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Chapter 2 : Local Government in Australia

Local government in Australia plays a small but significant role in the Australian economy. The institutional framework for local government and local governments structure and functions are quite different to those in other countries. This chapter provides an overview of some of the unique characteristics of Australian local government and some of the key policy issues associated with it.

Size of the sector

In 1999 2000, local government had a revenue of over $16 billion (around 2.5 per cent of GDP), with about 37 per cent of its income derived from taxes (mainly rates), about 32 per cent from sale of goods and services, about 13 per cent from grants and subsidies, 3 per cent from interest and 16 per cent from other sources. It employs close to 140,000 people in 727 local governing bodies (including approximately 100 Indigenous or other community bodies). Local government is responsible for infrastructure worth more than $130 billion. For more details on the financial situation of local government see Local government finance later in this chapter, and for more details on infrastructure and the role of local government, see chapter 5.

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Constitutional basis for local government

Constitutional responsibility for local government lies with States and Territories, which provide the legal framework for councils operations. As a result, there are significant differences in the responsibilities of councils and in the State systems for overseeing them and the services they deliver. Local government is not recognised in the Australian Constitution and the Federal Government s role focuses on monitoring local government efficient and effective performance of their functions in relation to the Local Government (Financial Assistance) Act 1995. For more information about the different structures of local government, their election and remuneration processes, see Local governance later in this chapter.

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One of the most striking characteristics of Australia s 727 local governing bodies is their diversity. Areas of significant difference include:

  • size and area of population represented;
  • range and scale of functions;
  • councils fiscal position (including wide disparity in revenue-raising capacity), resources and skills base;
  • differing physical, economic, social and cultural environments of local government areas;
  • differing attitudes and aspirations of local communities;
  • structures of power and influence within local communities and the extent to which elected representatives reflect a broad range of opinion; and
  • the varying State legislative frameworks within which councils operate, including voting rights and electoral systems.

Indigenous councils also are established under different models in different States.

According to the latest update of the Australian Classification of Local Governments (ACLG) at Appendix F, 585 councils, or just over 80 per cent of councils across Australia, are categorised as regional or rural (see table 2.1).

Table 2.1: Distribution of urban, regional and rural councils (no. and %) by State at June 2001

Diversity is as great within States as it is between States and goes beyond rural/metropolitan differences. Table 2.2 gives some flavour of this diversity, showing, for a selection of councils, the range of areas, populations, local road lengths, income from rates and financial assistance grants per capita. For example, the population of a metropolitan council such as East Fremantle of 6,649 is similar to that of a rural agricultural council like Buloke of 7,526 despite the disparity in area: 3 sq km and 8,002 sq km respectively.

Table 2.2: Characteristics of selected councils, 2000-01

Total grants per capita in remote areas are significantly higher than urban, regional or rural areas. This can be explained by the greater need for assistance in accessing services in remote areas like Murchison in Western Australia with a population of 145 and an area of 43,800 sq km. Per capita grant versus per capita rate income varies significantly. For example, Surf Coast Council in Victoria generates the same rate income per capita as Gosford City in New South Wales, with similar area and road length, but Surf Coast received twice as much general purpose financial assistance grant per capita as did Gosford City. Appendix D lists all councils, the area they cover, their population, their local road length and details of financial assistance grants they receive.

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Local government's changing role

Local government s role has expanded significantly in the last few decades. There has been some devolution of functions to local government by other spheres of government. Other factors, such as changing community expectations of government, deregulation of markets, competition policy, technological change, industrial relations reform and privatisation of public utilities, have also had a profound impact. Local government reform programmes, implemented by some State governments (see chapter 4 for details), have also brought about extensive changes to the structure and operations of councils across Australia.

The combined effect of these changes is that local government is now providing a wider range of services and taking a greater role than ever before in economic and social development and environmental management.

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Local government's functions

As noted above, the range and scale of services provided by local government varies. However, some common services include:

  • construction and maintenance of key infrastructure including roads and bridges, drainage, waste management;
  • regulation of local communities (for example, inspection, licensing and regulation of food premises and animal and noise control);
  • environmental management and planning; and
  • provision of services such as care of the elderly and recreational facilities.

