Towards a two and a half tier system:
National and Local Government
This paper will argue that the replacement of federation needs to be discussed widely and that the Federal Government and the educational institutions, especially the universities, have a responsibility to alert the people to options. Regrettably, for the moment at least, they are failing utterly in this task. Governance reform, with the exception perhaps of health and hospitals, is low on the list of public policy priorities of the major parties.
The paper favours the strengthening of local government rather than the creation of new regions, as new political units, which some writers have proposed in recent years, varying from around 20 to as many as 99 regions. In these proposals local government is either treated as a third level of a unitary state or removed altogether as a level of Government. I will not discuss these several proposals although the existence of regions, specifically as adjuncts to both local and national governments, is regarded here as undoubtedly of vital importance to a construct that would replace federation. At the outset I should also explain that this is not an academic paper that concentrates of developing a thesis with a great deal of recognition of the contribution by other scholars. It is directed to the average citizen who has an interest in these issues, fortunately a growing number. Scholars can glance at a conference paper I presented at a Tenterfield conference on federalism in October 2008 to satisfy their academic curiosity if they so wish. See:
http://www.griffith.edu.au/__data/assets/pdf_file/0014/206510/tinkering-with-federalism.pdf
Local government is the very level where local community democracy in an otherwise complex society can and should be practised. However, for various, mostly historical reasons, it has had a chequered career, some have argued it was created as "afterthought", many would agree that it has never come into its own thus far, and that federation blocked it from flourishing. Could it be that its time has come?
The problem of centralisation of decision-making is currently still predominantly located in state governments, not in Canberra. The feds collect most of the taxes - about 82% - so the fiscal imbalance is huge but there is no point in putting the clock back. This is not practical anyway. Australia needs a complete reorganisation that provides effectively for decentralisation away from state governments dominated by the woes of the metropoles. Superior decentralisation means more power to local government, as well as to regions, but what actually is regional decentralisation?
The concept of region has many aspects. Therefore several valid answers exist depending on what criteria are used. Flexibility is essential. Attempts to force regions into one dimension, the geo/political dimension, as a principal building stone for a new constitutional construct is fraught with problems. On the other hand, those who argue in favour of a two-tier structure based on a national government and much improved local governments favour regional constructs primarily as adjuncts to local governments. This allows for much greater flexibility in that specific needs for regional administrations, which can be functional/departmental, biological, environmental and/or people oriented, can be accommodated more effectively. The voluntary organisations of regional councils already reflect this thinking. There are 64 of them with over 400 Councils participating. Secondly, at the national level functional/departmental decentralisation (e.g. health, education, IR, etc) can follow best practice of what already is in place in some states. In addition to this we need effective specific city government as a special category of second tier. The problems of the metropolis are so unique that they cannot be left to financial weak state governments any longer. Remember that many well-decentralised states are NOT federations. One type of response to ending federation is that centralisation will take over and decentralisation will suffer. This would be the wrong kind of reform. It is not what is promoted here. It is also far fetched to argue that centralisation in Canberra would be "inevitable". However, to achieve superior decentralisation a pro-active approach will be essential. To hear senior planners in Sydney preparing for a city of seven million by 2050 reflects a totally undesirable mindset that needs to be changed. Little or no consideration is given to the need of moving the population to regional Australia.
All Australians should reflect on this. The state of knowledge on matters of governance structure is inadequate, but surely this can be rectified. The Government itself, educators, public and commercial broadcasters and the media should have a major role to play to rectify this. Why is THIS not part of Rudd's "education revolution"? Especially the public broadcasters, rather than over-concentrating on "current affairs", which means discussing/highlighting issues within the parameters of current system of governance, should run public education programs on governance that includes discussions outside the square. It should include comparative studies that are not tied to any kind of ideological framework or interest group. It is valuable to look at the place, functions, role and financing of local government in other countries and to assess their place in both unitary and federal systems. Local government outside the metropoles need to be prepared to provide employment and accommodation to a much larger number of people than has been the case in the past. This cannot be left to the market place alone but, of course, it will play a role in this. However, the provision of very considerable new infrastructure surely is largely a task for the national government, in part via local government.
Local government in a very weak position now.
