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Opening address to Australian Council of Local Government, Canberra.

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Prime Minister of Australia


Opening Address to Australian Council of Local Government

18 November 2008


I acknowledge the First Australians on whose land we meet, and whose cultures we celebrate as among the oldest continuing cultures in human history.

Welcome to the nation’s capital, and welcome to one of the biggest gatherings of elected representatives in Australian history.

Today we launch the Australian Council of Local Government.

And today we turn a page and begin a new era in the relationship between Australia’s national government and the local governments that represent local communities across our nation.

Today brings together more than 400 mayors and representatives from councils and shires across this nation.

Never before have councils from different states and territories been brought together in a forum like this.

We gather today for three reasons:

First, to establish a new, stronger and more coherent relationship between the federal and local spheres of government.

Second, to receive your input on our election commitment to the constitutional recognition of local government, rather than us simply imposing our view.

And third, to begin work on a planning reform agenda to improve infrastructure and service delivery across this country.

In the past couple of hours I have arrived back from the G-20 Summit meeting in Washington - convened in response to the global financial crisis.

The Summit was an important milestone for the global economy - bringing together the leaders of the world’s 20 largest economies, comprising 85 per cent of gross world product.

The fact that the US brought these 20 nations together reflects the size of the challenge we now confront.

The US and Europe are on the verge of recession.

Germany and Japan, the second and third largest economies in the world are already in recession.

An economic slowdown has hit our own region - including China.

The Summit also demonstrated a recognition of the changing centre of gravity in the world economy.

Simply put, global economic growth won’t get back on track without the G-20 economies of our own region - China, India, Indonesia and South Korea - economies that now comprise a large share of global economic growth.

The Summit resolved that member economies would take “immediate steps to use fiscal measures to stimulate domestic demand to rapid effect”.

Where the private economy cannot fill the growth gap, let us be clear - government must step in.

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That’s what the Australian Government resolved last month when we announce our Economic Security Strategy.

That’s what global governments resolved in their communiqué last weekend.

To begin to chart a course of action to see us through this great challenge.

We know there are no easy solutions or quick fixes to the global financial crisis.

This is going to be a long, drawn-out crisis that will have a real impact in Australia - leading to slowing economic growth and increased unemployment.

The Australian economy is sound but we will not be immune from the global slowdown and the real possibility of a global recession.

Australia has already taken decisive steps to stimulate our economy.

Our $10.4 billion Economic Security Strategy provides a substantial fiscal stimulus to underpin growth.

Last week I announced a thirteen-year, $6.2 billion New Car Plan to transform the Australian automotive industry and support Australian manufacturing and Australian jobs.

These initiatives build on the $47 billion in tax cuts for working families that we delivered in this year’s Budget.

This is important progress.

But it is only the beginning.

Because we are waging a war against global recession and global unemployment - and we are determined to deploy every tool at our disposal.

The government will take whatever decisive action is necessary to protect economic growth and jobs for Australians.

We have also taken strong and decisive action to stabilise our financial system.

We guaranteed bank deposits to build confidence in our banks and protect people’s savings.

We have also guaranteed the term wholesale funding of banks so that credit can continue to flow.

As with the real economy, growth and jobs, the Government remains determined to take whatever action is necessary to maintain the stability of the financial system into the future.

Once again we still face many challenges.

And once again, through the Washington Summit, the G-20 has resolved to combat these challenges together through the reform program we have agreed on.

Just as the G-20 meeting was critical to the future of the global economy, today’s meeting of the Australian Council of Local Government is also important to our national economy.

You cannot have a strong Australian economy without a healthy global economy.

Equally, you can’t have a strong national economy if you don’t have strong local economies.

Because local government has an important role in strengthening and stimulating local economies, local businesses and local jobs.

That is one of a number of reasons why the Government attaches priority to a new partnership with local government.

Your role in the local economy.

Your role in the delivery of local services.

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Together with your enduring role in supporting the local community fabric, including the voluntary sector.

Analysis of Federalism

It is often said of Australia’s system of Federalism - Commonwealth, State and Local Government - that if it didn’t already exist, and we were starting again today, we’d be unlikely to create the system we have now.

Some services are provided by three levels of government.

Some services are inadequately provided by any level of government.

Duplication in some policy areas.

Buck-passing in others.

The complexity of the Australian system of government is revealed by analysis of the budgets of the Commonwealth, State and local spheres of government.

Consider how revenue is collected:

z The Commonwealth collects 82 per cent of government revenue. z The State and Territory Governments collect 15 per cent. z Local Governments collect just 3 per cent of revenue.

This suggests the Commonwealth has all the money.

