If a ballot paper asked whether you support recognition of local government in the constitution, would you know what you’re voting for?

Local Government Minister Simon Crean is facing a hard time persuading states to support a proposed referendum to include councils in the constitution. For the rest of us that might have to soon decide, there’s little understanding of why the move is necessary. Crikey helps explain …

What are the arguments for recognition?

Local governments deliver a wide variety of services including roads, footpaths, libraries, planning, public parks, sports grounds, waste collection and various community services. It would be possible to symbolically recognise the importance of this role through mention of local government in the preamble to the constitution.

But the more immediate concern for federal and local governments is a financial one. (Bear with us — there is some heavy legal stuff in this paragraph, but it is important background.) Recent High Court decisions have raised uncertainty about whether the federal government can provide funds directly to local government. Pape v Commissioner of Taxation in 2009, a case about the legality of stimulus payments in the government’s response to the global financial crisis, revealed the High Court’s consideration the Commonwealth was unable to spend money without explicit constitutional powers as set out in sections 51 and 61. While in that case it found powers did exist due to the global crisis, the general line of thought was that an explicit power was needed for spending.

Then, in Williams v Commonwealth, a case about school chaplains, the High Court found the Commonwealth could not spend money — outside some tightly specified circumstances — without supporting legislation. A number of Commonwealth payments to local governments, particularly for roads and other infrastructure, do not have a specific legislative authority.

These cases weren’t about local government. So it is possible there is nothing for people to worry about; Commonwealth payments could be fine just as they are. But recent history shows citizens are increasingly prone to take Commonwealth spending programs to the courts. If someone were to do so in the case of local government, the bulk of the academic commentary suggests a challenge to some or all of the Commonwealth’s funding of local government might well succeed. Thus, people who are keen to see local government continue to provide a range of services with Commonwealth money support a referendum to clear up uncertainty and avoid the risk that funding might come to a sudden halt.

What are the arguments against?

When a proposal to recognise local government was put to a referendum in 1988 it was overwhelmingly defeated, with all states and territories against. The primary argument was that it would undermine states’ rights. This remains the key objection.

An article in Quadrant by David Mitchell last year sets out the range of states’ rights arguments. From this perspective the potential invalidity of the financial support from the Commonwealth to local governments is actually a good thing. States’ rights proponents argue the Commonwealth has no business directly funding local government and all monies should go via the states.

What is the likely referendum question?

The government set up an expert panel to consider the questions involved. It recommended an amendment to section 96 of the constitution (which allows the Commonwealth to make payments to the states) to add in local government. It would then read (new section shown in italics):

“The Parliament may grant financial assistance to and State or to any local government body formed by State or Territory legislation on such terms and conditions as the Parliament sees fit.”

Who supports the referendum proposal?

The federal government supports the proposal. Not only in principle, but also because it was part of its agreement with key independents Tony Windsor and Rob Oakeshott on forming government. The Queensland government has also shown support; that may reflect current Premier Campbell Newman’s long association with local government, but is also consistent with the findings of the expert panel that a majority of Queenslanders favoured the move.

The Australian Local Government Association, for obvious reasons, strongly supports the referendum. Local governments provided a majority of the 252 submissions to a joint select committee of federal Parliament inquiring into the matter. Local governments don’t want to lose funding.

Who opposes it?

The New South Wales and Victorian governments stand opposed, as do various other advocates of states’ rights also oppose it. The Coalition is opposed to the timing, rather than the principle. A dissenting report to the joint select committee report argued there is not enough time for a referendum to be considered by the public before the election and there hasn’t been enough negotiation with the states. It noted:

“… the abject failure of the government to implement detailed engagement with all the states and territories to address and negotiate through any concerns they may hold, makes it very difficult for Coalition members to properly and thoroughly assess any unintended impact of the proposed change.”

In broad terms, past Coalition governments have been more inclined towards states’ rights arguments than Labor. The question is not necessarily a politically partisan one, but in the current adversarial political climate it’s become so.

Does it have any chance of succeeding?

One would have to be very brave to bet on a successful referendum. Referendums have a hard enough time in Australia; of the 44 referendums, only eight have been passed. Our hurdles for constitutional change are high  — a majority of voters Australia-wide and in a majority of states.

The Commonwealth’s normal lever for bringing around reluctant state governments — buckets of cash — is not an option this year given the tight state of the budget and the numerous other high-priority demands on funds. In any case, the principles of states’ rights are strongly held, and even the traditional bucket of money approach might not work with NSW and Victoria. There is also little sign the Australian people will rise up in force to lobby and demand protection for much-loved and cherished local governments.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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