Professor Percy Allan, in a presentation at a Conference on Federal-State Relations held in October 2008 in Tenterfield, considered The Future of Local Government in the Federation. He started with the aspect of sustainability of Councils on the basis of a 2008 Report by FiscalStar, a research organisation. They found that "35 of the 100 largest Councils in NSW needed to increase their rates, fees and charges by between 80% and 200% over the next 10 years or severely cut their services in order to regain financial sustainability. Another 19 Councils also would need "drastic action because their financial sustainability is marginal". Eleven of the 18 regional coastal urban councils were unsustainable. Only three were sustainable. Ten of the 22 outer-metropolitan Councils were unsustainable.
"The heart of the problem is that most Councils have a huge backlog of infrastructure (roads, storm water drains, buildings, etc) that has passed its used by dates and needs renewal, not just patching to safe, sound and sightly". His Consulting business "Review Today" estimates that nationally, excluding Queensland, the renewable backlog is $10.2 billion.
Weakness of many Councils are (a) heavy reliance on tenuous grants from other governments; (b) little or no spare cash to meet emergencies and special needs; (c) expenses growing well in excess of underlying costs, and (d) insufficient capital works spending to renew ageing infrastructure.
Allan emphasised that "the elephant in the room is infrastructure". He mentioned as an example to tragic death of a family of five in 2005 when their motorcar plunged into a huge hole in the old Pacific Highway at Somersby on the NSW Central Coast. A rusty storm-water steel pipe culvert under the road had collapsed because it had not been renewed when it should have been. Allan's paper provides evidence that the position local government finds itself in is fast approaching a major crisis and that this seems to be a pre-requisite for action. With action is meant, according to Allan "a revamp of federal and state funding".
Strengthening Local Government
Allan also makes important comments on the "under-sized nature" of local government claiming that the relative capacity of local government in Australia to address local needs is much smaller than most people think.
Citizens appear to believe that local government constitutes about 10 to 30% of the Australian public sector. However, in reality local government accounts for only about 6% of general government outlays and 3% of taxes in Australia. In 2006 local government expenditure as a share of GDP was only 2.3% compared with 15.1% in Japan, 12.9% in the UK, 12.7% in the European Union and 8.5% in the USA (Dexia, 2006).
Dr. Mark Drummond of Beyond Federation (quoted by Allan), who has done very extensive research on this topic (see Drummond 2002, p. 44, for example), found that, in 2000, local government's share of outlays was then 6.4% in comparison to
* Other classic federations: 17.7% to 26.2%
* Other type of federations: 12.4% to 33%
* Devolved unitary systems: 26.1% to 74.2%
* Centralised unitary systems: 10.4% to 25.5%
Drummond also found that the average residency size of local governments units (or the lowest tier of government) in other countries is generally much smaller than in Australia. To the question: "Should our Councils be bigger?"
Allan responds that people who argue for that are "misinformed". He claims, "there is in fact little evidence in Australia or elsewhere that smaller local government units necessarily suffer diseconomies of scale. Where small scale is a handicap it can often be overcome using shared services centres or outsourcing functions to specialist providers". An exception here is small Councils (under 8000 in rural areas).
Allan concludes his paper by with references to surveys of 2008 which clearly indicate that (a) a significant majority of people want changes made to the federal system (b) a majority want state Governments to disappear (c) a majority want most decisions to be made at the lowest level of Government.
Still, also a large minority wanted three levels of government.
From these observations one can draw some pertinent conclusions. There is huge scope and ambition to strengthen local government amongst the public, financially, and in terms of powers and functions. Secondly, forms of regional administration to assist clusters of local government - as is done now by ROCs - are appreciated by the public. The principle of subsidiarity (decentralisation of decision-making in governance to the lowest level possible) is also appreciated. Amalgamation of Councils, in the main, has little support.
