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Monday, 5 March 1984
Page: 365

Senator MAGUIRE(3.33) —I move:

That the Senate take note of the paper.

The 1983 annual report of the South Australian Local Government Grants Commission reports on the Commission's activities in 1982-83 and on the recommended grants to local governments in South Australia for the current financial year. The South Australian Local Government Grants Commission allocates funds to local councils which have been passed on to South Australia from the Commonwealth Budget. A total of 30 per cent of the funds are allocated to local councils on a population basis, with equal amounts per head of population, and the remaining 70 per cent of the funds are allocated to councils on a needs basis, on the basis of certain formulae that determine efforts made by councils in expending and raising moneys.

Since 1974-75 funds have been made available from the Commonwealth Budget to local government. The Whitlam Government established the precedent, giving the first ever grants from the Commonwealth Budget to local government in Australia. Something of the order of $450m annually is now paid from the Commonwealth Budget to local government throughout Australia. This year councils in South Australia will receive some 8.6 per cent of the national allocation from the Budget, totalling some $39.5m. Funds paid in my own State go not only to local councils but also to such important bodies as the Outback Areas, Community Development Trust which services those parts of South Australia without local government, and the Coober Pedy Progress and Miners' Association. Currently local government grants are based on a formula which provides that 2 per cent of personal income tax collections from the Commonwealth Budget are paid to local government. In that way, the funds paid to local governments are different from funds paid to the States. In the case of the latter, funds are based on the total tax collections rather than specific personal income tax collections.

Last financial year local councils nationally received a 21 per cent growth in funds from the Commonwealth Budget, but this year the rate of increase will be far lower, and I think it is very important to outline the reasons for that very low increase. One reason is the effect of the wages pause introduced by the former Government. The very slow growth in income tax and the consequent slow growth in funds to local authorities is one of the side effects of the wages pause which was not thought through very clearly by the former Government. As a result, there has been a very big impact on local government in Australia. Certain income tax cuts were also made late in 1982. Over and above that was the effect of the economic recession in compressing incomes and, therefore, taxation collections. This financial year the growth in funds to local councils from the Commonwealth Budget will be of the order of 8.2 per cent.

Concern has been expressed by a number of local authorities about their real growth this financial year. Their concern is that the allocation of funds from the Budget should keep pace with inflation. Certainly, the Budget provides for a growth of 7.5 per cent in the consumer price index this financial year, which gives some apparent real growth, but I acknowledge that the consumer price index is more a measure of costs faced by consumers than costs faced by organisations such as local authorities. However, there is some encouraging news that the gross domestic product deflator, which is a more broadly based measure of inflation, was running below the 7 per cent rate late last year, and that suggests a real growth in funds for local government this financial year.

The Government is concerned by the slow growth in funds to local government. I am pleased that the Minister for Territories and Local Government (Mr Uren) late last year indicated that there would be an inquiry into local government finances during 1984. I welcome the announcement by the Minister. I welcome his expression of concern for local government finances, and I am pleased that the Minister will announce soon the membership and terms of reference of the inquiry into local government finances. I hope that one of the aspects looked at will be the case put by South Australia for a bigger share of funds.

Question resolved in the affirmative.