Unlike its counterpart in some other countries, local government in Australia is not responsible for health or education. There are even significant variations in responsibilities between local governments in different Australian states. For example, local government in Queensland, rural New South Wales and Tasmania has responsibility for water and sewerage unlike local government in the other States. Local government in the Northern Territory does not have responsibility for planning, the responsibility remains with the Territory government.

In addition to the functions mentioned above, local government is also:

  • an advocate and leader for the community;
  • an agent for the delivery of services for other spheres of government;
  • coordinator of services delivered at the local level; and
  • an information broker.

Local government s widespread geographical presence, its powers and responsibilities and strong community links mean it has a significant impact on the daily lives of most Australians. The quality of services provided by local government has a direct bearing on people s standard of living.

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Local government in the wider forum

Local government has a significant part to play in the wider forum and there are several avenues for councils to participate at the national and international level.

Local Government Ministers Conference

In 2000 01 the Local Government Ministers Conference (LGMC) was the ministerial body that provided a high-level forum for addressing local government issues common to jurisdictions in Australia and New Zealand. The LGMC comprised:

  • State and Territory Ministers with responsibility for local government;
  • the Commonwealth Minister with responsibility for local government matters;
  • the New Zealand Minister with responsibility for local government; and
  • the Australian Local Government Association President.

The primary objectives of the LGMC were to:

  • provide an intergovernmental forum for information sharing and development of nationally-significant policy on local government issues; and
  • sponsor projects which advance local government reform and promote examples of best practice.

The LGMC was an important forum for discussing the common interests and goals of member jurisdictions. It also played an important role in providing a national overview of local government and maintained an important network of officers.

The Commonwealth Government provided a permanent secretariat to LGMC and also to a high-level officer group known as the Local Government Joint Officers Group which supports the LGMC.

The Local Government Ministers Council met in Perth in July 2000. At that meeting, Ministers agreed to provide just over $30,000 from the Council Activities Fund for production of an infrastructure financing option manual for use by all jurisdictions to improve the financing options for infrastructure renewal or replacement.

Ministers noted the broad range of work recently completed and currently under development on the role of local government in natural resource management and dryland salinity. For more details on local government responses to these issues see Environmental revenue and expenditure in chapter 5 and Development Assessment Forum later in this chapter.

Local Government Ministers sought to pursue the development of a nationwide set of performance indicators for local government, and Victoria and South Australia agreed to co-host a meeting of officials from the States, the Commonwealth and Local Government Associations. The outcomes of that meeting are reported under Performance indicators in chapter 4.

The relationship between the Local Government Ministers Conference and the, recently convened, Regional Development Ministers meeting and the Planning Ministers conference was discussed.

At its meeting in November 2000, the Council of Australian Governments decided to combine the Local Government Ministers Conference with the Planning Ministers Conference to form the Local Government and Planning Ministers Council. Administrative arrangements for such a joint council are yet to be resolved.

Planning Ministers Conference

The Planning Ministers Conference comprised State and Territory Ministers for Planning supported by a group of Planning Officials which includes representatives of interest groups such as the Royal Australian Planning Institute, the Royal Australian Institute of Architects and the Property Council of Australia. The most recent meeting of the Planning Ministers was held in Canberra in May 2000.

The agenda of that meeting included:

  • the Environment Protection and Biodiversity Conservation Act 1999;
  • outcomes from the Development Assessment Forum workshop project and the Commonwealth Regulatory Framework project;
  • Emergency and Disaster Planning report, Planning Safer Communities: Land Use Planning for Natural Hazards;
  • role of information technology and e-commerce in planning reform; and
  • consideration of observer status for the Royal Australian Planning Institute.

The meeting agreed that the following issues should be taken forward to the next Planning Ministers Conference:

  • regional planning;
  • sustainability;
  • the quality of urban design; and
  • the application of technology to planning and economic development.

The secretariat for Planning Ministers meetings was rotated. The New South Wales Government was due to host a meeting planned for November 2000 in Sydney. This was postponed pending the Council of Australian Governments decision on a joint body with local government ministers and has not yet been rescheduled.

