Is Local Government going to be part of the solution, or part of the problem, as the Commonwealth responds to a looming budget blowout and the nation’s first recession in 29 years?
As councils step up to create new jobs in parallel with minimising rate rises (a tough ask) are we to be assisted by Federal Infrastructure grants on one side and mugged on the other with cuts to our Financial Assistance Grants?
With the coronavirus pandemic under control and lockdown measures being eased, it is likely the Federal Government will soon devote more of its energies to budget repair – if that shift hasn’t already started.
It is not just a matter of terminating support packages like the $130 billion JobKeeper program at the end of September. The Government will also look to reduce recurrent spending across several programs such as Financial Assistance Grants to local governments.
The horror Abbott/Hockey Budget of 2014-15 saw the surprise implementation of an indexation freeze on our primary grant stream – removing, but their estimates, nearly $1 billion from our sector.
This hurt regional and remote councils the most, forcing cuts to core funding, diminishing local service responses, and blowing out infrastructure backlogs.
Such a measure may be explored again as preparations for Budget night on 6 October ramp up.
It’s against this backdrop of potential new financial constraints on councils that our Board of Directors finalised ALGA’s Strategic Plan 2020-2023 last week.
Mindful of the uncertain fiscal policy outlook in Canberra, the board decided that “preserving” FAGs as the major source of Federal funding needed to be spelled out explicitly.
The Strategic Plan highlights the imperative of restoring FAGs funding to a level equivalent to 1 percent of Commonwealth Taxation Revenue – as it was when the current grant structure was established.
ALGA’s immediate call is for the government to restore the FAGs funding lost in the 2014-15 indexation freeze.
This unambiguous goal – and there are more in the document, including an increase in R2R funding of $800 million per annum and calling for a disaster mitigation fund of $200 million per annum over four years – is a departure from the 2017-20 strategic plan.
That document’s objectives were couched in far more general terms.
However, we cannot be under any illusions about the possibility of local government being touched up by expenditure review committees or razor gangs.
In South Australia, for example, the Marshall Government’s local government reform legislation, now before State Parliament, includes a de-facto form of rate capping. It is their second attempt to override local democracy and decision-making.
Bear in mind, the measure is being sold to the public as “providing council rate relief to ease cost of living pressures”.
The fact that the largest cost increases for councils have been state government charges, or that councils are facing their own unprecedented financial pressures from bushfires, drought, and coronavirus has, alas, failed to register with some of our colleagues in the state arena.
With room to manoeuvre on rates and charges now limited by community sentiment – and likely to remain so a while – preserving, protecting, and bolstering FAGs must assume greater importance for ALGA (and the state and territory organisations).
The new Strategic Plan reflects that sentiment.
It also reflects the reality that other issues impinging on local government activities are in a state of flux too – awaiting the resolution of the new policy coordination structures that will flow from the demise of COAG and the rise of National Cabinet.
These include implementation of waste export bans, disaster mitigation funding, energy and efficiency reforms to limit greenhouse gas emissions, building resilience to climate change impacts at the local government level, and further road infrastructure initiatives to enable greater freight efficiency and safety gains.
On the former, ALGA will forcefully advocate for the start of a circular economy, including mandatory product stewardship for all difficult-to-recycle products and Commonwealth incentives or penalties for manufacturers of these problematic items.
The significant on-shore job creation opportunities (and profits) from a stronger waste and recycling system demand we all put our shoulders to the wheel to achieve real change in this area, because we need those new jobs.
Further progress on climate change mitigation and adaptation is equally vital.
That’s why we’re advocating for a Local Government Climate Change Partnership Fund of $200 million over four years to support councils.
Ranging from lower energy lighting to local power generation to higher levy banks and wider fire breaks, every dollar spent on mitigation and adaption will create new jobs and protect existing ones.
The need for elected council members, senior LG managers, Mayors, Chairs and Presidents to step their lobbying on behalf of local communities (particularly of MPs and the main players in intergovernmental forums) has never been starker – local jobs depend on it.