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Thursday, 15 November 1973
Page: 3444

Mr ANTHONY (Richmond) (Leader of the Australian Country Party) - This very important matter which we are discussing seeks to make an alteration to our existing Constitution so that local government authorities may have direct representation on the Australian Loan Council. In the last 24 hours we have seen the unprecedented farce in this Parliament of the Government using its repressive powers to guillotine the debate so that Opposition discussion is limited and so that the fallacies of the case which the Government has presented cannot be exposed. The debate is so limited that it gives the opportunity for only three or four Opposition speakers to state their point of view. I have never seen such an abuse of and such an intoxication with power by a government as we have seen displayed by this arrogant, almost dictatorial Government. It is little wonder that the Opposition has been so annoyed at being restricted in this way.

The Government is making a mockery of Parliament. It is abusing its rights as a government by trying to stifle the Opposition and by trying to get this matter before the Australian people by stealth, hoping that in their ignorance they might cast a yes vote. The Australian people are well and truly aware of the actions of this Government in guillotining the debate and preventing Opposition members from having a free expression of their point of view. There is no liberty at all in this place if this is any example of the activities of the Government. The Bill we are examining seeks to transfer the powers of local government to the Commonwealth. That has enormous ramifications. Yet we are given 2 hours 30 minutes in which to debate 'this question. That means Opposition members will have 1 hour 15 minutes. Then when we get to the Committee stage we are to be given 15 minutes to debate the clauses of the Bill. This is appalling. lt is a complete abuse of the operations of a Parliament which is supposed to be a place where points of view can be expressed so that the Australian people as a whole can make a judgment.

It is quite obvious that the reason for seeking this amendment to the Constitution is to enable the Australian Labor Party to pursue its policies aimed at centralising all power in Canberra. This is just one of the series of steps to by-pass and undermine the authority of the States. I can think of nothing more confusing than to have a situation in which the Commonwealth has a financial lever that it can use against local government authorities when local government authorities are the creation of State governments. They can be created or abolished. The States can put administrators in charge. They can change the boundaries at their will. Yet here the Commonwealth would be negotiating directly with those bodies for loan moneys or even for the provision of grants. Local governments are integrated very much with State lav/. The provision of many of the services, and the laws applying to State governments concerning land, hospitals, electricity, roads and communications are all an integral part of local government affairs. Yet this Government apparently wants local governments to be beholden to it as far as financial measures are concerned. I can understand why all State governments have opposed this measure, including 3 Labor State governments. They understand the very grave implications in trying to manage the affairs of local government sensibly if the Commonwealth pushes its influence into this area.

The Country Party recognises that there is justification for particular measures designed to alleviate the financial problems of local government in Australia. Statistics indicate the scope of the problem. Between 1960 and 1970 the percentage of total government debt attributed to local government increased from 6 per cent to 8 per cent - from $700m to $ 1,600m. Over the same 10-year period local government receipts increased at a slower rate than did State and Commonwealth receipts. There is undoubtedly substance in the observation that revenue available for local government is inadequate in relation to requirements.

These constitutional proposals do not in themselves represent a solution to the problem. They represent a particular approach. In my opinion it is not the most appropriate approach. The amendments to the Constitution outlined in this Bill presuppose that existing constitutional procedures are incapable of effectively meeting the situation. Such an assumption is unfounded. Adequate scope exists for an improved flow of resources to local government through existing constitutional channels. It would be a mistake to deny the need for such an increased flow. It also would be misleading to overstate the problem. In aggregate and on average the interest burden is becoming more onerous, but not dramatically so. The circumstances of individual local government bodies vary greatly. Local government revenue has not kept pace with the growth of Commonwealth revenue, but that is more a long term trend than a short term development. There is need for urgency, but the need should not be overstated as a justification for extreme measures.

I believe that the disparity between the Commonwealth's financial position and the circumstances of local government in aggregate is a reflection of a broader problem. The State governments have, over a period of time, been restricted in their financial ability to discharge their responsibilities. It would be a mistake to assume that local government is unique in its financial position. It could be argued that State governments have neglected their responsibilities in this area. To advance that argument is to imply either that the State governments do not have sufficient revenue at their disposal or that such revenue is inequitably distributed. I think the first assumption is more supportable than the latter. Under these circumstances the logical approach would be to increase the flow of federal finance to the State governments for distribution to local government. Provision exists for this approach in section 96 of the Constitution. Existing procedures in the Loan Council would enable an expanded borrowing program to be utilised by State governments for local government purposes. However, I am inclined to the view that grant allocations are more appropriate in this instance than further loan revenue. The fundamental philosophy of the Australian Country Party is that financial arrangements should be tailored to the Constitution. One serves and strengthens the other. It is only if the constitutional arrangements are unworkable that a basis exists for an alteration of the Constitution. The arrangements are not unworkable; they need reviving and strengthening.