Allan also examines research about the comparatively moderate attractiveness of regions for citizens. While several theorists favour many more regions than the existing six states (only 9% want more states) the pull of the big cities is still considerable. Allan demonstrates that the quality of life in many metropolitan suburbs is regarded as higher than in most regional centres. Research based on quality of life criteria found that of the top 25 top communities nationally 20 are in major cities. Obviously, to turn that around requires a major shift in public policy orientation. Rather than thinking "How are we going to accommodate the big growth expected in the metropoles?" - a big city-oriented perspective - a more progressive view would be "What can we do to make regional Australia more attractive to more citizens?" The crisis is here in fact: a massive imbalance in the expenditure of resources between metropoles and regions. Neither major party has a credible public policy to address this issue. As with so many other issues the short electoral cycle and the concentration of voters in the metropolitan electoral districts have created a vicious circle. Thus far neither major party has been able provide a circuit breaker even though the health reforms by the Rudd Government may be a first step. This is one further reason why the electoral system, based on single-district constituencies and the preferential variant introduced in 1919, reinforced by compulsory voting (1924), have to be challenged by reformist newcomer.
It has been argued by some that Australia is lacking a sufficient number of regional centres, cores that would justify the creation of several regional governments, e.g. by David Bofinger (Beyond Federation), a few years ago now (2002). Bofinger also recognised the growing problems of the metropoles and the poor distribution of the population. The table below includes a population distribution of Australia's settlements compiled by Bofinger using 1996 Census data:
Population Range of Settlements
Total Population of Settlements Percentage Share of Total Population
Less than 5K 3,663K 20.5
5K to 10K 634K 3.5
10K to 29K 692K 3.9
20K to 40K 888K 5.0
40K t0 80K 617K 3.4
80K to 160K 537K 3.0
160K to 320K 1,030K 5.8
320K to 640K 323K 1.8
640K to 1.28K 2,075K 11.6
1.28M to 2.56M 1,291K 7.2
2.56M to 5.12M 6,142K 34.3
Australian total 17,892K 100
Bofinger concludes that "the relative paucity of medium-sized towns - from which we might hope to draw our regional cores - is striking. And the natural consequence is the [Max] Bradley complaint: that regions would be made up of too many small towns, with no common interests" (see also Bradley 2003).
A very comprehensive breakdown of the population of cities and towns in Australia was done by Dr. Mark Drummond in his 2007 Ph. D Thesis. In Appendix 2D he outlined the number of towns that might be described as medium-sized towns (based on the 2001 census).
The Census category "Other urban" (1.000 to 100.000) was counted as 4.18 m. This would include most of the medium sized towns but also many smaller towns, smaller than, say, 20,000 (see Table 2D-4 on p. 2D-3). The total number of the cities/towns in the category can be read from another table (2D-1 on p. 2D-2).
For 20,000 to 100,000, quite typically medium-sized towns, there are 82 such towns. If we include 100,000 to 200,000 add another 14. We might estimate that over 4 m live in such non-metropolitan cities and towns at present. With a determined Government effort to decentralise population - and employment opportunities - it should be possible, at least, to double the population in those cities in the next 40 years and to find room for an additional 1 m. in smaller towns or new towns. It'll be a question of political will more than anything else. This would greatly unburden the large cities. Many would argue that there is no need for Australia to grow by more than 5 m in next 40 years. We don't really have to grow to 36 m. as was reported quite recently.
Whether or not several of these cities are suitable to function as regional cores is quite another matter. In some cases yes, in other cases, along long coastlines, they may be not. Population density is not the only factor that makes for regional identity. There are several other factors, factors which can often be best determined by clusters of local government Councils.
The elevation of local government from Cinderella appendix status in the states - not even third level of government proper - to second elected level of government presents a radical change in quality and status. It would require the national government to acknowledge the great potential for local government to decentralise Australia as well as empower local communities. This would be particularly true for non-metropolitan local government jurisdictions of course. The corollary of this view also includes the emergence of metropolitan government as a special category of that second level. This is a separate issue that requires further consideration. In addition constitutional recognition of a flexible mezzanine type of regional administrations would need to be contemplated at the same time. This brings us to recent moves in the Federal Parliament to recognise local government in the current structure and suggestions to create a Federal Local Government Act. The ramifications of these developments are constitutionally challenging to say the least, however welcome, as constitutionally local government is a state matter. Attempts to gain federal recognition and support for local government by the Whitlam Government were thwarted by the Coalition parties in 1974, as a claimed threat to federation, and again in 1988 when another referendum with that intent (one of four), was blocked by the Coalition parties.