Development Assessment Forum

The Development Assessment Forum is a combined initiative of Federal, State, Territory and local government, property development industry and relevant professional bodies. Its purpose is to reach agreement across Australia on ways to improve the processes for development approval and cut red tape without sacrificing the quality of the decision making. The initiative has been in operation since 1998. In that time it has commissioned reports on:

  • the state of play for planning systems in each State;
  • a concepts/scoping paper that included analyses of leading practice principles for development assessment, identification of potential standard definitions in development assessment and case studies of leading practice; and
  • Commonwealth planning instruments that impact on the development assessment system.

The Forum also commissioned a series of 15 workshops held in early 2001 in metropolitan and regional centres around Australia. These workshops aimed to gain endorsement for the Forum's Principles of Development Assessment and to establish the level of agreement on preparation of a core set of nationally consistent definitions for assessment. The workshops found that there was generally strong support for the Principles, and an even stronger support for a national approach to definitions. They also found that further work is now needed to refine the broad principles. Those attending the workshop rated training, review of the appeals systems and electronic systems among their highest priorities.

The next scheduled meeting for the Development Assessment Forum was scheduled for Brisbane in early December 2001.

Regional Development Ministers' meeting

Commonwealth, State and Territory Ministers responsible for Regional Development and the President of the Australian Local Government Association met in March 2000. At that meeting they agreed to establish a Taskforce of senior officials to develop a clear framework and principles for better cooperation and collaboration on regional issues across all spheres of government in Australia.

Since then the Regional Development Ministers have met twice. At the November 2000 meeting they agreed to adopt a framework and recommendations of the Taskforce (see box).

Regional Development Ministers Framework for Cooperation

The Framework for Cooperation sets out the role of each sphere of government in regional development and the principles they agreed to follow. These include:

  • commitment to minimise duplication and overlap;
  • encourage communities to set their own priorities;
  • cooperate with each other and with the private sector;
  • use existing systems wherever possible;
  • build on competitive and comparative advantage for regions; and
  • consult with each other wherever possible, particularly where new programmes and services are being developed.

As part of the framework, all spheres of government agreed to:

  • build alliances and bilateral agreements for delivering localised community programmes;
  • collaborate on the development of information and publication dissemination to provide a streamlined and accessible source of information on government programmes to people living in regional Australia;
  • collaborate on economic, social and environmental objectives to ensure sustainability for local communities; and
  • encourage better utilisation and leveraging of funds through collaborative assessment of project applications.

Through the Australian Local Government Association, local governments agreed to work together with State, Territory and Commonwealth Governments on economic, social and environmental objectives to ensure communities achieve sustainability.

The November meeting addressed a range of critical ongoing regional development issues. There were particular concerns on infrastructure funding in Victoria and Tasmania; the need for business investment in regional New South Wales; the retention of professional and skilled workers in Western Australia; and zone allowance rebates and the fly-in-fly-out activities of mining company personnel for local communities in Queensland.

Also in November 2000, the Council of Australian Governments agreed to create a new Regional Development Council by amalgamating regional development issues from the Industry, Technology and Regional Development Council and the informal Regional Development Ministers meeting.

The establishment of the Regional Development Council within a Council of Australian Governments framework will enable regional development issues to be given more formal consideration across the whole of government.

Australian Local Government Association

The Australian Local Government Association is a federation of associations from each of Australia s six States, and the Northern Territory. Since early 2001 the Australian Local Government Association membership has also included the Australian Capital Territory government. The association aims to add value, at the national level, to the work of State and Territory associations and their member councils.

Local government in the international context

Local government has been involved, at the international level, in the Commonwealth Local Government Forum, the International Union of Local Authorities, and Sister City Relationships - particularly with Japan.

Commonwealth Local Government Forum

The Commonwealth Local Government Forum was founded in 1995, as a focus for action on local democracy in the Commonwealth and was endorsed by Commonwealth Heads of Government at their meeting in New Zealand that year. The Forum works to promote and strengthen effective democratic local government throughout the Commonwealth and to encourage the exchange of information on good practice in local government structures and services.

The then Federal Minister for Local Government, Territories and Regional Services, Senator the Hon. Ian Macdonald, represented Australia at the Commonwealth Local Government Forum in London in September 2000. At this meeting, the Forum adopted the Statement on Local Government Priorities for the New Millennium which sets out key principles on democratic values and good local government, partnership, sustainable development and capacity building. The next meeting of the Commonwealth Local Government Forum was in October 2001 in Brisbane.