But we don’t see a quarter of the revenue we collect.

It goes in one door of Treasury and out another - primarily into the hands of State and Territory governments, but some to local Government as well.

The financial churn and redistribution of revenue between levels of government makes it difficult for the public to know where their money is actually going.

Our federal system is no less complicated on the expenditure side of the budget.

The Commonwealth’s main expenditure items are:

z social security and welfare - a third of the national budget z health and hospitals - another sixth of the budget; z education is $19 billion a year; z national security is $18 billion a year.

The State and Territory government’s main expenditures are:

z Health and education - each about a quarter of their budgets; z Transport and policing - each about 10 per cent of their budgets; and z A range of other community services.

Local government budgets must be stretched across many priorities, including health, social security, welfare, housing, community amenities, business development, transport, communications, recreation and culture and general public services.

Rather than answer the question of ‘what do local governments do?’, it is better to ask ‘what don’t local governments do?’

In individual areas of policy, there is extensive overlap between the responsibilities of different levels of government.

A Business Council of Australia study, Infrastructure Action Plan for Future for Future Prosperity, highlighted the complexities in the delineation of responsibilities for economic infrastructure among the different levels of Government.

It found that:

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z While the Commonwealth government is responsible for aviation services, state, territory and local governments are responsible for regional airports z While national roads are funded by the Commonwealth, they are built by state governments z While local governments are responsible for local roads, they are funded by the Commonwealth and state

governments as well z All levels of government have some involvement in railway infrastructure provision and services z And in areas that currently fall within the sphere of local and state government, including public transport, water,

and energy, there are greater demands for Commonwealth involvement.

The Australian Government has a deep commitment to reforming the Federation.

Necessary for the Australian economy.

Necessary for the Australian people who demand better services.

Necessary for the Australian system of government which requires greater accountability.

We must have cleaner lines of responsibility.

We must have less duplication and waste.

And we must have stronger partnerships between levels of government.

The people are demanding we cooperate - rather than perpetuate conflict in order to avoid problems.

Local Government is critical to Australia’s system of government.

It is critical to our national economy.

Local government directly supports more than 168,000 jobs around the country.

That infrastructure and those services in turn underpin hundreds of billions of dollars of economic activity.

From water supply to childcare provision; from road construction and engineering to planning and development; from essential community services to building a more sustainable economy - local government is much more than just an adjunct to State and Territory governments.

Local government is the level of representation closest to the Australian people.

The Government that I lead believes in supporting local government.

We believe in investing in local government.

We believe in partnering with local government.

And we believe in partnering with local government in a long term reform program that better serves the nation, the economy and local communities.

The Government’s commitment to a new partnership with local government is part of our wider commitment to new ways of governing that are relevant to the 21st century.

The establishment of the Australian Council of Local Government is part of this reform program.

And this is the start.

It is our goal to build on the strong tradition of partnership with local government established by previous Federal Labor governments.

As long ago as the 1940s, Ben Chifley thought local government was so important that even while Prime Minister he continued to serve on the Abercrombie Shire Council in Bathurst.

The Curtin Government initiated a series of Commonwealth-State conferences on regional economic development

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between 1944 and 1947, believing that all three tiers of government needed to work together to ensure successful regional development, management of population growth, and provision for housing and water supplies.

After Gough Whitlam came to office in 1972, he established for the first time a direct relationship between the Commonwealth and local governments.

Whitlam understood the role of local government in nation-building, establishing direct grants to local government bodies for regional development in 1974.

From the 1974-75 Budget, ongoing General Revenue Assistance grants were introduced.

The Whitlam Government invested in critical local infrastructure such as sewerage systems in the new suburban estates of fast-growing cities.

These grants also funded flood mitigation, community health centres, urban renewal, recreation facilities, environmental projects, infrastructure for tourism and other local infrastructure.

Today, communities around Australia are still benefiting from the hard infrastructure built in those years through Commonwealth and Local Government collaboration.

The Hawke and Keating Governments revived the Commonwealth commitment to local government and local economic development.

In 1986 the Hawke Government launched the Country Centres Project to fund community-driven initiatives that generated local economic development.

In the 1990s, the Hawke and Keating Governments invested in local capital works to stimulate economic growth, providing direct grants to local government for social and economic infrastructure.

The Building Better Cities program under Brian Howe involved a significant investment in urban consolidation, urban renewal and economic development projects that embraced Commonwealth, State and local governments.

This led a revival of inner city areas and provincial centres, redeveloping public housing and improving public transport networks - with an innovative funding model built around achieving real outcomes.

The Government I lead is also committed to strengthening local government.

