will move to questions.

Councillor Pickard : Thank you, Chair, for the opportunity to make some brief opening remarks. I do not intend to go through ALGA's submission to the committee in detail or to recap on the wealth of material contained in ALGA's earlier submission to the expert panel made in October 2011. The submission to the expert panel summarises a long and comprehensive process ALGA has undertaken in determining its position and strategy to achieve constitutional recognition.

ALGA has also previously made submissions to the House of Representatives machinery of referendums inquiry and the Senate Select Committee on the Reform of the Australian Federation. In 2011, ALGA called for this committee to be established because we saw it as an essential step on the path to a referendum on the constitutional recognition of local government. We are obviously pleased that the committee has been established and that we are here today to talk about the option of financial recognition and changing the Constitution to ensure that the direct funding of local government can continue without the question of constitutional validity arising. Amending the Constitution through a relatively simple change to section 96 to achieve that objective has been ALGA's preferred option for recognition for nearly four years. We reached that view following extensive consultation with councils in 2007 and 2008 and subsequent consultation with key stakeholders, leading constitutional experts and strategic advisers and through commissioning independent research on community attitudes.

Importantly, the issues that ALGA has identified with direct funding where subsequently brought into much sharper relief by the High Court decision in the Pape and the Federal Commissioner of Taxation case in 2009 and the subsequent High Court case of Williams and the Commonwealth in 2012. They reinforced the doubts about the validity of direct funding and the uncertainty relating to the Roads to Recovery program.

Over the course of the last five-and-a-half years, ALGA has devoted resources and time to refining an agreed local government position on how local government should be included in the Australian Constitution. We have also devoted effort to mapping out a process for getting to a referendum and then getting that referendum passed. We have been fully conscious of the difficulties facing us in terms of getting to a referendum and then getting a yes vote. It seems ironic that Australia's Constitution, which certainly has nowhere near the profile or the gravitas of the US Constitution, is more difficult to change than the American constitution. Nevertheless, we have been steadfast in our commitment to this change because we believe that in the interests of every Australian community.

Our federation has evolved significantly over the last 112 years. The roles and responsibilities of the three tiers of government have changed and moved well beyond what was envisaged in 1901. Governments across the board do more for their constituents, maybe because there is more to be done. In 1900, we did not have the services, the infrastructure and the social welfare net that we now take for granted. We certainly did not have the tax burden and the very pronounced vertical fiscal imbalance that sees the Commonwealth collect more than 80 per cent of national tax revenue. To meet the demands of the public in a modern democracy requires three levels of government to work together collaboratively, Commonwealth and state, state and local and local and Commonwealth. It is a partnership that the Commonwealth wants; it is a partnership that local government want. We believe that it is partnership that our communities want. It is a partnership that does not threaten the relationship between state governments and their local governments.

This committee has been tasked with assessing the likelihood of success of a referendum on financial recognition. From ALGA's perspective, we believe that that involves not only an assessment of the levels of support for the proposition across the political spectrum, within the state and territory governments and within the broader public but also an assessment of the timing of the referendum. ALGA believes that the referendum should be held at a time that maximises the chances of success. Success for ALGA would be a referendum passed by the majority of voters in a majority of states and a majority of voters overall: the elusive double majority. Holding an unsuccessful referendum will achieve nothing and probably damage the standing of local government in the eyes of our communities.

The government has committed to a referendum on the recognition of local government by 2013. ALGA welcomed that commitment. But we believe that the promise should only be pursued if holding a referendum this year allows the maximum chance for success and there is adequate time for an effective campaign. If the prerequisites for a successful referendum identified by the expert panel and ALGA cannot be met in time for a referendum to be held this year then ALGA would call for a referendum to be held in 2014 or 2015 when those prerequisites can be satisfied.

We accept that it is the committee's task to make an assessment of whether the prerequisites have been met or not but we make no comment on the expected robust competition at the federal level, because it is a good thing for a healthy democracy like ours that campaigns are tough and hard fought. It is only a problem, however, if opportunities for constitutional change are lost because the merits of the case for change are overwhelmed and the question is never given clear air. In this regard, it may be relevant that the overwhelming majority of previous referendum events were not held at the same time as elections.

Thank you for the opportunity to appear before the committee this morning. We are happy to answer any questions you may have on any issues raised in our submission.

CHAIR: Mrs Prentice, then Senator Sterle.

Mrs PRENTICE: Thank you, Madam Chair, and through you: in the last session—and I think some of you may have been here—Professor Anne Twomey said the funding problem could be solved with a snap of the fingers under section 96. I wonder whether any of you had considered her response to that.

Councillor Rhoades : We did hear that same comment being made, and it surprised us. We will stand corrected, but the knowledge is that no R-to-R money has ever gone through section 96. It has been directly funded to councils by the federal government.

Senator STERLE: Mayor Pickard, how many councils are there in Australia?

Councillor Pickard : 560.

Senator STERLE: How many do ALGA represent?

Councillor Pickard : ALGA is a federation of the state associations, so we represent all of the state associations in Australia. Our members are not individual councils; they are members of states.

Senator STERLE: Of the 560, are all members represented by their state associations?

Councillor Pickard : It is my understanding that is the case. In Western Australia it is definitely the case. Mr Beresford-Wylie might like to confirm.

Mr Beresford-Wylie : Senator, my understanding is that there may be one council which is not represented by a state association. I am not sure whether that case has changed. The City of Melbourne is the council which currently may or may not be a member of the Municipal Association of Victoria. I know that it withdrew; it may be rejoining.

