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Tuesday, 25 November 2003
Page: 22825

Mr ORGAN (5:47 PM) —As a member of the House who was not a member of the committee, I welcome the opportunity to speak to Rates and taxes: a fair share for responsible local government, the report of the House of Representatives Standing Committee on Economics, Finance and Public Administration. This is an important document which the Greens welcome, and its 18 recommendations demand a speedy, considered response from the government. This report is a watershed in the way we look at the level of government which is closest to all of us—local government—for it has had its roles and functions greatly expanded over the years and is now in a situation where there is no doubt it is doing it tough.

As the President of the Australian Local Government Association, Councillor Mike Montgomery, said just yesterday, this report is a solid start to resolving the financial crisis facing local government—and, as we have heard from previous speakers, that financial crisis, at its heart, is the result of cost shifting. In his capacity as chair of the committee, the member for Wannon told the House yesterday that all levels of government have engaged in cost shifting in some form or another and that state governments are responsible for cost shifts of between $500 million and $1 billion a year.

In my own state of New South Wales, state funding of local government fell from 14.8 per cent in 1975 to 7.1 per cent in 1998, down a massive 7.7 per cent, whilst over the same period user-pays fees charged by councils almost doubled, from 13.4 per cent to 24.7 per cent of total revenue. It is clear, therefore, that state governments are increasingly pulling back from their responsibilities in the local government sector and, in return, that local governments are being forced to get a greater percentage of their revenue from ratepayers and residents. A disturbing picture is revealed through this report of the effects of the changing funding regimes for local governments, with infrastructure deteriorating and services diminishing. Announcements of `quality improvements' and `efficiency savings' by local government are now recognised in the community as just another way of presenting budget cuts, job losses and service retraction.

Long-held agreements and arrangements are falling by the wayside. For example, in 1939 New South Wales local councillors entered into an agreement to provide library services that were to be funded 50 per cent by councils and 50 per cent by the state government. As a former archivist and research librarian, I am very much aware of the important role libraries play in our society, especially the local library, which is used by a wide cross-section of the community, from primary school students through to businesspeople and the elderly. Yet today councils meet 93 per cent of library services costs, costs which are spiralling due to the new electronic information environment and Internet based research. It is no longer just a matter of councils budgeting for staff and books; money must be found for computers, online databases, infrastructure upgrades and training in these new technologies. Our very support for the concept of a knowledge nation is under threat if council libraries should disappear.

As the Rates and taxes report reveals, a decade of aggressive cost-shifting has resulted not only in a reduction of funds provided to local government but also in steep increases in fees charged to local councils for services provided by state government entities. One example is EnergyAustralia, one of the New South Wales state government's most profitable utilities. EnergyAustralia now charges councils for the assessment of customer complaints about public lighting and for the preparation of designs and quotations for improvement to public lighting infrastructure. EnergyAustralia's infrastructure has been allowed to deteriorate over many years, and now councils are expected to foot the bill for design upgrades. The same applies to transport. Private enterprise in Wollongong may provide the buses, but councils are now expected to provide the bus shelters, signage and furniture for bus stops, road pavement and concrete embankments. They even have to clean up the oil and diesel spill from defective buses. I could go on.

At the same time as increasing charges to local government, the state government has stymied the ability of councils to generate revenue by pegging rates—the main source of revenue for local government. This might be an electorally popular move on the part of the state government, but it cripples local councils—and we have heard similar comments from previous speakers. Nothing highlights the hypocrisy of the state governments and their Jekyll and Hyde relationship with local government more than rate-pegging increases that fail to keep up with increases in state government charges. In 2002-03, for example, the New South Wales state government permitted a maximum rate increase of 3.3 per cent. Yet, as the report shows, in the same year it obliged councils to increase payments to the New South Wales Fire Brigade by 13.3 per cent. In some years, rate-pegging limits have not even met the consumer price index increases, and they have consistently fallen short due to increased costs being foisted upon local government. The result has been an ever increasing gap between the services councils are expected to provide to their residents and the revenue options open to councils to provide those services.

Those who suffer are not the state or federal governments but the members of local communities, who watch as libraries are closed, aged care services are withdrawn and parks and public spaces deteriorate or are sold off as councils frantically endeavour to find the funds to provide the basic services. Such a situation has happened in the Illawarra. It is unsustainable and has led to financial crises among many local councils and a deterioration in the quality of life for local residents. The old mantra of sticking to the basics such as curbing and guttering is being heard more frequently as the community looks around at deteriorating infrastructure and new priorities in council services. The decades of state government shifting responsibility for services to local government, while increasing the fees and charges imposed on councils and depriving them of an adequate revenue base, must stop. Hopefully, many of the recommendations in this report will be adopted by the federal government with this specific end in mind.