In this year’s Budget, the Commonwealth is providing $2.2 billion through financial assistance grants and Roads to Recovery funding.

We have also committed to working with local government to address housing affordability through our Housing Affordability Fund and developing our regions through our Better Regions program.

As I said earlier, the federal government has three purposes for today’s Council meeting.

z First, to establish a new, stronger relationship between the federal and local spheres of government.

z Second, to receive your input on our election commitment to the constitutional recognition of local government.

z And third, to begin work on a planning reform agenda to improve infrastructure and service delivery across this country.

The starting point for our reform agenda is a stronger relationship between the Commonwealth and local government.

Until now, there has been no mechanism for the Australian Government to consult local government as a whole.

The role of local government has never been clearly defined.

This is why we have established the Australian Council of Local Government.

With the ACLG in place, we will now have a framework for future coordination.

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Greater coordination will help give local government a direct voice into Commonwealth policy making, as well as accelerating the implementation of program innovation, performance improvements and accountability in service delivery.

The ACLG also provides a mechanism for the Australian Government to consult local government on Constitutional recognition.

At the last election, Federal Labor said that we would take steps towards Constitutional recognition of local government. And we intend to deliver on that commitment.

The people in this room know that previous governments have sought to give recognition to local government in the Constitution twice before - in 1974 and 1988.

However, they were both unsuccessful.

The Liberal and National parties opposed both.

And they were lost.

That’s why we have not pre-determined a time line or a set of words. This must be got right.

And rather than us simply dictating from on high what that should be, we want to take your views into account.

I understand that ALGA is undertaking a serious consultation process with member councils - and I know that ALGA is aware of the challenges in forging a consensus among all local councils.

The Commonwealth Government will also support and respect that process.

I understand it will culminate in a special convention in Melbourne in December, and the outcomes from that meeting will be especially important for the Commonwealth as we move forward on this important matter.

The third aspect of today’s Council meeting is for us to begin the task of improving infrastructure and service delivery in this country.

We need a planning reform agenda for local government.

Local governments already play a significant role in planning the nation’s infrastructure.

They are responsible for 657,000 kilometres of roads across the nation.

They have a total asset stock worth over $214 billion.

A significant amount of this infrastructure is now under great strain.

Indeed, a report by PricewaterhouseCoopers in 2006 estimated that there is a $1.1 billion annual under-spend in the renewal of community infrastructure by local government.

Local governments are facing both rising costs for infrastructure provision and in many areas, growing demand for services in local communities.

Today is an important step in the Commonwealth’s commitment to immediate infrastructure investment.

But we also need to deal with the long term reform of the management of infrastructure as well.

We must improve asset management and financial management.

Councils that plan and manage their assets effectively are councils that can deliver value for money to their communities.

The quality and transparency of financial management varies greatly across different local governments.

Successive reports have noted difficulties in obtaining the level of information necessary to calculate the level of local infrastructure investment that is now needed to renew and replace existing infrastructure assets.

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We need to know what we’ve got, what condition it is in, whether it needs to be repaired and how much it costs to maintain.

This is the most basic level of information.

All States and Territories have agreed to adopt and implement nationally consistent financial and asset management and planning frameworks for local government developed by the Local Government and Planning Ministers’ Council.

But implementation has been patchy.

Where appropriate, the Government will consider making resources available for a long term reform fund to support councils as they improve their asset management and financial plans.

The Commonwealth will also consider making its future infrastructure investments linked to the implementation of nationally consistent asset management systems.

This is good public policy.

And it will provide the Commonwealth with the confidence necessary to provide further support in the future.

Next year at the ACLG I would like to be having a discussion about infrastructure needs that is informed by an agreed set of information based on council asset and financial management plans.

That discussion should not be one that looks back, but one that looks forward.

Councils need to identify their asset needs for the coming years.

Successful businesses plan their capital expenditure over decades, not months - and so should governments.

Next year at the ACLG I would like to be having a discussion that looks at our infrastructure needs for the next decades and beyond.

We should not be focussed just on fixing or replacing what we have.

We need to focus on laying the foundations for the future.

This is particularly important in our high growth areas.

Infrastructure takes time to build.

Working with States and Territories, local governments need to predict where we will need infrastructure in five or ten years’ time and get started on it now.

The Commonwealth will also support steps to improve the utilisation of infrastructure and service delivery - including options for shared services, joint purchasing or sharing of resources and expertise as ways to capture the benefits of scale economies.

The Commonwealth can also help local government in achieving economies of scale.

The Australian Government is currently introducing coordinated contracting arrangements for common areas of procurement, with a view to getting better value for money for Commonwealth departments and agencies.

