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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
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LOCAL GOVERNMENT, CONSTITUTIONAL RECOGNITION

The Hon. R.B. SUCH (Fisher) (12:00): I move:

That this house notes the proposal to have councils recognised in the Australian constitution.

Members would be perceptive enough to know that that is a fence-sitting motion. What I am seeking to do is have the issues canvassed in this place. Things have changed since I lodged this motion, but it is a very important issue. Local government is a very important level of government. As I have indicated before, I used to be on Mitcham council in the days when you could be a member of parliament and a councillor at the same time; sadly, that is not allowed any more.

The proposal now, in respect of councils, is limited, essentially, to financial allocation from the commonwealth. I note that a mayor has written to one of the suburban Messenger papers making the suggestion that there have been two clear challenges to the federal government making direct financial allocations to councils. I do not believe that is correct. There have been two challenges in respect of the commonwealth making direct allocations: one was essentially in relation to Christian counsellors or workers (whatever the correct title is) in schools, and there was another one in relation to some other matter. However, neither of them had anything to do with councils, as far as I know. To my knowledge, no one has challenged the commonwealth government providing direct financial assistance to a council.

So the proposal has gone from general talk about some acknowledgement of councils as the third tier of government to being quite specific in relation to the commonwealth being able to provide money directly to councils. There are plenty of arguments both for and against. The original proposal contained, I think, four elements: symbolic recognition; financial recognition (which is now basically on the agenda); democratic recognition; and recognition through federal cooperation. At least two states are opposed to the referendum that will be held at the time of the next federal election, and I think Western Australia has reserved its position.

The case against it—and this would embody the wider issue of the recognition of councils, as it is called, going beyond just the financial recognition—rests on the fact that there have been two referenda in the past, both of which have failed. That may not necessarily be because the concept is wrong or bad, but because Australians are notorious for not agreeing to referenda.

The question of financial recognition raises some issues about the role of state governments and coordination and priority in terms of projects which could be funded directly from the federal government to local government level. In fact, it raises an interesting challenge to the mantra 'We are local' when, under this new proposal, money would be directly channelled—as it has been for a while—to a local government. In other words, Canberra will decide which council will get money for an infrastructure project. That is currently happening. The referendum would formalise that and give it legitimacy in the constitution.

One of the concerns is that it shuts the state government out of the equation and, I believe, does not allow for the necessary oversight and overall planning in relation to issues. It lends itself very much to the potential for severe pork-barrelling, because you will be able to have a federal government of whatever persuasion saying they will give money to a particular council for a swimming pool. It does not take into account what the overall needs and requirements of a particular state may be. That is one of the concerns about this modified proposal which is going to be put in September.

The referendum itself is costing $50 million. I would love some of that money to go on some basic facilities in my electorate for people in terms of footpaths, bus shelters and so on. Councils in South Australia are spending $1 million on the yes campaign, and I do not think that is appropriate. That is a concern I have in respect of this issue.

Rather than tinkering around with a constitutional provision that allows Canberra and bureaucrats in Canberra to decide which council is given a bag of goodies, it would be better to address the fundamental issue of the funding of councils. Councils cannot do what they are charged with under the current funding arrangements. They cannot fund the infrastructure that is needed by relying, in the majority of cases, on rates from properties. They are not going to get the necessary money to maintain roads, bridges, or whatever, as a result of property taxes and parking fines.

I have argued in this place, and I still argue, that local government should get some prescribed allocation, whatever the appropriate percentage is, as part of the growth taxes—income tax, GST, whatever. State treasurers resist that like the plague because they do not want local government to be funded in that fundamental way. I think if you are fair dinkum about local government being able to do what it is charged to do, it cannot keep relying on getting property taxes from little old ladies and other people, as well as parking fines from others. That is the core issue.

If you are going to have a provision in the constitution relating to local government, it has to be a proper, thought out, well-delineated provision, not this sort of Mickey Mouse approach where bureaucrats in Canberra will be able to dish out money to their favourite councils. You can imagine what will happen. We do not have the same issue here. We have people, certainly from political parties, involved in councils here, but in New South Wales it is quite apparent that some councils are labelled 'Labor' councils and 'Liberal/National Party' councils.

What is going to happen if this referendum gets up is that you will have a government that is pally-pally with their party mates in that state and they will be dishing out grants directly. The state government will have no say in it. They will be dishing out money for projects in particular councils where the people who dominate that council happen to be in the same political party as the government that is in Canberra.

I think this current proposal does give rise to concern. Local government it is too important to be just allocated money through some backdoor mechanism from Canberra directly. It should be considered up-front in a total way. The other concern I have is that once you lock in something like this it becomes even harder to reform local government. We need to reform state and federal government as well, but that is almost impossible because, once you lock them into a constitutional framework, you have Buckley's of reforming them in any fundamental way.

