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Thursday, 24 May 1973
Page: 2621


Mr LAMB (La Trobe) - The election of the present Federal Government marked a turning point in the fortunes of local government. Previous governments held the view that local governments are the exclusive constitutional responsibility of the States and that the States should include local requirements in their overall requests for Commonwealth financial assistance. This Government has changed that policy to recognise the needs of local government and its role in a 3-tier system of government. In his policy speech the Prime Minister (Mr Whitlam) promised that his Government would 'give local government full access to the Loan Council and the Commonwealth Grants Commission', partly because 'the inequalities between regions must be attacked by the national Governnent*. This approach is logical given that the national Government is already committed to removing inequalities among the States; inequalities within the States are equally worthy of attention. This Act continues the Grant Commission's role in respect of applications by the States for special grants but now the principle of equalising grants will be extended to the local government bodies. This Bill recognises the inadequacy of locally derived revenue in meeting the expanding responsibilities of local government and the need for equalising the burden of individual local government bodies beset by unique problems in raising revenue.

The existing Grants Commission is a most suitable quasi-judicial body that can investigate needs and resources and make recommendations on the level of financial grants that should be made by the Commonwealth to local government bodies through the States. Some speakers in this debate have suggested that some form of taxation revenue should be re-imbursed to the States for this purpose and superficially it could be argued that local government bodies should receive Commonwealth assistance on the basis of per capita payments. However this would overlook the varying capacities of local government bodies to raise their own revenue. Certain demographic factors place special burdens on some local government bodies. For example, the inner areas of our larger cities with an almost static population growth do not enjoy a natural increase in rate revenue, from a growing number of rate payers, but have entered a phase characterised by diseconomies of congestion, that is, the costs of providing local services rise more than proportionally to the increase in population. Suburbs on the fringes of the cities, such as Waverley, Knox and Ringwood on the fringe of Melbourne, however, enjoy an expanding population with a corresponding expansion of revenue. This would mean little difficulty except that certain local government areas may face special difficulties as a result of an influx of migrants or young families who place greater demands on community services than do older people because the extra people outnumber the extra ratepayers in any such increase. Rural councils, such as Upper Yarra and Healesville, both about 40 miles from Melbourne, suffer from the drift or population to urban areas so that their revenue is stable or declining. Furthermore, they face the odious task of increasing rates on farming property unless their income can be supplemented from other sources.

There is a wide discrepancy in the quality and quantity of services afforded between the western and eastern suburbs of Melbourne. Comparatively, the western suburbs are deprived in that they lack a great number of community services such as roads, libraries, child care centres, recreational centres and social welfare services. These suburbs have suffered because the local councils have been forced to rely largely on revenue from rates which are low for basically 3 reasons. Firstly, large areas of land held by Commonwealth and State governments are nonrateable secondly, most of the residents are in the low income bracket and own correspondingly lower value properties - there is a limit to the amount of rates that can be applied - and thirdly, our regressive system of taxation deductions aids those on higher incomes so that indirectly the Commonwealth Government is providing more assistance to the more affluent communities. The plans of State authorities, such as the Melbourne and Metropolitan Board of Works, have meant rezoning of land that cannot deliver income to local councils. The local government bodies that take in the Dandenong Ranges such as Lilydale, Sherbrooke and Berwick, for instance, suffer because large areas are required for conservation and recreation and cannot be rated.

As the responsibilities for welfare work fall more heavily on the shoulders of local government, so the equity of rate collection becomes more distorted. The benefit principle of taxation is more appropriate for most local government services but is most inequitable for social welfare services which should be provided from community revenue. It is for these reasons, among others, that per capita payments would not be suitable as a basis for determining grants from the Commonwealth. But the grants recommended by the Commonwealth Grants Commission would he p to equalise the facilities available in richer and poorer, or highly or sparsely populated, local government areas and would provide a financial topping up for the expanding ro'e of local government into the non-traditional social welfare sphere.

