By Paul Hemsley and Julian Bajkowski

New South Wales Premier Barry O’Farrell has warned that the federal government could abuse any new powers to directly fund local government programs after the Joint Select Committee on Constitutional Recognition of Local Government preliminary report recommended a referendum on the topic at the next federal election.

“We don’t believe that it should provide the keys to federal governments to directly fund local councils and bypass state government process,” Mr O’Farrell told Government News.

The entry of the NSW Premier into the debate comes as a number of states continue to hold out on formally indicating their position until  the wording of a referendum question is finalised by the committee and officially put to them.

Mr O’Farrell said that although he was “always happy” to support a federal amendment that recognised local government, such recognition shouldn’t undermine existing state powers.

“We have a federal system and any referendum on recognition of local government should recognise local government but shouldn’t be used as a backdoor means of trying to reinvent the Federation to remove the law of the state when it comes to local government,” Mr O’Farrell said.

Mr O’Farrell’s heavily qualified support for a federal amendment contrasts with Western Australian Premier Colin Barnett’s outright rejection. Mr Barnett’s submission to the Joint Select Committee argues that recognition through a Constitutional amendment will reduce or impact state powers.

The NSW Premier is also clearly worried about his state powers being eroded and Canberra gaining a whip-hand.

“Our concern that we’ve expressed about Constitutional recognition referenda relates solely to potential abuse by the federal government to bypass the states,” Mr O’Farrell said.

Mr O’Farrell said local government across the state was established by an act of the NSW Parliament and the government intends to deliver on its “committed partnerships” with local councils.

However those partnerships have not always proved easy.

Late last year the O’Farrell government was accused of breaking a key election campaign promise of not forcing council amalgamations after his Local Government minister Don Page warned it was both unsustainable and not an option to retain the existing 152 councils.

However money can speak louder than words.

As the federal government already funds infrastructure projects for local councils through the Roads to Recovery program, Mr O’Farrell said there will always be “exceptional programs” in reference to the scheme.

“In a sense, the temptation at the federal level to directly bypass states isn’t necessarily party, political or one-side,” he said.