I have used this example before: why do we need 12 senators, for example, to represent each state? It is just not justified. In fact, the honest senators—and I am sure they are all honest—will tell you that they do not actually have to do much as a senator. You can still keep the nexus and the ratio, but you do not need 12 senators in each state to do that. That is just one minor example where you will not get reform because it is very hard once something is locked into the constitution.

That applies, as I say, at state and federal level, and what we are doing now is locking in local government in a financial way with the commonwealth, and it will make it even harder to bring about what I think is necessary reform in local government. The council where I live, Mitcham—just outside my electorate, because the boundary changed—just spent $18,000 on a review by consultants to look at how many councillors and how many wards they should have.

Surprise, surprise! They have rejected the consultants' recommendation which was to reduce the number of councillors from 13 to 11 plus the mayor. The consultants also recommended that there be three wards instead of six, and that has been rejected, so $18,000 down the gurgler. The same council spent $50,000 on legal fees and other associated costs to find out that they already had the power to block off a road so that the people in Craigburn Farm will almost certainly be incinerated come a major bushfire because they will not be allowed out, except through very limited exits. There is $68,000 on two little projects.

What you need in local government, I think, is a reduction in the number in the metropolitan area. I think we should leave the country ones as they are. We do not need 19 councils between Gawler and Noarlunga. We do not need 19 mayors with 19 PAs and 19 cars and all that sort of thing, but all that reform process is going to be hindered if this referendum gets up. I am not saying we should have one council. I do not know, and that is why I have always argued for an independent inquiry.

It will be even harder to get reform in councils. We cannot even get councils to share when they could do a lot more sharing than they currently do. Some of them share environmental officers, some jointly tender, but a lot of them do not cooperate in the way they could or should. What is going to happen now with this constitutional provision is that there will be less opportunity to bring about fundamental reforms that will help ensure that councils are efficient and effective but still retain their local connection. That is one of the fundamental objections.

We see in the media mayors coming out saying, 'Support the yes vote.' One country mayor said that rates will go up if this referendum is not carried. As I said at the start, no-one has ever challenged the allocation of money from the commonwealth to councils now; no-one has ever done it. There will still be money allocated to councils. It will not automatically result in an increase in rates. This process that currently exists, which seems to work, will not be stopped. It will not prevent federal bureaucrats allocating money to councils. That is a furphy, a red herring, that should be dismissed.

I conclude by saying that I do not think there has been a strong case made for what I call a mickey mouse approach to funding councils. If you are going to do it, come up with a proper, decent proposal which is discussed in the community, which enables councils to do what they are charged to do and to be funded properly. At the moment, they are basically the poor relation, getting more responsibilities put on them by state and federal governments and they do not have the financial base to sustain it and to carry out those tasks.

I think this current proposal is grounds for concern and I am not convinced that the public should vote yes. It will be hard to get it up, because it has been left to the last minute; it has not been properly articulated; the public knows little about it; and you have two state governments, New South Wales and Victoria, publicly opposed to it and Western Australia currently weighing up its options. I do not think the chance of it getting up is all that good. There will be $50-odd million down the gurgler, plus all the money spent by councils around Australia. What they are trying to do is get a few crumbs so they can afford projects, and that should be done in a better way, not through this current Mickey Mouse proposal.

The Hon. S.W. KEY (Ashford) (12:15): I wish to contribute to the motion by the Hon. Dr Bob Such that this house notes the proposal to have councils recognised in the Australian constitution. Formal recognition of local government in the Australian constitution is a key objective of the Australian Local Government Association (ALGA), strongly supported by the South Australian Local Government Association (LGA).

The 2009 High Court case, Pape v Commissioner of Taxation, renewed doubts over the federal government's powers to directly fund areas that are not mentioned in the constitution, such as local government, and this has provided the impetus for the ALGA to again seek recognition of local government in the Australian constitution. The case has focused significant attention on the question of funding for local government, particularly on legal impediments that may exist due to the lack of formal recognition of local government at the federal level through the constitution.

The federal Australian Labor Party has committed to a referendum to include appropriate recognition for local government in the Australian constitution at or before the next federal election. In August 2011, the federal government formed an expert panel on the constitutional recognition. The expert panel was asked to identify options for the constitutional recognition of local government and to report on the level of support for such recognition among stakeholders and in the general community.

The expert panel released its discussion paper on 22 September 2011 for public comment by 4 November 2011. Four options were identified for recognising local government in the constitution: symbolic recognition, financial recognition, democratic recognition and recognition through federal cooperation. All South Australian councils have passed motions endorsing the move to achieve financial recognition of local government in the Australian constitution.