Michael Cranny, formerly of Western Sydney Regional Organisation of Councils (WSROC), now Deputy Convenor of Beyond Federation, has contributed an interesting proposal (November 2006) to encourage recognition at federal level and to introduce a federal Local Government Act. One crucial question he posed was "Should the Federal Government use their new found powers for the decentralisation of all areas of state control?" Why could this question be asked? It was the result of the High Court decision to rule on the validity of the Howard Government's controversial and contested Industrial Relations legislation (Work Choices). The Court decided that that legislation was valid by ruling that the Constitution's Corporation power (Section 51 (xx) would override State rights to something like 85% of all corporations, including local government corporations. The outcome of this case is seen by many as opening the way for the federal government to take over many state functions thus achieving something that could not easily be achieved by constitutional amendment provided for under Section 128. Certainly, it places the High Court in a position of exercising considerable de facto political power as it has done earlier (1992), for instance, in a case concerning freedom of speech and expression of opinion. The virtual impossibility of amending and updating the Australian Constitution, due to Section 128 and the two-party domination of the political system (in itself a product of the electoral system), can be expected to result in more power accruing to the seven judges of the High Court.
A Federal Local Government Act?
The debate about the Federal Government's role in formulating national legislation for local government started at the end of 2006 and resulted in a Parliamentary resolution, passed by both houses of the Federal Parliament, recognising Local Government, its importance in many functional fields and commending local government elected officials "who give their time to serve their communities". The Opposition ALP moved an amendment to "support a referendum to extend constitutional recognition to local government in recognition of the essential role it plays in the governance of Australia". As could be expected that proposed amendment was defeated.
Has the Rudd ALP Government moved further along these lines since coming to power in October 2007? The Australian Local Government Association strongly favours the enactment of a federal Local Government Act but it would appear that given the adoption of the Rudd's Government "cooperative federalism" approach, that it has not made much headway in that direction.
In contrast Cranny argues that there are "compelling reasons why federal politicians need to act promptly in the national interest to enact a national local government act". He provides a long list of convincing reasons amongst them this one:
"Cost shifting by other spheres of government need stronger action than the Intergovernmental Agreement can possibly deliver with its weak enforcement mechanisms (Cost shifting Impact: $430 m. annually in NSW alone).
There are many theorists, practitioners and politicians who argue in favour of an increase in local government powers, more community input at that level. more independence and stronger financial resources. There is widespread agreement that this would strengthen democracy, which has undoubtedly suffered in recent decades, and create community satisfaction. The recurring clashes between state governments' planning powers, approvals for mining ventures, a variety of environmental decisions and amalgamations, and the capacity of local government to deliver services, on the other hand, are indicative of crisis. The imbalance has been growing.
The sprawl of Sydney is causing deep concern in adjacent regions. Citizens on the Central Coast, north of Sydney are expected to function as a spillway for excess population and don't like it. Recent complaints by the Western Sydney Regional Organsiation of Councils (WSROC), representing 10 Western Sydney Councils, identified further population growth as a major threat to agriculture. It accused the federal government of ignoring its objectives of stopping the acquisition of good farmland (Urban Adapt Program) and risking the supply of fresh food sources for the city.
Fine resolutions in the federal Parliament are not enough to remedy the situation let alone open a new chapter in Australian governance. There are of course occasional community victories in the regions such as the 2005 application to install 50 poker machines in the only hotel in the Victorian town of Romsey. 79% of the locals voted against and the Macedon Ranges Shire Council refused the application. The unsuccessful application had the decision overturned by Victorian Civil and Administration Tribunal, which approved 30 machines. The Council appealed to the Supreme Court and won. In NSW, the recent decision by the Keneally Government not to approve yet another unhealthy open cut coalmine application, by Messrs Bickharn, was the result of widespread community opposition as well as by the local thoroughbred industry supported by several captains of industry and wealthy horse owners.
However, these are exceptional cases and they are not representative of the general trend. There can be little doubt that there have been some serious cases of corruption and incompetence in local government in several states. Those who favour solutions of regional government for these reasons need to reflect on the Cinderella status of local government in the federation. Local government's dependence on the states, whose own financial situation and capacity to deliver services has declined gradually, as a result of fiscal imbalance, cannot expect much improvement in this structure, if any.
Conclusion
The answer should be obvious: federation has to go and be replaced by two elected levels, national and local!
