A fair share of the pie

Published: 27th July 2018

By LGAQ Media Executive Craig Johnstone

No level of government in Australia is more constantly reminded than local government of its duty to reflect the aspirations of its community.

There is no better indication of that than its name: LOCAL government. Those who run and work for the local council live locally, contribute to the local economy, see the local doctor and often send their kids to the local school. As a result, they are far more visible than their state and federal counterparts will ever be, particularly given the practice of some in these other spheres of government to want to live away from where their constituents call home.

According to the Australian Local Government Association, councils nationally employ just under 189,000 Australians (around 10 per cent of the total public sector), and own and manage non-financial assets with an estimated written down value of $354 billion (2013-14).

They do this and more while raising just 3.4 per cent of Australia’s total taxation revenue a year through rates and charges and looking after more than 25 per cent of all the nation’s public infrastructure. That’s right, just 3.4 percent of the total taxes Australians pay is made up of council rates. The biggest chunk is collected by the Federal Government (83 percent) while the states collect the rest.

Nationally, rates make up 90 per cent of council revenues, meaning that, for all the (usually uninformed) talk of wasting money, their communities would be in a sorry state if they did not strive to invest ratepayer revenue where it is most needed. The other 10 percent comes from grants. Yet the grants are extremely important to all councils, from those with a low rate base (in indigenous councils in Queensland, that rate base is zero) to those experiencing high growth and burgeoning demands on services and infrastructure.

All of this explains why councils are insistent in lobbying for a fairer go in how grants revenue is distributed in Australia. And while it is sorely needed, what they are asking for is comparatively small.

The most crucial decision Canberra could make in favour of local communities is to ensure their councils gain access to grants equivalent to at least 1 percent of Commonwealth taxation revenue each year.

Currently, they access about half of that, mostly through the Financial Assistance Grants system. The last time it was anywhere near 1 percent was when Bob Hawke was prime minister, yet the community’s expectations of the level of services their local councils should provide is nowhere near what is was two decades ago.  

They say all politics is local. What a pity the funding is going the other way.