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Thursday, 8 September 1983
Page: 584

Mr BRAITHWAITE(3.48) —I believe that the disinterest of the Australian Labor Party in this matter of public importance was demonstrated by the fact that it was necessary to call a quorum to get some Labor members into the House. Prior to that call I was able to count three Government members in the chamber. Only three Government members had an interest in local government and wished to hear the debate. I have put forward this matter of public importance for debate to have honoured the promise of the Labor Party at the last Federal election to maintain the real value of the general revenue grants paid through personal income tax sharing to the 839 local governments throughout Australia and to the 10,500 elected councillors who bear the work load of local government. This Labor Government has dishonoured yet another promise. It has shamefully withheld from the third sphere of government its proper proportion of Federal revenues. The great shame in this matter is that the Opposition has to suggest to the Labor Party that it should honour at least one of its promises. The categorical promise that I have mentioned was to maintain in real terms the Commonwealth's funding to local government in 1983-84. I quote from the Labor Party's own policy:

Labor will allocate at least 2 per cent of Federal personal income tax as a general revenue grant to local government. The allocation in any year to be not less than the real value of the previous year's allocation.

I repeat that Labor has said that this general revenue grant should not be less than the real value of the previous year's allocation. In 1982-83 the consumer price index rose by 11.2. per cent and local government's share of personal income tax collections rose by only 8.2 per cent. As a result, local government authorities throughout Australia have been underpaid in excess of $13m, or $15, 400 per authority. They have been sold down the drain by the Labor Government. This has occurred at a time when the same Federal Labor Government has increased grants to the States by 11.8 per cent, in effect giving the States an increase in real value. Quite obviously local government, in spite of the expansion of a Commonwealth department, does not have the financial and political muscle of the States to get its share of Commonwealth grants. Just as obviously to the Hawke Government, there is more political mileage in this election year in Queensland to be seen to be generous to the States.

The Federal Government's political generosity does not extend to local government, that is obvious. What a huge expense local government authorities will face. With an almost record deficit in this nation's history this Government, in a give away Budget, could not honour at least this one of its election promises. Its integrity is again quesitoned by the people of Australia. This sellout of local government is the last of a long list of broken promises. Local government, in fact the people of Australia, are in a state of shell-shock following the massive dishonouring of promises by the Hawke Government.

The hypocrisy of the Government is revealed in an answer that was given on Tuesday in the Senate by the Minister for Resources and Energy, Sentor Walsh, when he implied that the relevant consumer price index figure is the estimate of 7.5 per cent for the 1983-84 Budget. Of course, this figure is reduced by the artificial influence of the Medicare program on the CPI. No one would believe the Minister as far as this is concerned because he does not even read his own policy. The policy specifically states that the Government will maintain real value. Those in local government throughout Australia believe, and so do I together with all other members of the Opposition, that an undertaking was given to match the revenue sharing grant in 1983-84 with the CPI increase of 11.2 per cent in 1982-83, the year in which the Commonwealth on behalf of local government collected the personal income tax which is now to be shared. Senator Walsh misled the Senate in his reply to the question from Senator Archer last Tuesday.

The Australian Labor Party has talked in State and Federal terms of the constitutional recognition of local government in Australia. I quote from ALP policy.

Labor will work to have local government's rights and responsibilities recognised in the Federal and State constitutions.

I firmly believe that such recognition is worth nothing unless local government is given the means and the funds to carry out its responsibilities, which are ever-increasing. Without an accepted participation in the Commonwealth's own revenue base there can be no partical constitutional recognition of local government in Australia by the Labour Party. The Party's repudiation of its promise to maintain the real value of tax sharing arrangements is a repudiation of its intentions of constitutional recognition. The whole deceitful exercise raised questions for future distributions.

The Medicare legislation introduced into this House on Tuesday last specifically excludes the one per cent Medicare levy from the local government share of tax collections. As I mentioned earlier, the artificial reduction of the CPI because of the Medicare levy influence will not in any way decrease the escalation of costs which will be felt by local Government throughout the coming year because of the Government's near record deficit of $8.3 billion and because of its very slender grip on the wages and incomes accord which hopes to restrict wage increase to 7 per cent in the coming year. Local government costs in the coming 12 months will suffer, I believe, at least a 10 per cent increase. In this realisation one looks at Labor's abdication of its promise to local government in regard to the effects of its current policy at the end of 1983-84. Labor's Budget indicates that for 1983-1984 pay-as-you-earn taxation will increase by only 4.7 per cent and total collections for personal income tax sharing-excluding, as I mentioned before, the Medicare levy-will increase from $ 22.967 billion to $24.383 billion, an increase of 6.2 per cent. This is in comparison with what I believe is a real increase of 10 per cent in costs to local government. At this time next year local government will face the same problem as it does at the moment-increased costs and increased responsibilities, and less Commonwealth funds to meet those responsibilities.

I make mention also of the delivery of those funds from personal income tax sharing collections. I understand from at least one local government authority that the distribution of these funds by the Commonwealth was delayed until as late as last Friday. That is many weeks behind what has normally been expected.

Mr Newman —Tasmania's was announced only yesterday.