The proposal that the Australian Government be empowered to borrow on behalf of local government is a dangerous one. At the recent Constitutional Convention the Prime Minister (Mr Whitlam) said that the Loan Council should be restructured. At present it comprises 6 State representatives and 2 Commonwealth representatives with the Commonwealth having an additional casting vote. The Prime Minister proposes to restructure the Loan Council so that there will be 6 State representatives, 6 local government representatives and an additional Commonwealth representative to make 4 Commonwealth votes. In other words, on matters affecting local government finance the States would be outnumbered and outvoted. The Loan Council was constituted under the 1927 Financial Agreement. It determines annual borrowing programs for the Australian Government and the States, together with the terms and conditions of loans to finance those programs. If this Bill were passed the people would be asked to vote on the proposition we are now discussing.

About 20 per cent of local government current receipts are derived from net borrowings, of which about two-thirds is raised 'by local bodies but in many instances guaranteed by the State government. By promising, and presumably offering, favourable interest rates the Commonwealth would be responsible for this element of local government financing. State governments would be bypassed. The Commonwealth would, by financial inducement, take over responsibility for loan raising and be a consequentially more powerful force in the loan market. Its financial power would be greater, its policy leverage more direct. In the Loan Council the States would be outvoted on matters related to local government finance. The method of distribution of loan money to local government would be decided by the collective vote of local government and Commonwealth Government representatives. In practice, the distribution of loan revenue would be at the direction of the Commonwealth Government. The debt burden resulting from the service of the loan commitments will still reside with the local government bodies, instead of being diffused the creditor would be the Commonwealth.

Of course, some may say that the implications to the federal system are overshadowed by the resultant benefits. This is difficult to see. Local government debt burdens have resulted from the commitment of successful loan flotations. There is little evidence that this loan money has been difficult to obtain under normal economic circumstances. Under existing Loan Council procedures the Loan Council approves an aggregate borrowing program for larger State, semi-government and local authorities. In 1973-74 borrowing programs totalling $564m are to be undertaken by the Commonwealth; yet the semigovernment share of government debt has risen most sharply of any form of government debt since the Second World War- from $352m to $6,025m or from 1 1 per cent of total government indebtedness to 29 per cent. Clearly access to Commonwealth revenue does not in itself imply reduced indebtedness.

The proposal that the Commonwealth grant direct financial assistance to local government by amending section 96 of the Constitution also requires close scrutiny. Under Grants Commission arrangements, the Commonwealth may provide such assistance at the initiative of local government authorities. Under this proposal the Commonwealth may initiate grants as well as receive requests. In doing so it may bypass the States. In 1973-74 grants will comprise 32 per cent of the Loan Council programs. The Commonwealth may intend to extend that principle to local government. If the Australian people were to be asked to vote on these proposals I would ask them to consider carefully the full implications of them. It would mean a direct umbilical cord between their local council and the Commonwealth Government in Canberra. It could mean that the State governments would retain their responsibilities to and for local government but that financial authority and control would reside with Canberra. It would mean that the developing and potentially gigantic Department of Urban and Regional Development and its Minister would, in practice, determine the flow of development finance to various nominated regions of Australia. Those regions would in themselves be a basis for central planning on a regional basis and be in themselves significant political entities. It would mean that state governments in effect would exercise a dwindling residual role. The development thrust would occur at local government level without State government participation or approval. As Sir Winston Churchill put it in relation to another matter, the States would be like cut roses in a vase - fair to behold but doomed to die. No doubt the ultimate intention is just that. The Prime Minister in an article in 'The Australian Quarterly' of September 1971 stated:

We should not have a federal system of over-lapping parliaments and a delegated but supervised system of local government. We should have a House of 'Representatives for international matters and nationwide matters, an assembly for the affairs of each of our dozen larger cities, and regional assemblies for the few score areas of rural production and resource development 'outside those cities.

I ask the people to look beyond the immediate financial attractions of these proposals. They are more apparent than real. By all means, let us improve the position of local government. However, let us not destroy the Constitution in the process. Let us be vigilant against those who are obsessed with concentrating all power in Canberra by eroding and emasculating the authority of State governments. To some people in local government the issue may have a superficial appeal, but the implications for preserving our federal system will be under challenge if this question were to be passed by the Australian people.

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