But it is not just the state governments which are involved in cost shifting. The federal government needs to improve its act as well. It needs to better manage its allocation of funds to local government—and I welcome the recommendations in the report which aim to address this specific issue. The peak local government body which covers my own electorate of Cunningham, the Illawarra Region of Councils—IROC—made a number of pertinent points in their submission to the inquiry. They noted that the Illawarra Region of Councils currently delivers three Commonwealth regional programs and a further three state programs, employing a total of 14 staff. It might not sound like much, but it is significant. Numerous additional projects and brokerage funds are managed by these programs or by IROC core staff for the Commonwealth and the state. Of greater significance is the key role of many IROC staff in the region's strategic priorities. The services provided include community programs, environmental planning and management, cultural planning and management, and integrated regional, urban and transport planning. Interestingly, the delivery of all of these programs has also been increasingly constrained by cost shifting on the part of the federal government and by a degree of political favouritism in the allocation of grants.

IROC pointed, for example, to the failure of funded programs to include annual performance based, or even award based, salary increases for staff in contracted budget allocations and to the lack of recognition of the costs involved in retaining, or more often losing, trained staff, vehicle and infrastructure leases and accommodation rentals, for programs constantly under review or subject to last-minute contract renewals. This lack of certainty can be very expensive and must aggregate at the national level. IROC also highlighted a lack of allowances in grant funding for redundancy payments payable to `contract' staff when a long-term program is terminated.

Those are just some of the very real concerns facing the people at the coalface, where federal moneys hit the ground via local government. Small wonder then that councils are crying poor, for they are poor. And that is having a major knock-on effect via the drive to amalgamation in the name of so-called greater efficiency. This is very evident in my state of New South Wales and it is not a road I would choose to go down. Indeed, there have been quite determined moves in my electorate of Cunningham to de-amalgamate—in other words, to make councils smaller so they better serve the needs of local communities while still sharing major infrastructure and service provision areas.

This is evident from a serious resident push for a return to the pre-1948 days of Bulli Shire Council, and the formation of a new local government body to look after the interests of residents in the northern Illawarra, taking control away from the large, centralised, and `city-centric' Wollongong City Council. There is a widely held view that bigger is not necessarily better, and that small can be beautiful with regard to local governments. This is a view partly reflected in the committee's report by the recognition of the need to get rid of duplication and to make better use of limited federal funds.

Honourable members would do well to read Michael McGirr's impassioned article in today's Sydney Morning Herald about his local government body, the shire of Gunning on the Southern Tablelands. Gunning Shire Council is under threat of merger with seven other councils to form two super councils, one based in Queanbeyan and the other in Goulburn. McGirr says:

Under the proposal, part of Gunning Shire will go to one and part to the other. Gunning Shire will no longer exist.

This new plan would put the centre of our local council about as far from Gunning as Campbelltown is from Point Piper.

And that is a long way!

But it is not all doom and gloom in local government, as the same people who identify various problems have also provided some of the solutions that have been taken up in the report before us. For example, the Illawarra Region of Councils said in closing their submission to the committee:

IROC is a successful model of regional co-operation, partly because it was resourced and supported in its infancy by Commonwealth processes, and partly because it has successful and committed members who undertake a diverse portfolio of local government activity. It achieves efficiencies for its members and delivers results for State and Commonwealth governments.

I am sure that many councils throughout Australia would similarly view the importance of their role, for the services that councils provide are many and varied. As we know, local government provides both core and in-kind support supplemented by fee-for-service charges—libraries, roads, rubbish collection, swimming pools, lifesavers, public toilets, development control et cetera.

IROC pointed out that they would benefit from national coordination of regional initiatives, increased recognition, and easier access to Commonwealth processes and funding. They are obviously seeking a closer relationship with the federal government, and the Commonwealth would benefit from more frequent use of the diverse and accountable frameworks that only local government can offer, both locally and regionally. I am therefore pleased to see that the Rates and taxes report makes a number of recommendations which address these specific issues, and I look forward to its recommendations receiving the government's early attention.

In closing, I would like to note that this report is especially timely, as the National General Assembly of Local Government is meeting in Canberra as we speak. Yesterday I met with councillors Carolyn Griffiths and Trevor Mott from Wollongong City Council, and I was informed that there was a lot of concern over the future of federal funding for the Roads to Recovery program, which has proven to be so successful.

A headline in today's Sydney Daily Telegraph proclaims that `Councils face losing control of their destiny', with moves by the New South Wales Labor government to have more control over council boundaries and governance. In this somewhat volatile environment, I hope that the many worthy recommendations in the Rates and taxes report—which I believe has the best interests of local government and ordinary Australians at heart—see their way through to implementation, and that politics does not become the overriding instrument in setting the agenda within the local government sector.

Local government has enough problems in protecting local environments and maintaining the quality of life of ratepayers and residents. Local government above all needs financial security and stability, and I hope that the federal government is truly committed to this goal. The Rates and taxes report sets out a possible way forward, and I look forward to discussing its recommendations with my constituents over the coming weeks. I congratulate the committee on its preparation of the report.