Mr WARWICK SMITH (Minister for Sport, Territories and Local Government and Minister Assisting the Prime Minister for the Sydney 2000 Games)(3.40 p.m.) —by leave—I am tabling today for the information of honourable members the first ever local government national report and accompanying policy paper outlining the Commonwealth policy on local government.

Under the Local Government (Financial Assistance) Act 1995, the federal minister responsible for local government is required to report annually to parliament on the operation of the act. This report is an important document aimed at improving the accountability of councils, encouraging council effi ciency and effectiveness. It also makes the process of distributing Commonwealth grants to councils transparent.

Together with this first national report, I am tabling a policy paper on local government, Commonwealth councils and community—looking ahead, which challenges local government to take advantage of Commonwealth support and work together to advance good governance, good economic management and greater fairness in our community.

We would all agree that local government plays a key role in the wellbeing of every Australian. From Huon Valley to Minjilang, from Busselton to Cardwell, across Australia some 770 local councils provide leadership and services to their local communities. In total, local government expenditure exceeds $11 billion, or some five per cent of total government spending, and in 1995-96 local councils employed some 155,000 people.

The services of local government are vital to businesses as well as to individuals. Local public works, recreation, public health, community services, building, planning and development approval and cultural activities are just a few examples of services for which we rely on local councils.

Despite the diversity in councils, the central challenge for each is to provide the highest quality and widest range of services, consistent with the needs and aspirations of its community and the resources available. This must be achieved within the provisions of relevant state and territory legislation and regulation.

If Australia is to develop and prosper, all three spheres of government—Commonwealth, state and territory and local—must play their part in establishing a framework of governance which allows individuals, families, business and communities to realise their potential and flourish. To meet this challenge councils must seek continuous improvement in all council activities, identify and introduce new technologies or processes which can achieve quantum improvement in councils' operations or service delivery, provide leadership in balancing the demands of the vocal against the views of the wider community, and seek to broaden and deepen the council financial base to provide greater financial capacity and stability. Many councils are taking up this challenge and this needs to be an ongoing process, as it is for other governments and the private sector.

While local government governance is primarily an issue for state and territory governments and local councils themselves, the Commonwealth wishes to ensure that financial assistance to local government contributes to optimal community outcomes. Most local councils derive the largest share of their revenue from property rates. Other sources of income generated by councils include charges for garbage collection, public services, housing and community services, economic services, health and community services, recreational and cultural amenities and charges associated with development activities. Total income from these sources, however, is generally not sufficient to fully finance councils' operations and provide an appropriate level of services to residents. Councils with small populations and a limited revenue base are often among the most stretched.

The Commonwealth provides significant financial assistance and program funding to local government. As a matter of good management, however, local councils should seek as far as possible to achieve financial security in their own right. This requires them to consolidate their revenue bases, explore alternative financing mechanisms and ensure that their administration and services are as affordable and efficient as possible.

In 1996-97 the Commonwealth is contributing over $1.2 billion to increase the financial capacity of local councils and provide greater certainty in their funding. This represents an increase of four per cent over Commonwealth funding to local government in 1995-96, an excellent result for local government in the light of the very difficult economic circumstances faced by the government when it came to office.

The funding provided by the Commonwealth through financial assistance grants, known as FAGs, is a significant element in the budgets of individual local councils, ranging up to around half of their income in some cases, especially in remote areas. The overall contribution by FAGs to local government income is over 10 per cent. In keeping with the Local Government (Financial Assistance) Act the government will initiate a review of local government financial assistance, to be carried out not later than 30 June 2001. This will be done in consultation with the states and territories and local government.

An important purpose of the report being tabled today is to improve the transparency with which states and the Northern Territory Grants Commission determine the distribution of financial assistance to councils within their jurisdictions. The information provided through this annual report will be valuable background for this planned review of FAGs.

The documents being tabled today review the existing position of councils but, importantly, also look to the future. Commonwealth, councils and community—looking ahead sets out a range of new initiatives. These are summarised in the policy paper but the main elements include:

training for council officers to enhance their skills to meet emerging policy and management challenges;

continuing support for the National Awards for Innovation in Local Government, NAILG, to promote excellence and innovation in local government activities and services. For the 1997 awards there is a reduced number of categories to encourage even higher quality applications and proposals;

the government's response to the recommendations of the Small Business Deregulation Task Force that relate to local government. In consultation with the states, territories and local government, I intend to provide support for the implementation of local government related recommendations;

cooperation with councils affected by the Sydney 2000 Games to facilitate their making the best possible use of opportunities provided by this unique event in conjunction with my role as Minister for Sport, Territories and Local Government and Minister Assisting the Prime Minister for the 2000 Olympics; and

continued support for benchmarking and continuous improvement initiatives.

I will be making more detailed announcements on these and the other initiatives early in the new year after discussions, including with State and local governments. The initiatives outlined in Commonwealth, councils and community—looking ahead provide a framework for addressing the challenges facing local government.

Prior to commending the report, I also extend my thanks and the thanks of my office to the National Office of Local Government, who have worked tirelessly to prepare this documentation in a reasonably short period. It is the first time this report has been presented to the parliament. It is by virtue of an act that both sides of the parliament supported prior to the election and it is also equipped with detailed maps of all the local council districts, all 770 of them right around Australia. To colleagues of the National Office of Local Government, we extend a special thank you to you for the work you have done as well. I commend it and the national report to honourable members.