Senator STERLE: So to the best of your knowledge, possibly one?

Councillor Rhoades : I actually believe that the City of Melbourne will be back in.

Senator STERLE: That has certainly put a bit of light on that. And to the best of your knowledge, through your conversations with your state councils, how many councils are supportive of the referendum?

Councillor Pickard : All state associations have a formal position to support financial recognition of local government and all state associations support the position that a referendum should be held only when it maximises the chances of success. Ninety per cent of individual councils have formally passed resolutions to support the financial recognition of local government, which I think demonstrates significant support from individual councils throughout Australia. There are fewer than five councils that have formally passed resolutions not to support the constitutional recognition of local government.

Senator STERLE: Thank you very much.

Mr COULTON: You talk about timing and adequate support. From my point of view—and I actually agree with the chair—I cannot remember a federal political campaign in my lifetime where everyone has gone in holding hands and it has been peaches and cream. They all seem to be pretty intense, from memory. I do not know that we are in all that different a situation now. Is ALGA prepared to campaign on this issue? It seems to me that, with the major political parties going to an election, other issues will be front and centre of the next campaign. The logical place for community involvement would be through a campaign run by their local council—being the body closest to those people. Are ALGA prepared through their 500-odd members to run that publicity campaign to gain that support?

Councillor Pickard : Absolutely. The local government associations nationally and within the states are prepared, willing and able to support the constitutional recognition of local government through an amendment to section 96. In saying that, however, it is our view that we only wish that the question be put when it has the maximum opportunity for success.

It is our belief that there are four important prerequisites that must be met in order for a referendum to have the maximum chance of success. The first is strong, public bipartisan support. The second is the Commonwealth negotiating with the individual states. To date, it is our understanding that that has not occurred. Indeed, from a number of states that have not taken a formal position on supporting the recognition of local government, it is due to the lack of the words being proposed as the constitutional amendment.

Another important prerequisite, which was mentioned at the former panel, is a public awareness campaign. We believe that is absolutely fundamental to achieving a successful referendum outcome. It will educate Australians not only about the Constitution and how it is changed but also about the proposed local government change. The fourth and final prerequisite we believe is crucial to maximising the success of a referendum is a change to the Referendum (Machinery Provisions) Act 1984. Our position proposes a change to the act to allow a publicly funded yes and no case but also to change the act so that funding is allocated in accordance with the vote on the bill that supports the constitutional change in the House of Representatives and that funding be allocated in proportion to that outcome.

Mr WINDSOR: I am having a bit of difficulty absorbing a no case from the people who have been proposing the yes case. For the 20 years that I have been involved in politics this issue has been at the forefront of local government. It is because of the nature of this parliament that this issue is being given a chance of being aired in terms of a referendum. I have to say that I am shocked to read some of the arguments in the most recent submission and to listen to those put this morning which almost develop a no case. Not to take advantage of a parliament that is willing to go ahead with your argument—I would suggest the lack of confidence that you have in yourselves and in the Australian people is something that maybe your organisation needs to look at.

My question is: who at the federal level are you concerned about not supporting financial recognition of local government? You seem to be developing this mythical case that there is this great deal of opposition out there—I do not see it—that you cannot present the argument and that you cannot be successful with the argument until the time is absolutely right. You may wait another 20 years to get the chance to present it if you become the agent of arguing against your own case. Who are these people at the federal level? I know the states do not know the question. It is almost as if you want us to have a sort of dummy referendum with the states to see whether they would accept the question before it is even proposed. At the federal level who is opposed to the financial recognition of local government, if in fact the wording that has been proposed by most people, including people this morning, is the wording that is put?

Councillor Pickard : Thank you for your question, Mr Windsor. I will make some initial comments, and I am sure Keith would like to provide some thoughts to your question. Over the last 20 years I think a lot has changed with the referendum question. There is actually now a catalyst. That catalyst is a result of the Pape case and of the Williams case, and it has only come into play in the last couple of years. It was more of an ideological, symbolic representation of local government in the Constitution 20 years ago, whereas now there is actually a significant issue facing the federal government about how they fund local government. The funding stream that has been provided by successive governments since 2001, totalling $3.5 billion to date, is, potentially, questionable. That is now the catalyst and a focus for the need to change section 96.

We are not suggesting that there is a strong no case. We as associations are suggesting that, since the 1974 and 1988 referendums were unsuccessful in recognising local government, we need to be cautious and confident that a referendum question will be successful.

It has been bandied around the ALGA table that this is effectively our last opportunity to have local government recognised in the Constitution. It is not about having a question, it is about successfully passing the question, and we wish to be absolutely sure and comfortable that that is the case.

The challenge we face at the moment is that the federal government has not formally responded to the expert panel's recommendation by the local government minister taking a position on behalf of the government to change section 96. The federal opposition leader has used the words 'appropriate recognition of local government', so there is not absolute certainty as to what type of recognition from both the Labor and, indeed, the Liberal parties would put forward to a referendum. Until those positions are absolutely crystal clear, we do not even know how to present that to the state governments.

Councillor Rhoades : Thank you, Mr Windsor, for the question. I nearly fell off my seat when you said that ALGA was more seen in comment in the submission and again this morning as advocating a no case. We are very cautious—

Mr WINDSOR: A postponement case.

Councillor Rhoades : No, I disagree with 'postponement' at the same time. We have looked at the research over many years and we keep coming back to that word. We want this to be a success—as do you. You want exactly the same result as ALGA does. That is what the government is after. Nobody wants to see millions upon millions of dollars put into something if it has not been properly presented to all sides, and that is the role that ALGA has been playing—to convince governments.

