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Wednesday, 31 May 2000
Page: 16781

Mr SIDEBOTTOM (12:24 PM) —It is always nice to be able to talk about local government. I, like the former speaker, was a member of local government for about two years. Because of the archaic law that we have where there may be a conflict of interest in terms of profit of the Crown, I had to resign that position before I could stand for the federal election. Unfortunately, if I had been so unlucky as to have lost the election—

Mr Snowdon —Thankfully you did not.

Mr SIDEBOTTOM —and thankfully I did not—then of course I would have lost my position on local government. Of course this would have affected others in the same way. If I remember correctly, Senator Brown was talking about introducing a private member's bill or a suggestion in the Senate to the effect that, if you were in local government, you would not have to resign the position per se but rather table it. I think it something—and it is not directly relevant at the moment—that we should have a look at. It is hard enough to get people to stand for local government—let alone state and federal—and, with that disincentive, I think you lose good people. It is nice to know that we are here rather than being non-members of the houses of parliament and also non-council members, which may well have happened.

Mr SIDEBOTTOM —Secondly, it is nice to share this forum with one of the clerks who was at school with me many years ago in Hobart. It is a small world, isn't it. To be together is a historic moment for my old college, Saint Virgil's College. It is nice to acknowledge that and to be here with him. I am sure we look exactly the same as we did when we were in shorts.

So often nowadays it seems that people living in regional and rural Australia are getting mixed messages from Canberra. After the budget, it was a very mixed message. It is no more evident, I am sorry to say, than the scrambled signals going out to our community leaders in local government—most recently, in the lead-up to the GST and in the aftermath of this government's fifth budget. I think we would have to agree that so often local government is the forgotten partner in this government's vision—I will have to be careful about using that word `vision'—for regional Australia. I think you would have to say that poor old local government would be a distant third cousin in the food chain of the family. The former speaker and member for New England certainly raised that issue in his speech very candidly and very honestly.

It would be charitable to say that this might be an oversight on the government's part, but I do not think it is. I think it is deliberate. I would like to make my way through that, and I think this legislation demonstrates it. You do not have to travel far from Canberra to find that local government is not high on this government's list of priorities. In fact, it was not in the GST deliberations, and if you were to investigate the absolute and sheer confusion in local government, let alone in small businesses in local government areas, I do not think you would get any more evidence than that. And it is going to continue, believe me, despite the glitzy advertising campaigns. You are going to have to more than unchain local government; you are going to have to dig it up. It certainly was not in the budget.

But what surprises me is that this government does not even try to hide the fact that it wanted to abrogate its responsibility to local government. In fact its attempts to do that are why we are here today. Its attempts were foiled, stymied, initially when we tried it—and if you do not have the numbers, you do not have the game—and then of course through their complicit partners in the GST and in introducing the new tax, the Democrats. We can discuss that a little later.

The signs were ominous for regional Australia and local councils right from the time this government came into office over four years ago—or is it five years now? All we basically hear is the 13 years of Labor and how we cause everything. They forget that they have been in long enough now to make a difference. One of the first things this government did was to abolish the office of regional development. The member for New England was talking about regional development organisations and how they acted contrary to local organisations. I would say to you that the introduction of regional development organisations under the former government unchained many local government areas and allowed them to at least develop programs both from the bottom up and from the top down. It did have problems, but at least it started to unshackle the binds that they felt.

At the time this government came into office I remember them saying that there was no role for a national government in regional development. We know they believe that, because we do not now have a minister for regional development. Regional development and regional services are hived off into some junior ministry, thrown in with local government. When you check the speeches of the relevant minister, there is just the replication of about three points and basically little else. I believe that says a lot about this government's priorities.

It is ironic that this government's latest attempts to sever ties with our important third sphere of government was foiled by its GST partners in crime, the Australian Democrats, with a little help, I am happy to say, from the Labor Party. Hence, we have this Local Government (Financial Assistance) Amendment Bill 2000. The bill is the legacy of the government's attempt to shift all responsibility for local government to state and territory governments. The Howard government, as part of its new taxation system, proposed that the states and the Northern Territory assume responsibility for providing general purpose assistance or financial assistance grants to local government. In essence, it wanted the states to take over the responsibility for funding to local government.