The expert panel handed its report to the federal government in December 2011. The panel concluded that the financial recognition of local government, which would formalise the power of the commonwealth to directly fund local government, is the option most likely to gain the support of the general community from all sides of politics. In response, the Australian parliament appointed a 12-member joint select committee to inquire into changing the Australian constitution to provide financial recognition of local government.

Following the findings of the independent expert panel, the committee has been charged with investigating the potential success for a referendum on this issue. The preliminary report of the joint select committee was published on 24 January 2013. The committee recommends that the Australian government hold a referendum at the same time as the federal election. The committee supports the expert panel's proposed form of words for the amendment. It proposes the following amendment to section 96 of the constitution:

…the Parliament may grant financial assistance to any State or to any local government body formed by State or Territory legislation on such terms and conditions as the Parliament thinks fit.

The South Australian government supports initiatives to strengthen the relationship between governments and to provide clarity of powers between all three spheres of government. The South Australian government has indicated its support in principle for the recognition of local government in the Australian constitution. It has maintained its position consistently in discussion with both the LGA and the expert panel.

While this government supports that this house notes the proposal to have councils recognised in the Australian Constitution, we will await the federal government's consideration, including that of the referendum and how things pan out in the next federal stage in the coming weeks. As previously stated, we will properly consider the implications of any Constitutional amendment on the interests of the South Australian community as a whole, not just the government sector or individual councils.

The DEPUTY SPEAKER: The member for Goyder is just returning to his seat.

Mr GRIFFITHS (Goyder) (12:20): I was temporarily distracted; I apologise, member for Ashford, I should have been listening more intently to your wind-up.

Mr van Holst Pellekaan: It is in Hansard.

The Hon. S.W. Key: Read it tomorrow.

Mr GRIFFITHS: No, I was listening before that; it is just that I was distracted temporarily. I will put on the record that, indeed, I worked in local government for 27 years, so I do have some level of background on this.

I recognise that the Adelaide City Council, for example, was established in 1840 and was the first municipality in Australia to be established. I did listen intently to the member for Fisher's contribution and I was intrigued, given his motion, what the words were going to be. I know it stems back to things he has said for a long time about numbers of local government authorities, particularly in metropolitan areas. I was intrigued because, as I understand it, there have been two referendums in the past: 1974 when 52 per cent of the people voted against it; and 1988 when 67 per cent of the people voted against it.

There has been some discussion about the appropriateness of the financial transfers. I am aware of a High Court challenge that has actually occurred on this and that is, as I understand it, part of the reason for why the actions have been taken. There was the original intention for the four key areas that were being looked at, but from the advice I was provided with last week, where a bill was introduced for it in the federal parliament, indeed to provide for it, the proposed law stated, 'A bill for an act to alter the constitution to recognise local government by stating that the commonwealth can grant financial assistance to local government, including assistance for community and other services.' People will then be asked to put a 'yes' or a 'no' in the box on that.

There has been a lot of media on this in recent times, with people ringing the radio about that, and print media. Alexander Downer had an interesting article in The Advertiser; Matthew Abraham, well-known ABC journalist; the MessengerPress has published some information about this, but, indeed, since the 1974-75 financial year, there has been across Australia, from the federal government to local government, some $38 billion worth of funds that has been transferred.

In the current financial year alone there is $2 billion worth of funds that is transferred from the federal government to local government via the Grants Commission which makes the allocation of those funds, based on two criteria, as I understand it: one is more of a population base and one is with regard to road length issues across those council areas too. It has been very contentious, it is fair to say.

The opinion of the states is varied, there is no doubt about that. Some have expressed some reservation without a firm position; some have said 'no'; the Labor Party in South Australia is saying yes. I am aware that federally, as I understand it, the proposal for this referendum came about as a result of discussions that occurred post-2010 federal election between the Prime Minister and the Independents about the forming of government situation and a commitment that was given to them at that time about this being a future referendum question.

It has been the result of two committees of investigation federally in that time since. In the last one, David Fawcett (who is the senator for South Australia and a former federal member for Wakefield) was on that committee and I met with him and talked about that process and what was going to occur and they had been around the whole nation actually talking to different groups and getting submissions. I think at that stage there were about 500 submissions lodged: 250 or thereabouts coming from local government across the nation; 250 from business or individuals; and the opinion was a bit varied in relation to businesses and individuals, whereas local government, of course, have a very strong position on this.

Like the member for Fisher, though, I am rather intrigued in the $1 million that has been allocated by the 68 councils of South Australia to support this. As a person who worked for so long in local government, and for probably 20 of those years worked on budget issues within those councils, I know how finely balanced it is each year to provide services at a reasonable price. So, it is a lot of money for a collection of councils to come up with as part of the message that they want to communicate to people.

