It’s Referendum Time, Baby by Kathleen Feain

Some of you reading this issue are virgins – election virgins that is! The prospect of the looming Federal Election may make you break out in a cool sweat and shivers. Not only do you have to evaluate multiple policies, dodge party rhetoric and ultimately choose who to vote for, this year you also have to decide whether local councils should be recognised in the Constitution. That’s right, folks – it’s referendum time.

What is the referendum about?

Despite local governments existing in Australia for over 160 years, the Constitution does not recognise them or provide for the Federal Government to fund councils directly. While local governments receive up to $2.7 billion in Financial Assistance Grants from the Federal Government annually, 80 per cent passes through the states before being given to local governments. This leads to delays in funding being received, confusion over the origins of the grants and increased administrative costs, estimated to be up to $18 million a year.

To improve efficiency, the Federal Government has increasingly opted to fund local governments directly, representing 20 per cent of annual payments. A successful referendum would recognise and protect this direct funding by amending Section 96 of the Constitution to read: Parliament may grant financial assistance to any state or local government body formed by or under a law of a state or territory on such terms and conditions as the Parliament sees fit.

Arguments for the YES vote.

The Australian Local Government Association (ALGA), founded in 1947 and representing 560 local governments across the country, has been the primary body responsible for raising the profile and concerns of local governments at a nation level. Each local council, while diverse in its population and geographic size, provides around 150 services to communities using only three per cent of taxation revenue, raised through fees and charges and the only local government tax: property rates.

ALGA raised the need for a referendum regarding constitutional recognition following two recent High Court decisions – the Pape Case and the Williams Case – which put into question the constitutional validity of the direct federal funding of local government programs. Without constitutional recognition of direct federal grants, federal funding of valuable programs such as the Roads to Recovery Program and the Regional and Local Community Infrastructure Program could be put at risk through future High Court challenges.

The benefits of direct funding stems from the value of subsidiarity, a principle holding that the functions of government should be exercised as closely as possible to affected citizens. In addition to reducing delays and added cost, direct funding ensures that councils are able to respond quickly and effectively to local community needs. This was evident during the global financial crisis, with Australia effectively avoiding recession due in part because of the direct funding of 3,300 small community infrastructure projects which were delivered by local governments.

Arguments for the NO vote.

With local governments established under state and territory laws, state governments are largely opposed to constitutional change, as they believe it blurs the lines between the three levels of government. State governments and opposing politicians have declared that a successful referendum would mean that power is taken from the states and handed to the Federal Government in financial relations. ALGA has repeatedly contradicted this position in its press releases and parliamentary submissions by making it clear that through seeking recognition, local government does not seek to break or change the relationship between itself and the state and territory governments.

However, this means that Constitutional recognition of direct federal funding would not seek to protect councils from the disempowerment that comes with forced amalgamation, boundary changes and dismissal by state governments. Cheryl Saunders, from University of Melbourne law school, is an advocate for the No vote as she believes that local governments should not settle for the proposed constitutional recognition which she describes as “limited, isolated, constitutional change” which doesn’t recognise and respect local government as sphere of elected government.

Likelihood of it passing?

Former Prime Minister Robert Menzies once said “to get an affirmative vote from the Australian people on a referendum proposal is one of the labours of Hercules.” Mind you, he did declare this in 1951 after the rejection of his attempt to ban the Communist Party – yet it is still relevant given that only eight out of 44 referendums have passed since Federation. The low success rate of referendums may have something to do with the stringent guidelines outlined in Section 128 of the Constitution. Any proposed change must be initiated and passed in the Commonwealth Parliament, with any change approved by a majority of voters nationwide as well as a majority of voters in a majority of states. This isn’t necessarily a bad thing, however it means that for a referendum to succeed it must capture the public’s imagination. Unfortunately, this referendum has failed to achieve the much-needed buzz and excitement, despite the fact that it will be the first referendum to be held in 14 years.

The issues surrounding federal financing of local government aren’t well understood, particularly since they are quite technical and rooted in dense political and legal history. Despite advocates for the Yes vote having $20 million in funding to assist their campaign, public awareness and knowledge of the referendum is low. However, the Yes vote is not yet a lost cause. It has received a lot of political support, particularly since the Julia Gillard Government agreed to hold this referendum as part of a deal with the Greens and Independents in order to form a majority government following the 2010 election.

Why should I care about local governments?

Perceptions of local council are typically restricted to the traditional roles of services to property – roads, rates and rubbish – with many Australians unaware of the major roles that local governments play in their wider community. Due to amendments to Local Government Acts in various state and territories, local authorities have assumed responsibility for many more social issues including: health, alcohol and drug problems, community safety and planning. In addition, councils have been active in the application and monitoring of regulation in development and planning, public health and environmental management.

While there is no mention of local governments in the Constitution, this is not to be taken as a sign that they are of low importance or value. Given that the focus in 1901 was to create a strong federation by bringing the states together, local governments were viewed as periphery to this goal. Since federation, local governments have been regarded as a residue for which the states are responsible, meaning that states can determine the functions and responsibilities of local government, as well as forcibly amalgamate and dismiss without reasonable process or allowing for councils to appeal unfair treatment.

Finally, you should care about this issue as voting in a referendum is compulsory. Voters need to tick a Yes or No box to agree or disagree to the proposed question. Happy voting, people!

(Note: due to the September 7 election date the referendum will be put on hold until the next term)

Kathleen Feain


Catalyst has been the student publication of RMIT University since 1944. We may be older than your parents but we’re still going strong!

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