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The Australian Government enacted the Local Government(Financial Assistance) Act 1995, following a review in 1994 of the Local Government (Financial Assistance) Act 1986.

The replacement Act requires that the Minister report to Parliament on the operation of the Act 'as soon as practicable' after 30 June each year.

This annual report to Parliament must include an assessment of:

  • the extent to which allocation of financial assistance grants has been made on a full horizontal equalisation basis
  • the methods local government grants commissions used in making their recommendations
  • the performance by local governing bodies of their functions including:
    • their efficiency
    • services provided by them to Aboriginal and Torres Strait Islander communities.

Submitting an annual report to Parliament seeks to achieve two of the government's goals in relation to the arrangements under the Act.

They are:

  • to increase States' transparency and accountability in allocating the Australian Government's grants to local governing bodies
  • to promote consistency in the methods by which grants are allocated to achieve equitable levels of services by local governing bodies.

Reporting on local governing bodies' performance helps to assess whether two of the Act's purposes are being achieved. These purposes are:

  • to improve the efficiency and effectiveness of local government
  • to improve the provision by local governing bodies of services to Aboriginal and Torres Strait Islander communities.

The report covers all local governing bodies in receipt of grants under the Act. It fosters transparency and accountability by enabling an interstate and an intrastate comparison of the allocation of grants to local governing bodies.

Chapter 1 provides a comprehensive overview of local governance in Australia, including its roles, functions, size and diversity, finances and governance arrangements.

Chapter 2 provides an overview of current arrangements, including the process and principles of apportioning funding between the States and between local governing bodies within a State. Appendix D sets out the financial outcomes for all local governing bodies in receipt of grants. The classification system used in Appendix D to group similar local governing bodies is described in Appendix F.

The National Principles for allocating general purpose and local road grants is at Appendix A, and the methodologies each State adopted in allocating funding to local governing bodies are summarised at Appendix B. The grant outcomes for each council in 2002-03 is at Appendix D, while Appendix E shows the ranking of local governing bodies within a State on a relative needs basis.

Local government performance is discussed in Chapter 3, which reports on State developments, Australian Government activities to support local government performance improvement and updates reforms and the application of National Competition Policy. State reports on performance and reform are at Appendix G. Improved performance of local governing bodies continues to be promoted through the National Awards for Innovation. The 2003 Innovation Award winners are at Appendix I.

Chapter 4 addresses infrastructure issues and has a bearing on the efficiency and effectiveness aspects of local government performance.

A report on the gains that have been made in 2002-03 in delivering local government services to Aboriginal and Torres Strait Islander communities are in Chapter 5 and the reports from the States are at Appendix H.

For the first time, the report includes a detailed discussion of local government operation and performance in a comparable country - Canada (Chapter 7), and also explores examples of 'joined-up' government in Chapter 6. Given the number of ouncils in rural and regional areas that are now taking on regional development roles, Appendix J offers an overview of Australian Government-sponsored research in this area.

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