Monday, December 4, 2006

Direct federal funding for local government

The Australian Local Government Association (ALGA) commissioned PricewaterhouseCoopers (PwC) to undertake an independent analysis of the financial sustainability of local government in Australia.

A summary of their report gives a tantelising look at what could be achieved through improved direct federal funding of local government.

The report says that improved funding for local councils, would assist local communities by enabling councils to return important community infrastructure to an acceptable condition. Extra funding would clear backlogs in renewals and support regular maintenance to retain service levels.

Additional funding would assist local government to take full advantage of their ability to flexibly gauge and respond to the changing demands at a community level.

Since most councils face increasing demands for a broader scope and higher standard of community services and infrastructure, it's important that local government has the resources to set the priorities and consult with the community on the trade-offs between council provided infrastructure and services.

Enabling a council to respond directly to the service and infrastructure demands of an informed community would:

  • Strengthen local communities by ensuring and adequate standard of key facilities for the ongoing provision of a range of significant social and recreational services.
  • Provide for greater choice and consultation on council provided services and infrastructure that would encourage more participation in community activities raising levels of inclusion and wellbeing. This would promote increased community cohesion and safety, particularly in rural areas.
  • Enable the implementation of local programs to meet and include the diverse needs of the community that support cultural diversity, access and equity, equal opportunity, involving minority groups.
  • Support a sustainable environmental strategy for each community to improve local environmental outcomes.
  • Enhance business and community links with regional areas to promote regional equity and development.
  • Promote further economic development and the generation of employment benefits through links with the business community.
  • Improve the quality of life of local residents through the support and alignment of health and welfare agencies within the area.
  • Support local recreation, arts and culture and an appreciation of heritage in order to promote vibrant and active communities.

PwC developed 11 recommendations based on a 'twin track' approach for improving financial sustainability through the pursuit of:

  1. Internal reforms by some councils to improve their efficiency and effectiveness and
  2. Suggested changes to inter-government funding for improved financial sustainability to primarily assist the types of councils with sustainability challenges.

Internal reforms required by some councils is likely to be assisted with the release in 2007, of the Asset Management Module of the Local Government Managers Association 'Good Practice Tool Kit.'

The area of inter-government funding is the key element to sustainability of Australian local government. Disappointingly, the PwC report lacks vision, merely applying oil to the ox-cart and giving the driver a new whip. What local government desperately needs is a massive injection of funds through efficiency savings from migrating local government out of state control and under one federal Local Government Act.

If federal parliament does nothing new, by continuing to underfund councils, then we will see community assets over Australia quickly deteriorate and become unserviceable. States have a bad record of failing to pass on federal funds to local government. States are known to indulge in asset stripping of public utilities under their responsibility and they have a long history of demanding payments from councils to support the voracious appetite of state treasuries. We need to retire the ox-cart and driver that have been used to deliver local government services for a century before federation. In this new millenium, shouldn't we be embracing a leaner and more effective funding structure that says we expect 'value for money' and this should be without the unneccessary overheads.

Cities and towns will not only look shabby and run down but essential transport, sewage and water infrastructure will eventually start breaking down, making the conditions ripe for growth of the ghetto and all that goes with it. Australians deserve better. Politicians have applied the blow tortch of structural reform through such bodies as the ACCC and the Productivity Commission on all other segments of our economy except their own. Its time to realise the estimated $50 Billion savings from a two-tier level of government in Australia.

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