But before the Democrat-government GST deal, the Labor Party successfully moved an amendment in the Senate to have local government financial assistance grants, or FAGs, retained by the government. And following the Senate's rejection of the initial GST legislation, the government negotiated a hastily revised package with the Australian Democrats. They were hastily revising and devising lots of packages with the Australian Democrats—anyway, there was a lot of candle buying at that time and it was going late into the night. Under the terms of that agreement in May of last year, the government agreed begrudgingly to retain responsibility for the payment of financial assistance grants to local government. As a result, thankfully, the Commonwealth still has a direct financial link to local government.

The bill will also fundamentally change the role of state governments in relation to local government. In fact, state government will no longer just be the post box for the role of passing on FAGs to the local government organisations. You see, it has a new role. Basically you could say it is monitoring, if you want to be nice; you could get a little bit more negative and say it is policing. I think we would all agree it is almost a punitive role that it has to take up. It has got the power to withhold financial assistance grants in cases where a local government authority fails to collect the new tax. To put it more formally, the bill amends the act to implement clause 18 of the IGA to require states and the Northern Territory to withhold from any local government authority that does not pay voluntary or notional GST payments a sum representing the amount of unpaid voluntary or notional GST payments. Amounts withheld by the states and the Northern Territory will form part of the revenue pool to be distributed to the states.

Mr Snowdon —To the states?

Mr SIDEBOTTOM —To the states, yes. This is just another example of the many onerous compliance tasks this government is foisting on government, business and communities around Australia. So the Local Government (Financial Assistance) Amendment Bill 2000 is the outcome of another GST driven process. Paradoxically, the outcome for local government from financial assistance grants under this government's tenure is still very much a sore point, particularly among local councils in regional and rural areas.

Local government is still suffering from government cost-cutting measures in 1997-98 which have cost local government millions. The $15 million cut in financial assistance grants in 1997-98 has never been recovered—and under the tight-fisted approach this government has taken to local government it never will be. If you multiply the 1997-98 funding cut by four years, it amounts to over $60 million, which equates, on average, to a loss of $87,000 per council over that period. This is certainly not an insignificant amount in my electorate of Braddon. The funding cuts have been felt across the nine municipal councils across the north-west coast of Tasmania.

Adding salt to this wound is the imposition of a GST on local government. Make no mistake, there are significant set up and compliance costs for local government associated with the GST. At present, the government has made a paltry $2.5 million available nationally to try to help soften the impact on local councils. It is my understanding that New South Wales will get $626,000; Victoria, $360,000; Queensland, $535,000; Western Australia, $402,000; South Australia, $248,000; Tasmania, $125,000; and the Northern Territory, $214,000. That amounts to a grand total of around $2,000 per council to make them GST compliant. I suppose they should be grateful for that because if they were small business they would only get $200.

What is worse, as was revealed in the Senate estimates hearings last week, this government has been holding out on local councils. An extra $1 million was allocated, but it has not been handed over yet. Asked if he had asked any of the councils how much the GST implementation was going to cost, the minister replied:

I don't think so, I do not think too many councils have raised the issue with me.

That is extraordinary. But should we be really surprised that the minister, or this government for that matter, does not seem too interested? For their interest, in my electorate it has been estimated the GST has so far cost local councils more than $500,000, and there is plenty of anecdotal evidence that many councils are still unsure of how to apply the new tax. For state governments to withhold FAGs payments due to GST non-compliance in light of the lack of information and financial support for local government to implement the GST would be an extreme punishment.

The GST dilemma facing local councils was recently highlighted in the local media in my electorate. One council administrator was quoted in the Advocate newspaper as saying:

The Coast would have lost more than $500,000 in productivity costs.

Another said his council was unable to estimate how much compliance costs would be, but the costs would certainly outweigh the savings. He said, and I quote again:

The level of savings will not be significant and we have been involved in a never-ending run of meetings to determine where we are going with the GST.