If anything came off the rails in this process it was the procrastination of the High Court in handing down the judgement on the Williams case. Everybody seemed to have stopped the role that they were playing. I believe that we could have been in a better position today to move forward had we not lost six to eight months sitting on our hands and waiting for a decision to be made. If something had come out more dramatically than it did—and, yes, we have been challenged that constitutionally what is happening is wrong—we are here to fix it, and we could have worked together to bring about a result. I believe, and ALGA believes, that the window has now come down and that collectively all of us should have still been working together because we all do support the financial recognition of local government in the Constitution. We should have kept working during that period to ensure that we gave ourselves an extension of time to be able to present to the Australian community and to gain and harness their support to get us success—again, that word 'success'—in this referendum going forward. I cannot explain why we just sat back and waited for a judgement to be given. We should have continued.

Mr Windsor, I know you will recall the first inaugural meeting on R2R in Moree in 2000 and the bipartisan support that it has received. We in government—local, state and federal—embrace the camaraderie in R2R. It has been an absolutely outstanding success in delivering these much-needed projects to communities right across Australia. We are here because that success has been challenged in respect of the good work that has been done by both governments to continue that program, which now, as you know, goes through to 2019.

But it goes a little further than that. We are trying to fix the problem that was raised in the judgement because, as we sit here today, who is to say that tomorrow a request could be put to the federal government to inject an amount of x millions of dollars into natural disasters that are occurring as we sit here right now? Would you like to be a part of a government that says, 'We would love to help, but sorry'? Where section 96 still gives you access to do that, we all know in this room that it takes a long time. There is a lot of local government experience in this room to tell you that when it goes through section 96 to the states it can take a long time to get to the end result, the project finished or the funding into a situation where it is needed urgently.

There are programs there that can do it, but it is about ensuring that all the Ts are crossed, all the Is are dotted, and we are maximising the possibility that we can all sit back at the end of the day and say, 'We've done this correctly, we've done it professionally, we've done it well; we've been supported by community and we've succeeded.'

Senator FAWCETT: We have been told in earlier evidence that the best chance of getting a referendum passed is if the public perceives that there is a problem and that there is bipartisan support for a solution to fix it. We have also been told that there isn't a problem because Section 96 provides a conduit that is, in fact, more efficient and that local government gets more money through Section 96 than they potentially would if the Commonwealth did all of its funding through direct grants. Would you care to comment on that and on what would need to occur within the state bureaucracies to get rid of that timing problem and capture the efficiencies that earlier witnesses talked about, if in fact Roads to Recovery or other programs went through Section 96?

Councillor Pickard : I will ask Mr Beresford-Wylie to provide some detailed commentary about the federal assistance grants system which he has intimate knowledge of; but it is important to highlight that, over the last 15 years, there has been no increase above CPI and population growth in federal assistance grants. It is not actually a funding stream that is keeping pace with the challenges that local governments face. It was highlighted, earlier on, that a growing suite of services and responsibilities is being imparted to local government, particularly through legislation by state governments, without the appropriate funding stream.

In net terms we are actually going backwards with the federal assistance grants; the only change that was made when Peter Costello was Treasurer was to reduce financial assistance grants. Successive governments since 2001 have used the Roads to Recovery and, during the financial crisis, the community infrastructure program, where over a billion dollars was provided directly to local governments with over 3,300 projects successfully executed at the local level. That demonstrates that governments of both persuasions have chosen not to head down a financial assistance grants route to increase the funding—which has remained steady—but rather have looked at specific initiatives to drive a federal funding program to local government, identifying federal priorities, such as the road network. Mr Rhodes has highlighted opportunities for other funding programs such as mitigation of natural disasters, mitigation of climate change and obviously community infrastructure, as another example. Mr Beresford-Wylie, could you provide some additional commentary about the financial assistance programs?

Mr Beresford-Wylie : Yes, thank you very much. I will be brief. There was a comment made this morning which seemed to suggest that the funds have been diverted, in a sense, from the financial assistance grants through Roads to Recovery. It is probably important to distinguish between the two. The financial assistance grant under Section 96 are in a sense general-purpose grants provided to councils through a fiscal equalisation mechanism so that they can provide an adequate level of services for all communities. They are not specific-purpose payments in the sense that the government has decided to achieve a particular national objective, which it has with Roads to Recovery. I should say that the financial assistance grants started in the mid-1970s and, indeed, for a period they were actually linked as a proportion of income tax. The Fraser government suggested that they would rise to become two per cent of the income tax take—of personal income tax revenue. The Hawke government decided that that was a bit too much money and reverted back to giving them a flat figure which would be indexed. They became, in a sense, a shadow program of the financial assistance grants going to the states. They remained that way until 1991 when there was an addition to the financial assistance grants which came from tied roads funding. The tied roads grants were rolled in to, and became, the identified roads grants component of the FAGs. They were kept separate because there was a separate base for distributing the financial assistance grants between the states. The general components were distributed on the basis of population; the identified roads grants on the basis of a share of the road task between the states. With the additional funding for Roads to Recovery, the decision made in 2000-2001 by the then Howard government was to provide the money in a different way—not through the financial assistance grants because it was aimed not at providing general support for councils, but for addressing a specific problem that the federal government of the day saw, which was how to improve the productivity of our roads base. A component of this was going to go through councils as Roads to Recovery funding and that amount of funding was $250,000,000.

