COMMITTEES: Economics, Finance and Public Administration Committee: Report

25 November 2003

Mr ALBANESE (Grayndler) (5.19 p.m.) —I am very pleased to rise, as a member of the House of Representatives Standing Committee on Economics, Finance and Public Administration, to speak to the report Rates and taxes: a fair share for responsible local government. It is appropriate that this report be handed down this week, because the Australian Local Government Association is holding its national conference in Canberra. Indeed, the participants are a reminder of how diverse local government is.

There are 721 local government areas around Australia; they are very diverse. In this committee's deliberations, members travelled the length and breadth of Australia to meet with large and small councils and with urban and regional councils, and that diversity came through. I do not think I will ever forget the hearing at Alice Springs, where first we heard a submission from Tennant Creek. This is largely an Indigenous community; people are literally struggling to get fresh water and basic survival services. Immediately after that, on the same day, we heard from Mosman Council in Sydney. They were complaining about the terror of the premium property tax, which kicks in at a land value—before a brick is put on it—of about $1.8 million for each block of land. The representatives from Mosman did not see any irony in them complaining about how tough it was for them immediately following the representatives from Tennant Creek, but all members of the committee certainly saw that was Australia in all its diversity. This was one of the challenges that this committee faced when dealing with local government and its relations to state and federal governments. It certainly cannot be viewed in a homogenous way.

One of the points made in many of the submissions to the committee was the need for constitutional recognition of local government. One of the reasons why states and territories have so much power and influence over local government is that local government is not recognised. There was a referendum in the 1980s to give constitutional recognition to local government. My friend and mentor, Tom Uren, when he was Minister for Local Government and Administrative Services in the Hawke government, campaigned strongly for that referendum. Unfortunately the Neanderthals on the other side, particularly Peter Reith, opposed that referendum and ensured that we did not get that progress. Then again, the same people opposed the republic referendum. Watching the World Cup Rugby on Saturday night, I thought how humiliating it would have been to have God Save the Queen sung twice before the game. That is what the people over there would have as progress. I was in the toilet on Saturday night where I heard English supporters sing a very raucous version of a song. The punch line—expletives removed—was `get the stars off our flag'.

We need to remember that progress is quite hard. With regard to the different spheres of government and responsibilities, getting solutions is a challenge which this committee have attempted—and which I think we have done our best to find. The reason why recommendation 17 suggests a national summit convened by COAG is in recognition that you are not going to get the sort of broad change that is necessary simply through the committee process. We looked at the way in which local government functions have increased. They are due to a number of factors: devolution—one area of government has given local government responsibility for new functions; raising the bar—essentially the standard at which local government services must be offered has increased and that, therefore, has led to increased costs; cost shifting, which can occur in two ways, including where one area of government stops providing a service and local government steps in to provide it; increased community expectation—the demand in the community for increased services; and policy choice—local government does make choices to go into particular areas and expand the areas in which it provides support.

Areas of cost shifting occur when there is a withdrawal or a reduction of financial support once a program has been established. Numerous examples were given of where there might have been a joint state-local government activity or a Commonwealth-local government activity; that activity became vital to a local community, and then the other sphere of government—or perhaps the private sector—withdrew support, thus leaving the local government area picking up the full costs. Assets can be transferred without appropriate funding support; airports were given as one example of that. There is also often a requirement to provide concessions and rebates, without compensation payments. For example, many institutions such as churches are exempt from rates and that reduces the tax base of the local government area. Increased bureaucratic requirements can also lead to increased costs for local government, as can a failure to provide for indexation of fees and charges for services prescribed under state legislation or regulation.

It is also the case—and I think this came out particularly at the Perth hearing—that we need to acknowledge that it is not all the fault of the Commonwealth and the states. In some cases the very nature of local government being very close to community opinion can mean that there is political pressure upon local government to provide services that really they have no business providing. An example of that, which we heard about at the Perth hearing, is the provision of police and community security. We had a number of submissions about it, and we hear all the time that Australia is a far more dangerous place than it has ever been before, whereas all the facts tell us that that is simply not the case—that in fact crime by and large is not increasing in our community but has decreased. But candidates running for local government find it politically opportunistic to campaign on these programs and, because it is difficult for them to say no, we actually have examples of local government providing services which, in my view, are not their business.

That is another example, in my view, of the need for council amalgamations in New South Wales. Many of the local government areas are simply too small, including those in my area in the inner west of Sydney. The Mayor of Ashfield has been quite courageous in stating the obvious about Ashfield, Burwood and Strathfield councils covering such a small geographical area. I have four local government areas in my electorate which covers 27 square kilometres. I believe we need to build capacity by having councils that are of an appropriate size. But council amalgamations by and large have been resisted. We had the example of the formation of Canada Bay Council from Concord and Drummoyne. The people resisted it and ran on antiamalgamation platforms. But, once it was formed, they all wanted to be mayor, of course; they all wanted to run for the positions. Opportunistic statements have come from right across the political spectrum.

There have been meetings opposing council amalgamations in New South Wales. It is very easy to appeal to the lowest common denominator: fear of a loss of local identity. For example, in King Street, Newtown, one side of the road is in South Sydney and therefore does not have bins and the other side of the road is in Marrickville. But the Greens oppose amalgamation and oppose fixing up King Street and putting it in the one council boundary locally.

Mr Organ —No, we do not.

Mr ALBANESE —The member for Cunningham has a more enlightened view than the local councillors. They do that for opportunistic purposes and that is just one example. The report also goes into the declining state of infrastructure in the nation. That chapter is very important. It talks about infrastructure not just in terms of roads but also in terms of our social capital—our community based organisations.

There are recommendations in there and statements—4.75 and 4.76—where the committee has unanimously declared that it considers that judicious use of borrowing may assist local government to meet some of its financial needs if such borrowing is accompanied by increased revenues to enable the debt to be serviced. That is a sensible statement.

I conclude by drawing attention to and coming back to the last recommendation, which is recommendation 17. It recommends COAG host a summit in 2005 on intergovernmental relations. It is very sensible that the three tiers of government should actually sit down and talk about who does what. The ideal in Australia would be a two-tier system of government. That would make sense: a regional form of government. But the truth is that it is highly unlikely that that will occur in my lifetime. Given that is the case, let us have a rational debate about what the role of each level of government is.

Local government plays a particularly important role. It is closest to the people. It is able to respond directly to people's needs. It allows for democratic participation, which enriches the democratic life of the nation. I believe that the federal parliament and we on this committee have taken local government's role very seriously. To that end, I want to congratulate in particular the chair of the committee, the member for Wannon, David Hawker. He does an outstanding job as chair of the committee, along with the member for Chisholm, Anna Burke, who is the deputy chair. We hear a lot about disagreements in parliament. It took us three or four days to finalise this report but it is a unanimous report. It is a consensus report. It is parliament working at its best. There is not enough recognition out there, in what is a fairly cynical community, of the good work that parliamentary committees such as this committee, which I have been on since 1996, can do. I sincerely hope David Hawker remains the chair of that committee. Well, I hope he gets to be the deputy chair at some stage because I hope we swap sides. But David does a very good job, as does Anna. They in particular, if you look at the attendances, really bore the weight of the work on that committee and that should be acknowledged.

I want to also acknowledge the work of the committee secretariat, and in particular the work of Susan Cardell and Vanessa Crimmins. They did a lot of outstanding work. There was a lot of travel to regional Australia during the conduct of this inquiry. I believe that this report is a positive contribution, one which has already been well received by the local government community. I sincerely hope that the recommendations lead to action, because otherwise that work will have been wasted. I commend the report to the House.