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Chapter 1 : Purpose of the Report

Following a review in 1994 of the Local Government (Financial Assistance) Act 1986, the Federal Government introduced the requirement that the Federal Minister report to Parliament each year on the operation of the replacement 1995 legislation. The review recommended that there be uniform national reporting on the main features of local government finance. The Minister is required to provide this report 'as soon as practicable' after 30 June each year.

The purpose of the reporting is to enable the Federal Government to monitor how grant funds are allocated by the State Grants Commissions as well as allowing the three spheres of government to compare outcomes between similar local governing bodies in different States.

Each year since the 1995 Act was enacted, the Federal Minister has tabled a report in Parliament. This is the sixth report, commonly referred to as the Local Government National Report. The purpose of the National Report is to:

  • increase transparency and accountability of State local government grants commissions in distributing the Federal Government's grants to local government;
  • promote consistency in the methods by which grants are allocated to achieve equitable levels of services by local government; and
  • promote efficiency and effectiveness of local government in performing their functions.

The report increases transparency by providing, to the Federal Parliament, all councils and the State Departments of Local Government, comprehensive and comparable information on the distribution of financial assistance grants to local government. It does this by identifying local governing bodies eligible for grants, by classifying them in accordance with their relative population size, density and proportion of urban area, using the Australian Classification of Local Government (ACLG). It then lists the amount of Financial Assistance Grant that councils received in the reporting year and the amount they are entitled to receive in the following year in accordance with the principles of the Act (reproduced at Appendix A). To promote consistency in the methods by which grants are allocated, the report includes advice from each of the local government grants commissions on their methods. It also identifies where the methods differ from one State to another and from year to year. This information is at Appendix B.

In June 2000, the Federal Minister requested that the Commonwealth Grants Commission review the Local Government (Financial Assistance) Act 1995 and the recommendations arising from that review are at Appendix C.

A list of all councils, including the grants they receive, their population, area and local road length, is at Appendix D. Appendix E lists councils by relative need and Appendix F provides details of ACLG classifications.

The efficiency and effectiveness of councils are related to their delivery mechanisms and relative satisfaction of the communities they serve. This Report incorporates input from State Departments responsible for local government and some of the Local Government Associations on the progress of councils towards measuring performance across the State as well as the use of service charters and locally relevant competitive tendering. This information forms part of chapter 4 and individual reports from the States are at Appendix G. Councils must also operate in the wider context of microeconomic reform, particularly National Competition Policy, and Appendix H comprises reports from the States on their progress towards microeconomic reform.

The Federal Government recognises that local government's efficiency and effectiveness is affected not only by the range of resources it can call upon and the way in which it delivers the services within its ambit, but also by its capacity to be responsive to the community's changing needs.

To help local government respond, at a regional level and to specific needs in a national context, the Federal Government provides additional funding to local government. It does this through specific purpose payments such as for aged care and childcare and through programme funds distributed directly to local government such as Local Government Online (part of Networking the Nation) and the environmental programmes addressing water, soil and salinity management (part of Natural Heritage Trust programmes). Through programmes such as Local Government Online and the Local Government Incentive Programme, councils are assisted in delivering their programmes efficiently and effectively to communities. Details of Federal Government programmes for local government are included in chapter 4.

Infrastructure is a major issue for all communities, particularly those in regional and remote Australia. Significant proportions of local roads and other essential services are constructed and maintained by local government, and a discussion of the essential role of local government in provision and repair of infrastructure is included in chapter 5.

Chapter 6 reports on the operation of a specific aspect of the Local Government (Financial Assistance) Act 1995 that requires a report on delivery of services by councils to Aboriginal and Torres Strait Islander communities. This includes reports in response to the Council of Australian Governments request to all Ministerial Councils to prepare an action plan to advance reconciliation with Australia's Indigenous peoples.

In chapter 7 the report focuses on the opportunities and challenges of the future for local government. It discusses the outcomes of the Commonwealth Grants Commission review of the operation of the Local Government (Financial Assistance) Act 1995, as well as some directions for local government in structural reform and resource sharing, and leading practice in asset management.

In the appendixes, the reader will find useful background material on councils in general, contacts for further information (Appendix L) and maps (Appendix M), and details of Federal Government funding provided over the year to local government including through the Local Government Incentive Programme. Information on the Local Government Incentive Programme funding provided in 2000-01 is at Appendix J.

The Federal Government seeks to encourage innovation and disseminate information about initiatives by individual councils that represent leading practice. One of the ways it does this is by presenting each year the National Awards for Innovation in Local Government. Appendix K details the winners in 2001.

Councils have some capacity to 'self assess' their relative effectiveness with reference to national statistics on social disadvantage, accessibility and remoteness. Appendix M describes some of the sources available to local government in this assessment. It also reports on an Australian Bureau of Statistics review, carried out in early 2001, on local government statistics, their collection, distribution and the role of local government in making this information available to key stakeholders. The appendix concludes with an explanation of the maps in the back cover of the report.

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