The distribution to the councils, it is well known as Professor Twomey said, is based on an allocation model which reflects the distribution of the identified roads grants. So there was a linkage between the two. But to suggest that a Commonwealth government would roll Roads to Recovery into Financial Assistance Grants is unrealistic. That has not been the case. Governments have had the opportunity to increase Financial Assistance Grants for 12 or 13 years and they have chosen not to do so. They have chosen to take a more direct path because they want to achieve specific outcomes with their funding of local government, and they cannot do that through the Financial Assistance Grants. The money is untied in the hands of councils, and therefore there is not the opportunity to specifically target outcomes that a federal government wants and that it knows local government can deliver.

Councillor Rhoades : Just to continue on that particular theme: with section 96 and the lack of any increase in the past 13 years, as has been mentioned—again, I go back to my favourite because it is so successful—communities relate to what they see with their eyes. There is no kudos for a federal government in power if the money is going—our communities think that all of those things that come through FA Grants come from the state. They do not know or understand that it comes from the federal government. You put a road reconstruction into place: what do you have at either end for the at least 12- to 18-month period? You have two signs that say, 'This is a federally funded project'. Communities relate to that. I have had them come to me and say, 'How are you going knocking on doors of the federal parliamentarians to get some money to fix my road?' That has not been heard of years, but it is that link. But when it goes through section 96, they think it comes from the state government and it is actually reported that the money has come through the FA Grants in local media and people think it is from the state government. Hence we have seen no increase, and when you think of it, let us be honest, why would you if you are trying to gain some benefit out of what you are doing?

Senator RHIANNON: ALGA is obviously in a critical position to make this happen. I was very interested in Mr Windsor's comments. I thought he summed it up very clearly that we have this unique opportunity because of the type of parliament that came about in 2010. I want to take you back. I think you heard Professor Williams's comment when he set out that interesting study he has undertaken on the conditions that create for a successful referendum. In terms of the amount of time for the campaign, he said that what you often find is that a successful campaign is six to eight weeks and gave emphasis to that. I could understand why Mr Windsor used the cautionary way because it did appear the way you were setting it out that you were being very careful. But life often does not work where you get everything in place and then you know you have got a successful campaign. You often have to create that. And as you are in such a key position, I just wondered, on the basis of what you heard this morning, which was interesting in terms of how we can get a successful campaign, did you revise any of your views with regard to how we move forward in light of those comments.

Councillor Pickard : We do not. The prerequisites that ALGA has carefully considered over a number of years are robust. They are based on not only on our considered view and that of consultants we have engaged—we have engaged the Civic Group, Barton Deakin and CPR Communications to advise us on strategy and how to successfully run a campaign—but we have also considered as an association our input into the expert panel's report. Indeed, they recommended exactly the same position on the prerequisites that we have formed. Ultimately, if the committee is of the view that the prerequisites can be met then the associations are ready to go to a referendum, but we find it difficult to accept that the prerequisites will be met.

Again, it is not necessarily about waiting until the next federal election. We are comfortable going to a referendum without a federal election. Indeed, we are comfortable going to a referendum with another question, such as Indigenous recognition. So, when we talk about the timeliness and the momentum of what is now a rather critical issue, we are keen to capitalise on that, but we do not believe in the next six months we can build the foundation for a successful campaign. That could be achieved within the next year or two.

Senator RHIANNON: So are you actually ruling out that we could go to a referendum at the coming federal election?

Councillor Pickard : No, I am not ruling it out. That is a decision for this committee to make. ALGA's position is that we want to go to a referendum which it has the maximum chance for success. We have articulated in our submission and this morning to you again what the prerequisites are. It is our opinion that those prerequisites cannot be met. If the committee is of the view that they can be met then we are ready, willing and able to contribute to a referendum. But again I say that this is probably the last time in a generation to have an opportunity to recognise local government in the Constitution.

Whilst we are not naive enough to suggest that we need to wait until we are 100 per cent confident in a successful referendum, we need to make sure that at the least the majority of states support the proposition. At this stage only two states have actively participated in your committee process—South Australia and Queensland. I think that in itself highlights an issue where there are four states that are not engaged in this space. The state associations have actively tried to engage the premiers in this space but, in the absence of the words and the precise constitutional changes being suggested, they are disengaging with us even.

Senator RHIANNON: I would like to ask about your campaign that you just spoke of and the advice that you have got from different bodies. Is that for the campaign to run in the lead-up to the actual referendum or is that in terms of the work that you are undertaking now?

Councillor Pickard : It is the campaign in the lead-up to the referendum. So it is effectively the education campaign that we need to roll out to Australians to explain not only about the Constitution and how it is changed but also and equally importantly about the proposed change of recognition of local government as opposed to the precise question, because there is a significant difference between the two.

Professor Williams highlighted the importance of that this morning in saying that it was about how you communicate the message to Australians about what you are trying to fix. It is about ensuring local governments have sufficient funding streams for the childcare centres, for their community facilities and for their road network and infrastructure. That is the message that, in the first instance, we need to communicate to the Australian public—before we even ask them to support a constitutional change.

CHAIR: You have just mentioned that you do not think the prerequisites can be met. What we as a committee are interested in is how ALGA is going to help those prerequisites to be met. Firstly you talk about timing. It must have been two years ago that ALGA was given a sizeable grant by the federal government. Like Mr Windsor, as long as I can remember in local government this has been an item on the agenda of every conference I have been to. The vast majority of submissions we have received are from individual councils—all of whom support financial recognition of local government. So that is in terms of the position since Adam was a boy.