Some people are upset by that and some people will probably recognise that it can occur. It is tied into the fact that federally $50 million is committed to this effort, which is an enormous amount of money. I understand that part of it is for the communication of the message behind the reason for the referendum to occur and not just the total absorption of the costs that will be part of that, but $50 million is big money, no matter who you are. It can provide an enormous range of services and infrastructure across the nation and in the individual communities, so it is a significant investment to make and it has to have a very sound basis.

I heard in my local government days, when in Canberra for a Local Government Association conference, Professor Dean Jaensch, who spoke quite passionately in support of this—that is my recollection of what he was doing at that time—and I know that he has held this position for some time and is respected across all sectors on the historical perspective and information he brings to issues. It is an issue that will divide people a bit between now and 14 September. It will be interesting to see what is the result.

The member for Fisher referred to the fact that Australians traditionally do not support referendum changes. I think only 14 have been supported and a much larger number than that have been rejected in the past on any issue on constitutional change. It shows indeed that our forefathers, who in the late 1890s in developing our constitution overwhelmingly did a great job, because it has served us well in that time. As a nation we have grown since then, so in the 115 or so years since it was near being finalised, and in 1901 when Federation occurred, has there been a chance for review?

What resources does it take to ensure that review puts in place the best possible form that will ensure that Australians are serviced in the way they should be? I note that this motion is based purely on the fact that this house notes the proposal to have councils recognised in the Australian constitution. On that basis I am prepared to indicate that the opposition acknowledges that and supports the intent of the specific wording of that motion. It will be interesting to see the vote held on this.

The member for Fisher was quite strong about his concerns about the costs and the timing and his push for an amalgamation of councils to occur in the future. Australians are the people charged with the final decision on this. I have to believe that democracy and its principles are very strong and that they are the ones who will get it right. Clearly in 1974 and 1978 they voted against it. It will be interesting to see what the current generation of Australian voters actually say.

Mr BROCK (Frome) (12:27): I would like quickly to contribute to this. Thank you to the member for Goyder for advising us of the wording of the motion going before—is that the referendum question?

Mr Griffiths interjecting:

Mr BROCK: That is good, because one of the issues I had was that we are going to a referendum. I also congratulate the member for Fisher, the Hon. Bob Such, to note the proposal to have councils recognised in the Australian constitution. We are discussing something here and we are noting the proposal; however, we did not know the wording of it. I am glad I have that wording now because it influences my thoughts. I respect councils because I think they are a very integral part of our communities.

I have made quite clear in this house and everywhere else that councils are the closest to the people in regional areas. They know and feel what is happening in their communities, and that is no disrespect to the state governments, but certainly in the rural areas we understand closely and passionately what are the concerns and issues confronting people out there, and the councils themselves are living in the streets, and so forth.

For the South Australian Local Government Association to spend $1 million from state councils as part of this proposal I find very intriguing, because as a person who has spent nearly 20 years on local councils, the last six years in my previous role as mayor of the Port Pirie Regional Council, I find that it is a lot of money as I know how hard it is out there for councils to balance their budgets. They have ever increasing overheads, specifically with the road infrastructure, which was fixed up many years ago by state governments but with no maintenance, and now councils are wearing that impost.

One of the things I find intriguing, as the member for Fisher has indicated, is that no-one has challenged the right—the member for Goyder said there is a challenge there—or really said that the commonwealth cannot give money directly to local councils. In fact, as the member for Goyder indicated, they already do that with the commonwealth grants for communities.

Those grants are worked out on various scenarios, including the social and economic situation of each council, unemployment, income and so forth. So, that is already done. Councils get road grants through the federal government to go towards road infrastructure. Just recently, the Clare & Gilbert Valleys Council in my electorate was successful in getting $410,000 from the Regional Development Australia Fund. The Independents in the federal government got some money put into that fund for regional infrastructure projects. The council got $410,000 towards repairing the Rattler Trail and also repairing some bridges on the Rattler Trail and on the Riesling Trail.

Even my own council in Port Pirie was awarded just over $2 million for a waste management facility and, due to various issues or reasons, they had to give that $2 million back. That money was given to build a waste transfer facility, but they did not end up getting that money, so the ratepayers themselves now have to come up with that $2 million. Again, there is money coming through from the commonwealth. The Port Pirie Regional Council now has a $5 million application before the Regional Development Australia Fund to upgrade the CBD area.

Everything is working fine at the moment but, when the referendum is held, it will be interesting to see the wording, which is very important. I will be looking very closely and with anticipation at the results of the referendum. As the member for Goyder said, in 1974 and 1988 there was a rejection of the referendums. In closing, I will wait for the results of the referendum, but I am concerned that $1 million of ratepayers' money in South Australia was spent on this referendum. I also reinforce my belief that local councils are an integral part of our communities and I will support them in whatever way I can.

Debate adjourned on motion of Mr Pengilly.

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