The president of the Australian Local Government Association, Paul Bell, has welcomed the Federal Government’s preparedness to tackle inter-governmental financial relations as part of its Tax Review.
“The decision of the Federal Government to look at the full tax system – Commonwealth, state and local – underlines what ALGA has been saying for some time, you cannot treat each sphere in isolation,” Cr Bell said in a statement.
“The recent study by the Productivity Commission into local government’s capacity to raise own source revenue ignored the fact that local government taxes and charges are part of a whole of government approach to raising revenue and providing services.
"While Local Government has been doing its bit to raise revenue, the real problem has been the tax sharing arrangements between local government which is called on by communities to provide an enormous range of services and the Federal Government which raises vastly more revenue than it spends.
“The Federal Government’s commitment to collaborative Federalism is not only about coordinating program and service delivery but is also about adequate resourcing of those services and programs. We have seen reforms proposed in the areas of Specific Purpose Payments between the Commonwealth and the states and now we need to see reforms to Commonwealth funding for local government.”
In making his comments, Cr Bell acknowledged the importance of the general funding support provided to local government by the Federal Government through the Financial Assistance Grants (FAGs).
“The Government has announced that it will provide $1.86 billion in FAGs to local government in 2008-09. This funding is welcome and makes a vital contribution to assisting councils to deliver the services and infrastructure required by local communities," he said.
"Unfortunately however, all councils face significant and increasing costs pressures in this time of economic growth and the relatively low rate of increase in the grants will mean that the many councils will slip further behind.
"It is for this reason that ALGA has called for more equitable tax sharing by reforming the FAGs so that they are maintained at a constant rate of one per cent of Commonwealth tax revenue.”
Other initiatives in the coming year which the Government says will strengthen the role of local government include establishing the Council of Australian Local Governments and consulting with local government, states and territories on the process for constitutional recognition of local government.
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