Secondly, in terms of timing, there are some elements of your submission where you specifically say you do not think there is enough time. ALGA has been running with this forever. This has been ALGA's issue forever. So take that into account. Also take into account the evidence we have heard today about successful referenda campaigns being short and the agreement from the political scientists perspective that it is a different campaigning environment that we are in now. You also mentioned bipartisanship as being one of the important prerequisites. What is stopping ALGA from getting the Prime Minister and the Leader of the Opposition to give a bipartisan view on this? What I am saying is that we are really interested in what you are going to do to help these prerequisites to be met.

Councillor Pickard : It is a good question, Chair. ALGA has been focused over the last five years—in fact, since 2007, in the lead-up to a constitutional convention of local governments in December 2008 in Melbourne, which over 600 local government representatives attended—to determine in the first instance the type of recognition: symbolic, in a preamble, financial or indeed institutional. The meeting resolved to request the board to consider those three options.

We have actually been on a very extensive journey since then, working on many levels. All the state associations have been very active with their state governments, without exception, over at least the last two to three years. That has resulted in Queensland and South Australian governments supporting the financial recognition of local government through an amendment to section 96. That is a position that they have adopted and are articulating.

The challenge we face, though, with the remaining four states is that in the absence of the words we are unable to convince them to support a proposition when there is no opportunity for them to assess what the implications are for the state. The only entity that can engage the states to achieve their comfort or otherwise is in fact the federal government, for communicating what type of recognition they are proposing in the Constitution. That has not been achieved as yet, and we have hit a wall with the four states. We will not be going any further to receive feedback from them in the absence of specific words that have been proposed. And that message has been communicated from premiers to state associations.

With the community itself, even as late as November last year ALGA was actively engaging our communities and produced the document called The case for change: why local government needs to be recognised in the Australian Constitution. In addition to that, the state associations throughout Australia have been active in promoting the importance of local government to the Australian community. And, indeed, the federal government grant that you referred to, Chair—the $250,000—has been used to help communicate to our communities the challenge that we face without the surety of a funding stream from the federal government.

So, local government has been very active for the last five years, particularly in the last two to three years, in doing what we can. But ultimately a referendum is run by the federal government, not by state associations or indeed by ALGA. We are looking now for the federal government to take a position. It is our view that it needs to be a strong public bipartisan position in order to maximise the opportunity for success, and that focus is around the articulation of the words. At the moment, the articulation of the words is absent from both sides of politics.

CHAIR: I will come back to some of your points, but Mrs Prentice is next.

Mrs PRENTICE: Mayor Pickard, you have now mentioned several times the importance of getting the words to bring the states on-side. Does ALGA have preferred wording? Do you support the expert panel? How do you think it should be phrased in the referendum question? And—knowing that I will not get another question!--I would also be interested in how ALGA is then going to plan the campaign. And do you have the time frame set ready to go when you get those wordings? Or will you be starting from scratch?

Councillor Pickard : Thank you for your question. We do have preferred words. Initially our position was to just insert the words 'and local government' in section 96. But a number of states expressed concern that the change to the Constitution will give a broader head of power to the federal government over local government, and that was actually quite a big barrier. So we support the words of the expert panel, with a slight change—based on advice we have received from constitutional experts—that better reflect the language used in the Constitution, and that is to insert the words 'or local government body formed by or under a law of a state or territory'. So, in part, section 96 reads:' Parliament may grant financial assistance to any state or local government body formed by or under a law of a state or territory on such terms and conditions as the parliament thinks fit.' So they are the words, slightly different to the expert panel's preferred words, based on advice from an expert.

In relation to a campaign we have, as I have indicated, worked with three separate consultants, covering the broad spectrum of the political landscape in Australia. We have a campaign structure in place. We have commitments from state associations to contribute funds to a campaign.

The challenge that we face is that the experts whom we have sought advice from have suggested that we need around 18 months to successfully run a campaign. These are people who run not only referendum campaigns but also federal election campaigns of both political persuasions. We have the campaign plan in place and we have the structure in place. The board has formally adopted that and we have commenced a process of collecting state contributions so that, where possible, ALGA has enough finances to run a successful campaign. But our professional consultants are suggesting to us that an 18-month period is needed. That is not for the Vote Yes campaign; this is for the education campaign that is required. Not only has the expert panel suggested it is a requirement but indeed you heard this morning some professors articulating the same thoughts.

Councillor Rhoades : On that same point I concur with the comments that have been made by Troy. The six to eight weeks that was mentioned by Professor Williams earlier was, I thought, backed up very well by your closing comments that today, in the year 2013, social media plays a big part in how you get a message out there. ALGA and the state associations have not been sitting on their hands, as I described before, as everyone did waiting for the handing down of the judgement—is it out this week, next month or when is it due?

Queensland, to their credit, ran a television advertising campaign in the Wide Bay area and up around that part there about recognition of local government. What we are trying to do—and New South Wales is ready to run with that—is to educate communities leading up to this about what your local council and local government do, what services your local council provides. So it is not just a case of 'We now have a decision, let's make a move—bang, away we go.' We are prepared. You heard the funding mechanism is in place for what we can contribute.

Professor Williams made this comment: have you seen the Prime Minister and the Leader of the Opposition get together in the one picture frame and say, 'We totally support this happening.' So we have been moving.

Mr ZAPPIA: My question is to John Trainer or Chris Russell from South Australia. John and Chris, I hope you can hear me. Firstly, do you concur with the views that have been expressed this morning by the ALGA representatives and, secondly, can you tell me what the South Australian Local Government Association's understanding is of the South Australian government's position on this matter?