Mr BRAITHWAITE —Tasmania apparently is in the same situation. I ask the Minister for Territories and Local Government (Mr Uren), who is at the table: What financial advantage was there to the Commonwealth in the deferral of these funds ? Perhaps it would get at least 12 1/2 per cent interest on the $459m of funds whose distribution was deferred. This has placed just another burden on local government finances and the manner in which they are relegated by the Government . The Government should realise that the days are long past since local government was able to rate sufficiently on land values to provide the services applicable to that land or for specified services.

A consistent escalation of local government responsibilities has been handed down from successive State and Federal governments, which has not been matched by funds from those governments. As a result, because of actions of this Parliament, the rate base can provide only about 50 per cent of the funds necessary to carry out these additional responsibilities in areas such as health , welfare, child care, care for the aged, sport, recreation and a host of other areas which were once and still are basically other governments' responsibilities. For instance, in this last decade many country shires have had to face the pressure of new mining, industrial and land development, yet they see the real income from these developments hived off to the State and Federal governments. To carry out these services at the local level local authorities have to be guaranteed funds-as of right not as a result of begging from the other more affluent spheres of government. So much for Labor Party rhetoric on constitutional recognition. If it cannot understand the difficulties and the problems of local government as they exist today, it must not understand what ' constitutionality' means to this very important level and sphere of government.

I was appalled, as many others in this chamber would have been, at the Government's 'presentation pack' in relation to local government, which followed the Budget two weeks ago. I predict, and I know, that the Government will rely heavily upon this discredited document in defending itself in the debate on this matter of public importance. The document is discredited because, in the face of a decline in the real value of its personal income tax sharing allocation, the Government has sought to present the whole package as an increase of 45 per cent on the 1982-83 equivalents. It is interesting to note the difference between this presentation and Senator Walsh's answer in the other chamber. Let us look at the major items covering this increase. The community employment program figure is a good example of accounting and funding gymnastics. Local government is expected to receive $130m extra for roads, water supplies and employment programs for which it has to find a further 30 per cent from its own resources. This means that local government will have to find additional revenue of approximately $54m to match Commonwealth funds, or about $64,000 per authority. Add this to the decrease of $13m in real terms in the personal income tax sharing allocation and local government is out of pocket by $67m, or $80,000 per local authority. I refer to local authorities spread right around Australia. This is a significant additional burden that the third sphere of government is called upon to bear.

The responsibility to carry out Commonwealth program has fallen on the local authorities. Let us look at the Commonwealth's real contribution to the overall $300m community employment package designed to place 70,000 Australians in work over a six months period. As a result of this program the Federal Government will save an estimated $100 per week for 26 weeks on the unemployment benefit from 90 per cent of the 70,000 people who will come from the ranks of the unemployed. This amounts to $164m. The clawback on taxation from these employees , including the Medicare levy, might be estimated at approximately $60m. This represents a recovery of $224m, or a net Commonwealth contribution of a mere $ 76m, just slightly more than the contribution by local government. The point is surely this: Local government authorities have to budget for additional income if the Commonwealth program, our program, is to be fulfilled. To do this the authorities have been given less in Commonwealth grants and will have to restrict services in other directions or redirect their priorities. If these amounts cannot be raised from the rate base of the authorities it must surely mean a diminution of traditional services, which will have human and social consequences.

Not only are the authorities under great financial pressure from the Commonwealth but also the States have been responsible by decreasing financial aid as the Commonwealth grants become available and giving local authorities more responsibility and less authority. Assistance to local government on water programs is far too small to be effective and is no substitute for the bicentennial water resources program of the Fraser Government which Labor dismantled. I know of one local government authority which could spend the Queensland commitment by itself. The aerodrome local ownership plan is not always seen to be an arrangement to assist local governments or the ratepayers. Yet that item has been given a guernsey in the Government's propaganda pack of $ 44.7m. We can look at road funding. It is a combination of acts put into place by the previous government. My colleague the honourable member for Gwydir (Mr Hunt)-

Mr Hunt —They will not give any money out of the bicentennial road fund.

Mr BRAITHWAITE —That is right. The money is not being made available in some cases. But this Budget provides-as though it were a significant increase-for a program which was instituted by the previous Government. It is just a lot of hypocrisy. It is a real nonsense to suggest that in the 1983-84 Budget the Commonwealth has assisted local government to overcome the financial pressures it faces or that it has given more independence and freedom to local government. In fact, the original concept of the personal income tax sharing arrangements, which were introduced in 1976 by the Fraser Government, was to give unconditional funds to local government and to allow more independence and freedom. Credit must be given to the Fraser Government which embarked on a federalism policy to include local government in an arrangement in which its constitutionality would be recognised in a practical manner. This was demonstrated by the increase of 21 per cent in the personal income tax sharing grants given to local government in the previous year. It amply demonstrated the coalition's recognition of the worth of local government. By decreasing this grant in real terms and placing on the shoulders of local government the responsibility of partially funding and implementing its own Commonwealth program, the Commonwealth, in just six months, has destroyed all the former initiatives and severely weakened the structure of local government in Australia .

I repeat what I said earlier. Local government had the clear understanding from the Labor Party's promise in its policy that it would match in its grant for 1983-84 the consumer price index increase of 11.2 per cent. The manner in which this promise can be fulfilled is for the Government immediately to propose an amendment to the Local Government (Personal Income Tax Sharing) Act of 1976 to provide for a real term minimum guarantee to local government general revenue sharing arrangements in 1983-84.

Mr DEPUTY SPEAKER (Mr Millar) —Order! The honourable member's time has expired.