There are special qualifications, however, that recognise the difficulties in extending the operation of the Grants Commission to local governments. If the Commonwealth Government had attempted to impose regional groupings it could not expect full cooperation from bodies each separately constituted and with differing financial problems and demographic qualities. Those best qualified to assess the ideal groupings will carry out the task. Approval of regional organisations will be carried out in full consultation with the States and should be initiated by the local government bodies themselves. In some instances, one local government body may constitute a region or possess regional characteristics in itself. The Bill is given flexibility by permitting the relevant Minister to recognise a single local government body as an applicant for assistance. Furthermore, the charge of centralism is lessened as such assistance as is granted will be in the form of section 96 grants paid to the States and the applicants must inform the appropriate State Minister of the details of the application.

The system of regions has been adopted to make the system workable and to reduce the 900 or so local government bodies to a manageable number for the Commission to process. The current position was put clearly by Mr Justice Else-Mitchell of the New South Wales Land and Valuation Court when he stressed that there are too many local authorities with areas and responsibilities resulting from historical accident rather than conscious planning or economic appropriations. It would be foolish for the Grants Commission to compound the difficulties. It is necessary that the local government bodies recognise the needs of local government in a wider integrated context rather than simple parochial terms. This objective could well be realised as many local councils already co-operate on a regional basis for many services such as regional libraries, social welfare and fire protection. The Government realises that it will have to recognise the existing organisational structure of local government but this must not preclude co-operation between local councils or prevent the Minister for Urban and Regional Development developing regional groupings to facilitate the workings of the Commission. Of course, how the Commission goes about its business is largely up to it and the local councils in such matters as investigations, studies and recommendations for grants to the regions or within a region.

The Act attempts to avoid the charge that lazy local governments - those which have not fully used local sources of revenue - will be favoured over those which by dint of hard work and responsibility have obtained the revenue necessary to provide essential community services. Grants will be made only after assessing the effort local government bodies have exerted in meeting their own financial commitments. The Act provides that local government bodies, whether they be regional or individual applicants, must demonstrate a reasonable effort to finance their affairs. This provision has an inbuilt advantage for local government. The rating system, until recently, provided an adequate and appropriate method of finance which has allowed them to preserve their financial autonomy and independence. At the same time as applying for Commonwealth grants, local government bodies should be seeking ways to preserve their existing strengths and maintain their independent function. I believe that local government bodies will be anxious to preserve their autonomy and will welcome the provision that they must demonstrate their reasonable efforts regarding finance. They will also welcome the information that these grants will in no way be a substitute for the assistance normally provided by State governments for single purpose or specific developmental projects such as those for roads, aged pensioner homes, home care services, senior citizens centres or tourism.

Local government bodies can probably expect similar treatment by the Grants Com mission in assessing their needs as that now extended by the Commission to the States in assessing their needs. Differentials in the fiscal capacities of local government bodies can be partially or wholly offset by the pattern of distribution of Commonwealth financial assistance to the States for local government purposes and the Commission takes this into account in assessing the need for a special grant by treating the bodies as if they had not received such State allocations.

The underlying basic proposition of this Bill is that the Australian Government no longer intends to turn its back on the financial problems of local government. This Government recognises that the taxpayer and the ratepayer are largely one and the same. This Government has taken the initiative and acted to increase the finances of local government which are inadequate for their expanding role in providing a quality of life for our citizens. The Government has already announced its intention of becoming involved in single specific purpose works such as sewerage, land and transport. It is now to become involved in helping local government to overcome the backlog of unmade streets and inadequate social services. It has now accepted the challenge of a truly national government and that is to ensure that no person will be jeopardised regarding his quality of life because of. where he lives. Once it was good enough to consider differences between States; now it is necessary to consider the differences between local government areas. I commend the Bill to this national Parliament.

Motion (by Mr Daly) agreed to:

That the question be now put.







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