Mr Russell : Thank you for the question. I am happy to respond. John is welcome to add anything, obviously. I can say very clearly that we fully support the ALGA position. I think the comment was made earlier that 90 per cent of councils in Australia have formally resolved to support that position. In South Australia 100 per cent of our councils formally resolved to support ALGA's position, as has the LGA council's representative our annual general meeting structure in early 2011. So there is very strong support here.

Mr Trainer : And a pledge of financial support.

Mr Russell : Yes. Very clearly, they have made a commitment to funding contribution, both to an awareness campaign about local government at the state level that we are now in the process of rolling out and a contribution to the ALGA for a specific campaign to support the referendum. I have just lost the second part of your question.

Mr ZAPPIA: The second part is: what is your understanding of the South Australian government's position with respect to a change to recognise local government in section 96?

Mr Russell : Yes, thank you. I understand a representative of the South Australian government will be attending your committee this afternoon but certainly our understanding in a formal agreement that we have between our president and the Premier is that the state government is supportive in principle of the proposition that the ALGA and we have supported. Like other states, and sensibly, they want to see the precise wording to understand it and to analyse it in detail and I think have been waiting on the Commonwealth indicating support for a particular form of words to do that. You will be able to pose that question more directly to the representative later today.

Senator BUSHBY: Thank you, ALGA, for assisting us today. It has been 25 years since the last referendum on local government recognition. As I understand it, your position is a strategic one, that it is better to wait a year or two to maximise the prospects of success this time rather than to wait effectively another 25 years for another opportunity. In that context, I note from your submission that the level of support has fallen slightly in your polling. What do you assess is the reason for that? Does that highlight the dangers of further delay or does it highlight the need for delay in your assessment in terms of better education? What is the factor which has caused that and I guess is the answer to those questions?

Councillor Pickard : Thank you for your question, Senator. Mr Beresford-Wylie might provide further specific information relative to the October 2012 research, which we are happy to table for the committee's information. You have access to our previous research but this is the latest research. It is interesting that there has been a slight shift down but it has been a reflection across the board of all spheres of government and that is probably a broader perception of people's views of the politicians potentially and parliaments and governments. However, what is consistent is that local government is still receiving strong support from the community. In fact, the majority support recognition of local government in the Constitution. Indeed, when prompted for financial recognition, that shifts a further 10 per cent. In 2011, when prompted it shifted from 57 per cent support to 68 per cent support and in October 2012, when prompted it shifted from 54 per cent to 64 per cent when the need for the financial element was highlighted, rather than just symbolic. I think it is a broader reflection of the views of the community on all the tiers of government as opposed to just an adverse reflection of local government.

Mr Beresford-Wylie : If I could make one additional comment to that, in 2009 there was still an issue around that the Commonwealth was talking potentially about constitutional reform going to hospitals. Others were still talking about the possibility of constitutional reform perhaps of water. I think there was a bigger discussion about constitutional reform at that time. I think people were more aware of the Constitution and therefore the possibility of reform and I suspect as we have drifted away from that the figures have simply moved down. In fact, it is not an increase in the number of people who are opposed to recognising local government; it is simply an increase in the people who are putting down 'Don't know' as an option. The opposition has not grown; I think it is simply that people have become a little more disengaged with the idea of constitutional reform. Mr Rudd made quite a point of the possibility of constitutional reform to look at hospitals and I think that probably resonated with people as a possibility of constitutional change. It is not there at the moment, so I think it is just disengagement potentially at the lower level with constitutionality. As Mayor Pickard has said, when prompted the number of people who are supportive still increases from the general abstract figure of, 'Do you support recognising local government?', 'Well yes we do'—that is in the low 50s. It jumps 10 per cent, which it has always done, when people are prompted by saying, 'It's about direct federal funding. Would you support a change in that direction?' and it increases significantly.

Councillor Pickard : Of interest are the three surveys conducted by ALGA in 2009, 2011 and October 2012. The number of those opposed to the recognition of local government has remained steady at around 14 per cent. So that has not shifted; there has just been some shifting in the understanding, the comprehension and the views of the community, as opposed to those who oppose recognition, which has actually remained steady in that timeframe.

Senator STERLE: Before I ask my question, Chair, is the letter from the Premier of Western Australia for public knowledge now?

CHAIR: We moved it this morning, yes.

Senator STERLE: So I can speak to that. Gentlemen, what I would like to do briefly is quote one paragraph from the Premier of Western Australia, Colin Barnett. He says:

In that regard, previous advice has been provided that the position of the Western Australian Government, supported by legal advice, is that a Constitution amendment is likely to affect the powers, capacity and function of the State Parliament and Government in relation to local governments and that any reduction or impact on these powers would not be supported.

Typical of Western Australia, the rabbit-proof fence was built there to keep the Victorians out and now anything that comes from Canberra must be kept out or anywhere that is not Western Australian. It is not hypothetical but a harsh reality that it is likely that the Western Australian government will oppose any financial recognition of local government. Mayor Pickard, as a West Australian, if the wording comes through that it is desirable from the government with support of the opposition at the expense of the position of the West Australian government, will the Western Australian Government Association and ALGA take the fight up on behalf of this proposal at any expense, contrary to the wishes of the state government in Western Australia?

Councillor Pickard : Not at any expense, not at the expense of a referendum not being successful. I have personally championed the cause with Premier Barnett for three years and his local government minister and a number of ministers that for I think philosophical reasons strongly oppose changes to section 96. I am not sure what legal advice the state has received but it is interesting that in a decision of the High Court in 1957 Chief Justice Dixon in his finding stated—this is in relation to section 96—that to grant money and moreover to grant money to governments it is not a power to make laws with respect of a general subject matter. So there is actually High Court precedent that outlines that section 96 does not give a broad head of power. I read a quote from Premier Barnett in the Australian on 26 November last year. The last sentence of the article stated:

WA Premier Colin Barnett said he would support recognition only 'so long as it was made clear that local government was a function of State government'.

