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Thursday, 21 November 1974
Page: 2690

Senator SCOTT (New South Wales) - I rise to make a few remarks in this debate on this Bill to grant financial assistance to local governing bodies. Whilst I and my Party, in common with the rest of the Opposition, support the measures in this Bill I want to indicate as briefly and as clearly as I can why we support it. At the same time I would hope to analyse it in some depth and to indicate those areas of it which I believe it will be necessary to change as time goes by. Basically we support this Bill because of the urgency of need that exists today throughout local government areas and indeed State government areas for that matter in Australia. There is an extreme urgency of need and this Bill confers some $56. 3m on local governing bodies without strings attached so far as the expenditure of that money is concerned but, of course, there are the indirect and damaging strings relating to the capacity and in fact the right of local government bodies to decide on their levels of rating. This is a significant and important string. But having granted the money, there is no string to its actual expenditure.

I wonder why the need for extra moneys in this form is so urgent today. The need comes from many directions. Obviously the first cause of the need for larger amounts of moneys in local government areas is the snowballing, the spiralling inflation that has been occuring in this country for the past 23 months. I want to make the point that contrary to the somewhat commonly heralded remarks, the inflation which is besetting local government, as it is every other individual, industry and commerce in this country, is not an imported situation. The inflation that is creating the urgency of this need is an inflation which has in fact grown from 4 per cent to something in the vicinity of 25 per cent or 30 per cent in 23 months and it has been literally nurtured within this land. It is an inflation that has largely come about by a constantly spiralling situation in the wage and salary field. It has been added to by an extremely high rate of industrial unrest, causing at this crucial time a falling away of goods and services and indeed it has been aided and abetted by the attempted transfer of funds from the private to the public sector in this economy- a transfer which fortunately in this circumstance has been recognised as unfortunate, as probably the wrong economic measure, and has been at least in some degree arrested.

So much for the inflationary situation as marking the urgency of the need for this additional money in local government areas. It is a situation which has brought to these bodies a great increase in the cost of new equipment, a great increase in the cost of wages and salaries within their provinces and indeed in the maintenance and development of their plant wherever they may operate. Beyond this, it is abundantly clear that local government needs increasing funds because in the unfortunate circumstances of unemployment it is in these areas that we normally find a real capacity to absorb usefully and constructively a significant number of unemployed workers and because of this circumstance there is an even greater need for increased funds in the local government area at this point.

There are other causes accentuating the urgency of this need and they are causes outside the province of government but they nevertheless do determine the necessity for increased funds in this area. I refer to such things as the incredibly wet and stormy periods that have occurred in such a large area of Australia in the last 6 to 8 months. They have done immeasurable damage to road and to communication systems in the country and consequently have placed on local government an even greater urgency. The problems have been added to unquestionably by the loads that traverse these roadways and bridges- loads which increase not only in weight but also in frequency. If you add to these needs the urgency of need in this circumstance for local government, if you add to this the realisation that the ratepayers themselves have been stretched virtually to breaking point in an attempt to match the ever increasing costs and the ever increasing demands that are laid upon local government, you can certainly realise the extreme need for funds such as those referred to in this Bill which provides on recommendations from the Grants Commission some $56m even though that may be a relatively thin amount when stretched over some 802 councils in Australia.

The fact that these funds are not tied moneys so far as their expenditure is concerned is a matter on which the Government should, I believe, be complimented. I believe it is tremendously important as time goes by that more and more moneys made available to local government and to State governments should in fact not have strings attached to them, for only in this way are we really going to involve the judgment and capacity of the people on the spot. This is the purpose of State and local government and the more money that is available to them without a tight measure of control the better they are able to accept the priorities of their areas, the better they are able to perform the tasks for there is an involvement and a judgment of the people on the spot. This has been a significant characteristic of Australian development over the years.

Very briefly let met say that in this legislation the Grants Commission has set out, as I understand it, to iron out the inequalities that it may find from one area to another. These inequalities stem, I believe, from revenue raising capacity and expenditure disabilities. These are a proper measure of the problem. They are a proper measure that must be taken into account when trying to establish some form of rating, some form of justification for a specific payment. The ideology of this sort of legislation is the ideology relating to equalisation. The method of it is in some way to use the expenditure and revenue differentials and, by relating those to the needs of like areas, come up with some measuring stick to apply to a sum of money and to come out with a grant that is to be applicable to each of the various local governing bodies in this country. To this point it is extremely good. I issue a serious word of warning. When we equalise something we must be tremendously careful, I suggest, not to equalise downwards and not to disregard the standards at the top and ultimately come to an average which is probably well below the average which may have formerly existed. This is the great problem with equalisation. There is always a tendency that equalisation will provide ultimately a movement to equalise downwards.

I refer to the fact that almost one council in ten in Australia received no grant and that significant numbers of councils received very small grants. In this sort of legislation we must not penalise performance. I am certain that this is one of the bad elements of the working of the

Commission through this Bill. I refer to the statement of the Minister for Foreign Affairs (Senator Willesee) in his second reading speech:

Councils are taking a new look at their immediate neighbours and at councils in other parts of the country to assess and compare the standard of their own municipal services with those of other councils. This wider view will benefit and strengthen local government.

I sincerely hope that the Minister is right. I fear that when a local government area looks just across its boundary and finds that it has received nothing and its neighbour has received $ 100,000 it will say to itself! Why has this occurred? In many cases it becomes obvious that it has received nothing and its neighbour has received $100,000 basically because it has been more efficient in its attitude, in its expenditure, in its representation and in its use of ratepayers' money, which is the real province of local government.

I make the point that there is a real possibility that this sort of looking across the fence at what happened to the council next door will not tend to raise the standards in local government development and maintenance but will tend to lower them in the hope, perhaps, that the council which received nothing will in the relatively near future receive grants. The yardstick by which we measure these things must not be related totally to the capacity to raise revenue. We must find a way in which that yardstick can be related to efficiency. If this sort of legislation and this sort of financial assistance to local government bodies is such that it will tend to put a penalty on performance and it will not be related to efficiency, it will not in the long term or even in the short term prove totally successful.

In this area the Commission is a relatively new event. It has expressed the view:

The short time span available for the formulation of grants for 1974-75 resulted in many shortcuts being taken. However, many lessons have been learned and these will be taken into account in the future. The operations of the Commission in this field are regarded as evolutionary, and the first attempt was very much a trial.

We shall certainly be watching for effective evolution. We certainly hope that an effective form of evolution will occur. Let me draw attention once again to the fact that it is a good thing that this money is available and that its expenditure as such is not tied. In most Government grants to States and other bodies at the moment there are ever increasing ties. I am reminded of the field of education, where ties have applied to something like 50 per cent of the money that is made available at this time. There is a great urgency of need for this sort of extra money in the local government area. I believe that we must be extremely careful lest we allow to develop a situation which may well tend to destroy efficiency and to put a penalty on the efficiency on which the future of effective State and local government depends. We support the Bill.

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