Another local council manager in my electorate was quoted as saying:

It is such a complicated issue that a true indication might not appear for some time.

I would have thought administration at local government level was difficult enough as it is, particularly in real terms, but to have the compliance costs, the compliance regulations and the demands on top of this, and the lack of clarification in terms of the GST, is galling. I thought the GST was supposed to be a simple tax. An accountant from another of my local councils said the main issues were a lack of clarification and vague information from the federal government. `Lack of clarification and vague information.' That has a familiar ring to it. It is the hallmark of the GST.

This government certainly has not made the GST easy for anyone, let alone local councils. We heard from the ACCC last week that municipal rates should not go up. It sounds a little like petrol prices need not rise, or beer prices will not rise, or the plethora of other GST broken promises. It no doubt is getting harder and harder for the ACCC to justify the impact the GST is going to have, and I believe it is inappropriate in this case for it to be an apologist for the government's new tax on local councils. Councils raise revenue from ratepayers for the ever increasing number of services they provide. The ACCC is a price regulator, not a tax regulator, so how can it say council rates and/or services should not rise? We will have to wait and see.

The government's attitude towards local government, as we have seen through declining financial assistance grants, and as we are about to see with the introduction of the GST, gives no cause to suggest it cares too much about municipal government. Financial assistance grants make up around 65 per cent of local councils' budgets, and municipal rates barely cover the cost of the multitude of services they provide. Therefore, the reality is that the less that is made available in financial assistance grants, the more likely it is that ratepayers will be slugged.

There is also an issue of equity under the Financial Assistance Grants Scheme, and local government may well argue that it is getting the thin edge of the wedge. The slow and steady decline of financial assistance grants from the Commonwealth to local government continues. In essence, this bill proposes the continuation of the existing practice whereby the official assistance grants to local councils remain indexed to population and inflation. How does that equate to a fair deal for local councils in regional areas where there is a population decline at a time when the national economy is in a period of taxation revenue growth? It means local government funding under the present structure will continue its decline in real terms. The bill does nothing to overcome the problem of no real growth in the level of assistance. The question of equity, particularly in rural and remote areas, begs the issue of a different type of mechanism to take that into account. I know the member for the Northern Territory has long advocated horizontal fiscal equalisation for remote and isolated municipal areas and, no doubt, will elaborate on that a little later.

While I do not oppose the bill, I reiterate that this government stands condemned for the reduction in financial assistance grants funding of $15 million over the past four years, its lack of any commitment to provide real growth in financial support for local government and its lack of financial support and information for the local government sector in implementing the GST. But what of the budget and its implication for local government? It is probably best summed up by the response from the Australian Local Government Association representative of local councils around Australia. The association had an expectation, as did regional Australia generally, that there would be something in the budget for them. In fact, in its official response to the budget, the Local Government Association said:

This budget was sold as a budget to assist rural and regional Australia.

Its response was best summed up, however, in just five words when it said:

There is no new money.

To say that local government was disappointed with the outcome is an understatement. Yet, on the face of it, the budget package for regional and rural Australia looked promising, with an allocation of $1.83 billion, albeit over four years. But all is not what it seems. It is typical of the smoke and mirrors approach to governance that we are all becoming accustomed to from the coalition. For example, of the package, $500 million has been earmarked for the Fuel Sales Grants Scheme—half a billion dollars, well over a quarter of the total package for rural and regional Australia, earmarked for compensation for the impact of the GST on petrol prices. Local government can only ponder how it could have better used that money. No doubt it would have used the money to improve Australia's deteriorating rural road network. After all, it warned the coalition prior to the budget that the rural roads network was on the verge of collapse and pleaded for the funds in its final submission for road funding. But what did it get? Nothing—not one cent for regional infrastructure. The Australian Local Government Association President, Councillor John Ross, said:

The Prime Minister has acknowledged the need for renewed infrastructure and yet his Government fails to deliver the necessary resources on Budget night.

He went on to say:

Once again the third sphere of government is disappointed.

Imagine his dreadful disappointment at the waste of taxpayers' money—now well over $400 million and still counting—being wasted in this government's advertising propaganda campaign. (Time expired)