President’s Column – 9 April 2020

ALGA President David O'Loughlin gestures at a lectern

A special videoconference of the ALGA board today reflected on how Local Government is stepping up and reinventing itself to play a key role throughout the Covid-19 crisis and beyond, despite facility lockdowns, revenue losses, imminent rate relief impacts and external calls for more spending and higher debt servicing. Three main principals emerged from the meeting:

  • The ability of Local Government to respond to the crisis and drive recovery will be proportionate to its financial capacity relative to other levels of government;
  • Local government’s small contribution could be significantly leveraged with cooperation from the other two levels of government; and
  • A recognition that the Commonwealth has the greatest level or capacity to assist other governments. They collect 80 per cent of the nation’s taxes, control the Reserve Bank, and have perpetual taxation powers, unlike Local Government which must set its taxes each and every year and is rate-capped in our two largest jurisdictions.

The forum recognised that the most valuable (and appropriate) form of Commonwealth support in this instance is via additional Financial Assistance Grants. Not a pull-forward which most Councils would have to bank to fund next year’s operations.

We are calling for an extra grant, equivalent to six months’ FAGs. This could be spent right now on a range of needs from rate rebates to affected businesses, replacing lost operational revenue so more staff could be retained, to funding the first phase of stimulus spending.

This is the request we have discussed with the Federal Government and will formalise shortly.

This week, Federal Parliament passed the Morrison Government’s omnibus coronavirus economic response Bill – after refusing an Opposition amendment that would have extended the JobKeeper payment scheme to cover council workers.

The Australian Local Government Association worked incredibly hard for an outcome that would have ensured council employees whose facilities had been shut down or revenue base fundamentally eroded were eligible to receive $1500 per fortnight in income support for six months.

So far, hundreds of people employed in councils across Australia have been stood down, with more certain to follow.

Indeed, based on advice from our member associations, ALGA calculates that up to 55,000 workers in local government are at risk of being laid off through no fault of their own.

The consequences for vulnerable and dependent communities – and for local economies – are obvious.

We also strongly argued for changes to the $1.6 billion childcare support package – which might have offered some relief to council-run childcare centres but will actually leave councils out of pocket because it will replace the child care subsidy which makes up 50 per cent of their revenue.

However on this front we have had a win with the Federal Government today announcing an alternative rescue pathway for childcare centres not eligible for JobKeeper, including ones owned or operated by councils. Contact your association office or ALGA for details.

The Federal Government has made clear it won’t shift its position that councils are “creatures of state governments”. We firmly rebut this diminutive language and their position, with the Commonwealth inventing and assuming responsibility for our major grant stream in the early 1970s, tweaking it in the ’80s and expressly choosing to retain control of it in the “GST wars”.

Since then they have added direct funding for roads, community facilities, blackspots and bridges. To ignore this history and responsibility at a time of need is convenient at best, abrogation at worst.

We will continue to remind the Commonwealth of their responsibilities, and the opportunities our long relationship presents to keep local economies alive and to kick-start the economy to drive recovery.

In the interim, this means your association will now have to seek assistance from your state or territory governments for the equivalent of JobKeeper or other funds to survive as your operational resources dwindle.

We also cannot (and should not have to) accept the woolly premise that financially constrained councils will manage by “taking a second look at their balance sheets and redeploying staff in other areas”. It is not that simple.

Swimming instructors can’t drive graders. Strong balance sheets are meaningless if you don’t have enough cash to pay the loan back.

Council reserves are for specific future purposes, locked up under mountains of constraints and legislation – and I don’t yet see the Federal Government dipping into its own much more fuzzy Future Fund, valued at $166 billion.

Nor is this a time for the old political game of cost-shifting.

We are better than this. Our communities need us and they want all our governments to recognise their unique roles and responsibilities and work together for the benefit of the nation.

If your Council is anything like mine, it has been turning itself inside out to continue to serve, to redeploy, to inform the public, to reach out, to help – and will keep doing so as long as you can.

You will agonise over relief packages and what you can cut from next year’s budget to fund the relief, sustain the lost income and yet also rise to the call to spend more on construction and infrastructure projects to drive the economy.

It’s a difficult balancing act, and I commend you for standing up for your communities and rising to the task.

I wish you well, and all the very best for a safe and holy Easter weekend. Churches may be closed, but we can console ourselves with chocolate!

Mayor David O’Loughlin
ALGA President