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Tuesday, 25 November 2003
Page: 22817

Ms GAMBARO (5:10 PM) —I am very pleased to be speaking to Rates and taxes: a fair share for responsible local government, the report of an inquiry by the House of Representatives Standing Committee on Economics, Finance and Public Administration. Cost shifting is not a new phenomenon. I am sure that any day now some archaeologist is going to unearth a tomb painting, buried in an ancient pyramid, of long-dead Egyptians, probably circulating around 1000 BC. It will show in exquisite side-face detail the Pharaoh's laden grain barge getting progressively lighter as it is rowed down the Nile by three levels of sweating galley slaves, all rowing out of tandem. The closer the trireme gets towards the royal granary and the mouths of hungry subjects, the lighter its cargo becomes.

Three men in a boat may seem comic but there is an old saying: `Two's company; three's a crowd'. Nowhere is this more evident than in the workings of a system where three separate and autonomous levels of government coexist. In that situation, `three's a crowd' takes on a new and highly challenging significance for those at the lowest level of the administrative pyramid in Australian government: local government.

As the committee inquiry reported, the states are now shifting costs onto local government of between $500 million and $1 billion per year. That is not so much a cost shift as a tectonic shift, which is costing the Australian community around $20 billion a year. As many previous speakers have said, it is hurting local communities, which are having to foot the bill. And it is hurting Australia as a whole as the system groans under the weight of duplication and constant delivery breakdown. The government's response to this is framed in part of the title of this report: `a fair share for responsible local government'. It would be unrealistic to think that any machine welded together out of three quite distinct sets of engines, steering wheels, nuts and bolts, one on top of the other, is ever going to run completely smoothly. It would need constant oiling; but, with most of that oil coming from just one can, that oiling will be far from efficient.

The federal government has poured generous amounts of oil into communities, increasing its spending on local roads under FAGs by $80 million over five years to $445 million in 2002-03. In addition, it has made $1.2 billion available to local government for roads over five years to 30 June 2005 under the Roads to Recovery program. Only this morning, at a Queensland local government breakfast, I was again reminded: `Roads to Recovery is one of the most successful programs that the federal government has ever implemented, and could you please, please make sure it continues as long as possible.' The member for Braddon is indicating that he agrees with this.

Cost shifting, in its simplest form, is the most predictable tendency for this oil to disappear on the way down, either pooling in the middle or leaking out of hidden cracks and crevices before it reaches the lowest cogs and flywheels that should be spreading it. And that is what happens; it happens vertically and horizontally. Each level of government in this three-tiered machine also engages in cost shifting in one form or another. Interestingly enough, it appears to have become even worse since the changes to local government acts were passed by the various states. The findings of our report make this clear. The figures revealed in this report are deeply disturbing. No efficient system can afford cost shifts from state to local government of $500 million to $1 billion a year. The system cannot afford to have vital services eroded from local communities, as is happening under current cost-shifting practices. Health is a prime example. How many times have we heard of state health authorities moving more and more services away from rural and remote councils and those councils having to pay to bring doctors to their areas.

It also occurs in some federal areas of responsibility—for example, airports. When we travelled around the country listening to submissions, we heard that more and more smaller areas are having to maintain airports. I find this an absolutely crazy situation. No local community should have to maintain an airport, which is essentially a federal government responsibility, and that is something that really needs to be looked at. The honourable member for Braddon comes from Tasmania; four councils in Tasmania have taken over ownership of particular airports, two of them are municipalities, and they have been subjected to increasing costs.

I agreed with the previous speaker, the member for Braddon, when he spoke about amalgamations and councils providing more and more services as a group. He spoke of the Cradle coast as a fine example of efficient use of resources, with councils in the area pooling their resources and coming together as one. While I am on my feet I will talk about the Moreton Bay coast and country area of my electorate, where the four councils there have come together to promote economic tourism and other benefits for the region. I believe that really is the way we need to go. As I mentioned earlier, some councils are increasing their spending on health. They are having to house doctors and are finding that they have to provide travel and pay salaries for medical workers, nurses and dentists. They need to do this because, without those resources, their communities simply will not survive.

Our study also found other, more worrying techniques of cost shifting. One of the worst is revenue denial. One cannot deny that this occurs with state governments. They fail or decline to raise statutory fees, fines or charges and employ things such as rate capping, as has happened in New South Wales. This is a negative cost shifting. It is a highly efficient revenue inhibitor that basically disadvantages local governments through a kind of sleight-of-hand and really is something that needs to be looked at further. It is happening at a time where the state governments are enjoying a huge GST windfall from that federal oil can that I mentioned earlier.

Our committee laboured long and hard to address these and other issues associated with cost shifting. Amongst the most urgent findings and recommendations is the need for a new funding equalisation principle and the need for more transparency, less duplication and much more equitable and individualised measurements of a community's ability to pay. This was particularly important in country areas of Australia where there is a huge disparity between urban and regional councils and communities. A community in the middle of Melbourne or Sydney cannot be considered the funding equivalent of a very remote community in the far north of Queensland or Western Australia or the Northern Territory.

I strongly urge the states to support the inquiry's central recommendation for a summit on intergovernmental relations to be hosted by COAG in 2005. Other recommendations include the extension of the powers of the Australian National Audit Office to examine the expenditure of federal specific purpose payments to the states, and through them to local government; closer monitoring of the management of specific purpose payments to safeguard against further cost shifting by the states; a tripartite intergovernmental agreement that will extend the federal Treasurer's powers from the state to include local government; and better local and state government coordination in infrastructure management.

Finally, I would say that I support the committee's fundamental objective, which is to make the machine work better, as I mentioned earlier, at all levels and thereby deliver more and much more efficiently to the people of Australia. I would at this time also congratulate the secretariat and I see there are members of the secretariat sitting here. I thank them for their fine work. I would particularly acknowledge Susan Cardell and Vanessa Crimmins and thank them for all they have done, their dedication and their efficient work in the secretariat. They certainly have helped us to provide a very detailed report that I am sure will not sit on a shelf; it will be used actively and proactively. I know that the local government minister is already working on a plan for his department to start implementing some of these recommendations. I commend the report to the House.