Rates and Taxes: A Fair Share for Responsible Local Government

This major Inquiry into Local Government and Cost Shifting has addressed not only the matter of cost shifting but also revealed the underlying issues relating to governance arrangements between the three spheres of government. 

I am delighted that this report is a unanimous report of the House of Representatives Economics, Finance and Public Administration Committee.

There is no doubt that local government has, over a number of years, been on the wrong end of cost shifting largely by State governments. The Commonwealth Grants Commission has recorded that over the last 25 years the Federal government has, in real terms, progressively increased its contribution to local government while State contributions have not grown.

However, the overriding message is very clear. To fix cost shifting on the part of all levels of government, we need to review our governance arrangements and the way our taxes, including rates, are spent. Cost shifting can be seen as a symptom of the current weaknesses in our system and it is the responsibility of all spheres of government to address the matter.

As the Committee heard, the duplication and coordination costs of all levels of government in Australia under the current arrangements probably amount to more than $20 billion per annum.

The report identifies the current roles and responsibilities of local government and the growth of its functions. The extent and effects of cost shifting are detailed as are the major problems facing local government's deteriorating infrastructure. The benefits of regional co-operation are explored and the history of Federal government funding of local government is examined and a new approach, which could resolve the outstanding problems with the current arrangements, is recommended.