I think this comes to the core of our additional words for section 96, not just to insert local government but effectively to highlight that we are a creature of the states, we are formed under legislation of states, and our attempts here to recognise local government in the Constitution are not to provide a broad head of power for the Federal government but effectively to secure the funding stream that is currently provided to us.

Senator STERLE: I will wrap up on this, if I may, Chair. I understand your answer to a certain extent, but if it is the wish of your members, of the shires, contrary to the Premier of Western Australia's view, you are not prepared to go out there and fight for what your members would believe would be the best thing for ratepayers in Western Australia?

Councillor Pickard : We already are. Western Australian local government has a formal position to support constitutional recognition of local government and we are championing that case.

Senator STERLE: I understand. Time is of the essence, but the paragraph I just read to you quite clearly is that the position of the state government of Western Australia has not changed. It is their belief that the constitutional amendment is likely to affect the powers that they have and they are not going to support it. That cannot be any clearer. You mentioned something that Premier Barnett said in November. This is dated yesterday. So I do not think there is a lot of support from Western Australia to see them lose any powers. I want to get it very clearly on the record that if this proposition is put forward for financial recognition for local governments you are not going to take a fight on against the Western Australian Premier even if it is the desire of your members in Western Australia to stand up for ratepayers and local councils.

Councillor Pickard : We do not require all state governments to support the financial recognition. We require bipartisan support at the federal level but we require four states to actively support financial recognition.

If there are one or two states that do not support the constitutional amendment, that will not prevent us as an association from supporting a referendum and championing that cause.

Senator STERLE: So, in Western Australia, you will be out there saying, 'Regardless of what the Premier says, if that is the case we disagree with the Premier and we are urging people to vote yes'?

Councillor Pickard : Absolutely. That is the position. An interesting point to note as to the Premier's letter is this: what change to the Constitution did he seek that advice on? In the absence of that, it is quite difficult to get advice from the State Solicitor as to the implications of any change to the Constitution.

Councillor Rhoades : Just to add to that very quickly in support of what Mayor Pickard has just said: it was said in the previous segment that you held, Chair, with the four academics, that, if there was a state, Senator, that was still opposed to it, hopefully the rest could sort of get it to, 'Okay, you are opposed to it, but do not take a no case on.' In defence of WA local government, all along in this process they have said that, if it came to that case, at the end of the day they would still be very proactive in promoting the yes case, and if it meant that they could not expend the funds that they will collect, they would contribute those to the national campaign of ALGA to do it. They are more than playing their part at a local government level in WA. But they are the things we have to work on.

Senator SINGH: Based on your response just then to Senator Sterle, and on your submission, which I have read, and on the two letters you have written to me—and I presume you have also written to other members of parliament—one of which I received on 17 December and the other on 25 October, which obviously were coming out of the June Williams decision as you mentioned in your first letter to me, I am confused as to what ALGA's position is on this referendum. We know that the June decision, the Williams decision, created some urgency in relation to direct financial payments to local government. Roads to Recovery is the example you use and it has been used widely. Do you agree that that urgency is still there? And if that urgency is there, why would ALGA now want to prolong that uncertainty? Has ALGA's position changed since the letter you wrote to me on 17 December? I am quoting the President, Mayor Felicity-Ann Lewis:

The establishment of the joint committee is a major step in achieving the Government's commitment in 2010 to hold a referendum into the constitutional recognition of local government in the life of the Parliament.

Those are fairly supportive words in that letter from ALGA. Has your position changed from 17 December to today, where ALGA is no longer supporting a referendum in 2013?

Councillor Pickard : No.

Senator SINGH: What I have read in your submission is that ALGA also now believes—and it is on page 5 of your submission—that it will not be possible for local government to run the most effective campaign in 2013. You have just now said to Senator Sterle about how ALGA would support a referendum, regardless of one particular state government not being for it. Yet earlier today you talked about four criteria, one of which is negotiation with the states being favourable. I am completely confused as to what ALGA's position is. You obviously have seen the urgency because you wrote twice to me in the second half of last year. But now all of a sudden it is like you are saying there is not the urgency and we need to extend this out and create and prolong the uncertainty that is being created from the Williams decision. So can you provide some clarity on the record for members of this committee, who are taking this issue very seriously and are listening to experts and to you and to all of the submitters that we have received? We have received positive submissions from local government. What is ALGA's position on this referendum this year?

Councillor Pickard : Thank you. I will try to make it as clear as I can for you and for the other members of the committee. There is an urgency to address the current uncertainty that faces direct funding of local governments and the federal government as a result of the Pape and Williams cases. So the urgency is there.

But, having said that, our view is that a solution to the direct funding of local governments from the federal government is changing the Constitution, which history reveals in Australia is not an easy task with. Following two previous unsuccessful attempts, local government want to ensure that when we go to a referendum we are in a very good position to have it passed. I mentioned four prerequisites. One of those prerequisites was not unanimous support from each of the states. The prerequisite was for the federal government to engage with the states. That has not happened yet. There has been no engagement from the federal government with each of the state governments in Australia. It is not a condition that all six have to agree. It is a prerequisite that they are engaged and there is a conversation about the proposed words. So local government, through ALGA, supports a referendum being held at a time that maximises its chance of success and we believe that those four crucial elements are required to maximise the success of a referendum.

