Introduction
The NSW Department of Local Government have recently invited submissions from the public on the position paper ‘New Direction for Local Government[1]’. Submissions are due by 9 March 2007. The Department’s position paper gives a brief history of forced structural reforms into NSW local government, yet the paper did not mention the need for the state government to reform itself. The paper instead discusses a range of areas for improvement by councils including the following: Peer reviews of councils, Strategic planning assistance for councils, Red tape review and Clarification of roles.
This blog does not offer comment on these or other topics covered in the paper. In my view, the position paper omits the most promising new direction for local government. This is the direction already taken by local government in New Zealand.
It is a direction that offers the best opportunity to achieve long term financial sustainability by local government throughout Australia. This blog outlines a proposed new direction that will be a quantum leap for local government in Australia.
Recent interpretation of federal powers under the Australian Constitution
My starting point is the law. In New South Wales, Australia, we are subject to the NSW Local Government Act 1993. A recent High Court decision[2] on Workchoices laws went against the six state governments and upheld the Australian Government’s legislative use of the ‘corporations’ power under the constitution. Leaving aside the contentious debate over the IR laws themselves, the decision is highly significant for local government in Australia in other ways.
Legal experts such as Professor Ron McCallum, Dean of Law at Sydney University has indicated that the corporations power could be utilised by a future federal parliament to take control of many areas traditionally controlled by state governments. Prof. McCallum[3] told the ABC:
‘the High Court has left the door open. They've declared the WorkChoices laws to be valid. They've given a wide view to the corporations power. This would leave it potentially open to the Federal Parliament to control areas of health where corporations operate. Query, could control some aspects of local government. I think we've seen, over the last 30 years, from the Hawke, Keating, Howard governments, federal powers increasing by a lot of favourable High Court decisions. You'll remember the Tasmanian dams case a quarter of a century ago. I think the States are looking more and more like municipal governments than state governments.’
The High Court decision opens the way for a new 'New Federalism', going far beyond Industrial Relations and with a huge impact on the overall power of the states[4]. Professor George Williams of the University of NSW said: "They [the High Court]have constructed Commonwealth power with few or any qualifications[5]”
Constitutional lawyers are still picking over the judgment, but they all agree that in many fields the Commonwealth can now basically do what it likes. It is now a real possibility that responsibility for local government could, under suitable legislation, come under federal law, since most Councils are considered to be ‘corporations’ under the Australian constitution. The Australian Constitution has, through judicial interpretation, indeed become the evolving document but probably more so than envisioned by its founders in 1901.
The direction forward
This blog recommends that the New South Wales Department of Local Government be advised by interested members of the public, that the way forward to a more financially sustainable future would be for state governments to cede local government powers to the federal government.
Additionally, federal and state members of parliament should be asked to support either state or federal legislation that would facilitate the transfer of local government laws including finance to national legislation.
The submission outlined above is consistent with the successful motion moved by Blacktown City Council to the 2003 National General Assembly of Local Government relating to the perceived benefit of a rationalisation of the current three levels of government. The successful motion has become a policy position of the ALGA and it is suggested that this position should be put by Council to both the DLG and LGA:
‘That the federal government be requested to commission the Productivity Commission to conduct a public inquiry on the anticipated productivity savings from vertical rationalisation of the current three-tier system of government.’
Sustainable funding for councils is critical. Local governments from all states have increasingly been seeking through their Associations, direct federal funding. The recent High Court decision provides an incentive to more vigorously pursue this approach to its logical conclusion.
Justification
The justification for a structural change to the framework for local government in Australia is compelling:
* The unsustainably high cost of the "three tier" system of government in Australia needs to be promptly addressed if Australia is to remain globally competitive in the next few decades.
* There is a pressing need to free up resources that are inefficiently replicated by state governments to more economical ends that advance better outcomes for individuals, communities, groups, the environment, the economy, industry and businesses.
* The NSW Minister for Local Government has admitted that his department has very limited funds available to give local government to meet serious infrastructure funding shortfalls. The position paper provides no significant practical solution to the funding crisis. Regional networking and clustering will help at the margin, but we need far more than that proposal can deliver.
* The financial predicament of local government is consistently exacerbated by the requirement for councils to be the revenue raiser for state run entities such as fire services through such onerous means as levy imposts on councils.
* The cost savings of streamlining government in Australia to two-tiers is likely to be in the order of $20 to $30 billion per annum according to postgraduate research conducted at the University of Canberra. The Productivity Commission should be asked to model the national cost savings achievable through vertical rationalisation of Australia’s system of government.
* The diversity of our country, and the desire and ability of people and communities – in cities and in each viable local region – to deal with their own local issues without excessive interference from state Ministers for Local Government or Ministers for Planning would be a most welcome and refreshing change.
* The desire of Australians to be rid of burdensome and inappropriate differences, between states and territories and sometimes between urban and rural areas, in laws, regulations and access to services, including such essentials as medical treatment, water, energy, communications and transport can now be addressed in light of the recent High Court decision[6].
* Business and community groups have drawn attention to the need for uniform national laws covering local government to replace the current legislative pot pori from six state and two territory governments.
The driver for a new direction to a national legal framework for local government
The biggest driver for reform is the billions of dollars in financial savings that can be achieved through eliminating the heavy overhead costs associated with state government intermediaries.
Conclusion
A national system of local government would bring long overdue legal and financial consistency to the industry. Local government in Australia would be more understandable to national and international clients. With the transfer of power, Australian local government would be in a position to be structured to meet national standards of democratic governance, accountability as promoted by the ALGA and LGMA in consultation with regional associations.
National benchmarks, as foreshadowed in a motion to the 2006 National General Assembly of Local Government could help to ensure that local government is seen to be just, equitable, affordable, efficient, stable yet flexible, and socially, environmentally and economically sustainable; functionally effective in areas such as the environment, health and education; and centralised and decentralised in an appropriate balance.
The federal government would be strengthened under the proposed framework to be more responsive to the opportunities and needs of our country as a whole, and to our global circumstances into this new millienium. In place of existing state governments, local/regional structures such as WSROC and the LGA could play their role, being close to and responsive to the opportunities and needs of people and communities.
The NSW DLG Position Paper states that local government in NSW is at a crucial point in its history. It correctly observes that communities are rapidly changing and as the heart of communities, local councils must continue to evolve. The department’s position paper sets out a context for ongoing reform by the local government sector in the context of the NSW state government’s supervisory role.
That supervisory role has been the problem. It is vital for interested members of the community to set out an alternative new direction of connectedness and innovation within a new, broader national framework as outlined in this blog.
Links
[1]NSW DLG Position Paper http://www.dlg.nsw.gov.au/dlg/dlghome/documents/Information/Position%20Paper.pdf
[2] New South Wales v Commonwealth of Australia; Western Australia v Commonwealth of Australia [2006] HCA 52 (14 November 2006) http://www.austlii.edu.au/au/cases/cth/HCA/2006/52.html
[3] High Court decision a comprehensive win for Commonwealth: law experts http://www.abc.net.au/worldtoday/content/2006/s1788172.htm
[4] High Court decision paves way for greater federal control http://www.abc.net.au/pm/content/2006/s1788644.htm
[5] SMH The Appeal was lost 86 years ago. http://www.smh.com.au/news/national/appeal-was-lost-86-years-ago--constitution-expert/2006/11/14/1163266550349.html
[6] The beyond Federation Charter http://www.beyondfederation.org.au/charter.html
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