Once these coordinated contracts are established, the Commonwealth will examine the options for local governments to take advantage of these arrangements as well, to help reduce costs and improve outcomes for local ratepayers.

Our starting point in our nation-building partnership with local government is a dedicated Regional and Local Community Infrastructure Program to address the needs of local communities.

In May this year we announced that this fund will commence in 2009-10.

However, in light of economic conditions and the urgent need for investment in community infrastructure, we have decided to bring forward this investment.

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That is why today I am pleased to announce that we will make immediate provision for $300 million to local governments through the Regional and Local Community Infrastructure Program.

And by immediate, I mean immediate.

It means now.

It’s ready to go now.

This funding is the next phase of our economic stimulus strategy for the nation.

This purpose of this action is to build local infrastructure and help support local economies and jobs during the global financial crisis.

We expect that the Regional and Local Community Infrastructure Program will create thousands of jobs - for tradespeople, engineers, and administrators who are in charge of rolling-out our new infrastructure or repairing existing infrastructure.

This initial $300 million injection into the program will be delivered by 30 June 2009 in two programs.

$250 million will be allocated to each council and shire, based on a formula that recognises need and population growth, but with a minimum allocation of $100,000.

We expect this funding to be allocated to new initiatives to repair and build community facilities - initiatives that are over and above those already planned and budgeted.

Those initiatives might include upgrades to local sporting grounds, refurbishing a community centre or local pool, upgrading a streetscape, building a tourism information centre or building an indoor sports centre.

To claim their allocation, councils will be required to submit proposals that are ready-to-go and meet program guidelines.

Second, the Commonwealth will invite bids for a further $50 million to be invested in larger-scale local projects such as new sports stadiums, entertainment precincts and cultural centres that require a larger Commonwealth contribution - $2 million or more.

With these investments, we aim to leverage greater investment such as from States or groups of local governments, to deliver a stronger economic boost to local communities.

Local governments have the capacity to roll-out smaller-scale infrastructure projects quickly.

We will be asking local government to implement a speedy rollout of infrastructure investment to deliver both immediate economic benefits and long-term community benefits.

Monies from both funds will need to be expended by the end of September next year.

Improved workforce capability is also critically important to building the effective 21st century local government.

Skill shortages are especially acute in local government management, engineering and urban planning.

Attracting and retaining skilled local government staff, ensuring the ongoing training and development of local government personnel and establishing local government as an employer of choice are significant challenges for local government.

This problem has been recognised at the state level, and state governments are undertaking valuable work in collaboration with state-based local government associations and the Local Government Managers of Australia.

However, across Australia there is lack of coordination and uptake of these training opportunities which address local government skill needs.

It will always be the primary responsibility of local governments, and States and Territories working with local governments, to ensure that local governments have the skilled professionals they need.

However, the Commonwealth can take steps to support and enhance the professionalism of local government.

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That is why today I am pleased to announce that the Australian Government will contribute up to $8 million in funding for a new centre for excellence for local government.

The Australian Government will provide an endowment to showcase innovation and best practice across local government and encourage the wider adoption of innovative practices and solutions.

We will shortly run a competitive process to identify the best candidate university or other provider for this centre.

We intend this to be based in a university, but delivered virtually as well as physically to maximise access across all of Australia’s 565 local authorities.

This funding will also contribute to the development of specialist local government leadership programs that will enhance the profile of the sector and contribute to its capability through its workforce.

This is an important reform for the future.

In closing let me make a couple of remarks about today’s program.

First, I want to acknowledge the substantial work that has been done ahead of today’s conference by the Minister for Infrastructure, Transport, Regional Development and Local Government, Anthony Albanese, and by his department.

There’s no doubting Albo’s commitment to local government.

Indeed, his passion for local government goes right back to his first job in politics, working for Tom Uren, the architect of the Whitlam Government’s urban development agenda, and local government minister in the Hawke Government in the 1980s.

Second, the program that’s been put together for today is intended to give you the opportunity to focus on matters of greatest relevance to your local community.

The break-out sessions have been structured to address specific challenge in infrastructure, productive cities, local government efficiency, regional communities, local environments, constitutional recognition, housing affordability, social inclusion and Indigenous engagement.

I want today’s discussions to be the beginning of a new partnership - a partnership that can bring together the expertise and experience of local governments across the nation with the Commonwealth.

But it is only a beginning.

If we succeed together it will be one long step forward in reforming the Federation - and ending the blame game that has plagued our nation in its first century, a blame game that should have no place in our second century when the challenges the nation faces are far too great to ignore for any longer.

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