We doubt that there is sufficient time between now and the federal election to ensure those prerequisites can be met. I think, and Councillor Rhoades highlighted it earlier, the delay in handing down the Williams case has adversely impacted that time frame, one that we have been preparing ourselves for, to run the constitutional awareness campaign—and that is absolutely critical. The expert panel have said that that is critical. Previous inquiries of your parliament have highlighted how important it is to have a constitutional campaign. In the absence of that campaign the success of a referendum is highly unlikely. So, yes, we are being cautious but we want to make sure that it is not just a case of having a referendum. We want a successful referendum. It is our belief that, whilst the issue is critical and we need a solution, we do need to ensure adequate time to ensure the prerequisites and the foundation are laid for a successful campaign. It is our view that will be difficult to achieve before the federal election but it can be achieved shortly thereafter whether it be in 2014 or 2015. I think there is an opportunity—and this is the position that we are presenting to the committee—for a strong public bipartisan position to be taken in the lead-up to the federal election for a referendum to be held independent of the following federal election to recognise local government in the Constitution.

CHAIR: We have to wrap up this section but I am going to follow up something that Senator Singh raised because she stole my thunder completely on the issue of the two letters and the booklet. You have said to us today and in your submission that there is not sufficient time. You do not believe today there is sufficient time to have a successful referendum this year. Is that correct?

Councillor Pickard : It is our view that there is not sufficient time.

CHAIR: Okay. What I am struggling with is this. On 17 December, less than four weeks ago, there was sufficient time because you wrote to me and said the establishment of the joint committee is a major step in achieving the government's commitment to hold a referendum on constitutional recognition 'in the life of the parliament'. So that is in the life of this parliament. I do not know what has changed in that four weeks.

Councillor Pickard : With respect, I think the emphasis of that sentence is actually at the front end of that sentence and that is the indication from the president. So if you could reread the first four or five things, and I do not have the letter in front of me, and it is actually about the indication from the president that there it was a strong step moving forward for the government to be able to adhere to its election commitment. It was not saying that we would therefore be pushing for it to be held in accordance with that election commitment.

CHAIR: Even if I accept what you were saying just then in response to that, still I was written to on 25 October and 17 December in letters from the ALGA which held none of the reservations that you have made in your submission dated 18 December. You held up earlier this booklet that I have here. Again, when I was written to I was given two copies of this booklet which had four points as to the necessary conditions for a successful referendum. 'Support across all political parties'—so bipartisanship and I accept that. 'The government needs to lead on the issue and demonstrate its support publicly'—we accept that and this committee is an important part of that. 'The public needs to be informed about our Constitution, how changes are made and the question that is going to be asked'—again we accept that. 'The public needs to be informed in a factual way'—I accept that.

But what I am being left with following the reading of your submission and our discussion this afternoon, is a feeling that we are in a circular argument where you accept that there is an imminent threat—in fact you said in your initial submission to the expert panel that there is an 'imminent threat' following the decision—yet you say that ALGA will only support a referendum if it is successful, and we are very unclear as to what ALGA is going to do to help make that success.

The reason I raise these letters again is not to be pretentious. I just want to highlight to you that every member of parliament, I believe, would have received this correspondence from ALGA, which is why some of us were very surprised to read the submission that you submitted to the committee. I am happy to take any comments on that. If you feel that you have said it all, then fair enough.

Councillor Pickard : We think that we have articulated the view and, hopefully, in my previous response to the question I made crystal clear the association's position. The position that we have adopted is reflected by the expert panel's own independent assessment of the situation of what is important to achieve a success in a referendum. I come back to this point—and we discussed this many years ago—about making sure that it was not just about having a referendum; it was about achieving a successful referendum particularly if local governments through the state associations were going to contribute millions of dollars to help run a campaign.

I apologise if there is confusion. I read that sentence differently from the way you have both read it. I take that sentence to be an indication from the president that the announcement from the committee is a strong step forward, which we publicly endorsed and embraced. The trouble is that the lag created by the Williams case has suddenly concertinaed the time frame between now and when the federal election could possibly be held. Not only is there a problem because of the mechanisms of the election and the bills required to be presented before the House but, importantly, the public campaign. We have been actively preparing ourselves for a referendum at the federal election in accordance with the agreement struck by the Labor government and the Greens. That has been our focus for the last term of this government. But it has become rapidly apparent to us, and it is our view, that those prerequisites will not be met.

You may hold a different view. I reinforce the point that if it is your view that there is sufficient time for our prerequisites to be met and that the success of the campaign is in a very sound position, then we are ready, willing and able to run a referendum campaign. We are concerned that those prerequisites cannot be met, but that is an opinion which the committee needs to form on its own basis.

Councillor Rhoades : Very quickly, just to back that comment up: at around the same time in December, there were still decisions and answers we could not get from this committee with regard to timing. We know it is now March for the recommendation to be handed down, and when you look at that time frame the closing comment from Mayor Pickard is our position. We are ready to go. The enthusiasm is there. The processes are in place to make the prerequisites. We think that it is going to work—let us go together.

CHAIR: Thank you very much, and thanks very much also to the Local Government Association of South Australia for being on the line. If you have been asked to provide any additional information, would you please forward it to the secretariat. You will be sent a copy of the transcript of your evidence to which you can make corrections of grammar and fact. Thank you very much.

Councillor Pickard : We will table for the committee's reference our legal advice and our latest research on constitutional recognition.

CHAIR: Thank you very much.