Australia is part of the Pacific Region of the Forum. The Forum s Pacific Regional Project Advisory Committee met in Vanuatu in March 2001 with Department of Transport and Regional Services officers participating.

International Union of Local Authorities

Departmental officers also participated in the International Union of Local Authorities General Assembly meeting in Brazil in May 2001 at which the National Awards for Innovation in Local Government were showcased. The Union aims to develop and maintain a strong democratic political organisation that is the worldwide advocate and voice of democratic local government, as well as being a source of key information and intelligence regarding democratic local government, a source of learning, exchange and capacity-building programmes for democratic local government.

The structure of the Union is based on seven regional sections based in different centres around the world; Australia is part of the Asia and Pacific Region centred on Jakarta. These regional sections run their own local government training courses, set up information and documentation services, conduct research and consultancy projects, and promote municipal international cooperation.

Sister city relationships

The Australian Sister Cities Association seeks to increase international understanding and foster world peace by furthering international communication and exchange at the person-to-person level through City-to-City affiliations. The Federal Government supports the Association in its work and in 1999 2000 funded the development of a strategic plan by the Association. The plan was presented to the Association Conference in Adelaide in October 2000.

In March 2000, the Federal Government funded research into sister city relationships by Dr Kevin O Connor of Deakin University. He reported on the findings from this research to the Sister City Relationships conference in Adelaide in September 2000. The paper presented to the conference discusses the public policy contexts of sister cities in both Australia and Japan, analyses the results of two surveys in Australia and Japan and examines some case studies of economic and business relations and community involvement issues (see box).

Sister city relationships between Australian and Japanese cities

The study shows there are some significant differences between the perceptions of Australian and Japanese local governments with regard to sister city relationships.

In Australia the shift to a greater emphasis on economic relationships is not shared by the Japanese counterparts. The results of the research show that the types of relationships between the two countries are still predominantly cultural and educational exchange. Nevertheless, there is a significant change occurring in the Australian perception of sister city relationships that is being expressed principally in terms of an economic return.

At present, Japanese perceptions do not include economic concerns, as local government is not considered a local developer in either social or legal terms. While new public management is beginning to appear in parts of Japan, local government is still primarily seen as a service provider.

Dr Kevin O Toole, Deakin University

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Local governance

Councils are democratic institutions operating under State legislation. To fulfil their role effectively entails constant review of electoral structures and procedures as well as remuneration levels. Effective management of community resources also requires councillors as well as council staff to be fully aware of their rights and responsibilities and to understand the procedures for developing and implementing policy. This section discusses some recent developments in electorates, remuneration and training.

Local government representation

Councils have several electoral structures, including more than one structure in a single State. They also have widely different levels of representation. Table 2.3 illustrates the great variety across the country. For instance, Victoria has just over twice as many councillors as Tasmania despite a population nearly 10 times greater and in New South Wales, South Australia and the Northern Territory there are on average twice as many councillors per council as there are in Western Australia.

Table 2.3: Local government electorate size

Not only are the responsibilities of councillors divergent, but their terms of office and method of election vary from State to State with election by ward in some States and direct election of mayors in some councils.

In June 2000, as part of its review of the 1993 Local Government Act, the Queensland Department responsible for Local Government released a discussion paper on the conduct of local government elections in Queensland. The paper indicated that, out of 125 local government areas (excluding Aboriginal and Torres Strait Islander communities) in Queensland, 59 were undivided for electoral purposes and their council composition ranged from five councillors (including the mayor) to 13.

Of the 66 electorally divided local government areas in Queensland (that is, those with wards), 14, including the City of Brisbane, had single member divisions. The other 52 local government areas had either multi-member divisions or a mix of single and multi-member divisions. The paper suggested that for councils to have one or the other, but not both, would reduce confusion. The review indicated this would facilitate first-past-the- post voting in single member divisions and a preferential system in multi-member divisions, thus reducing some of the current confusion.

In Victoria, a review of local government remuneration, The Report of the Victorian Councillor Allowances Review Panel, June 2000, found that there were 577 councillors in 79 councils in the State with generally seven to nine councillors each (excluding the City of Melbourne which was then under an administrator). It also found that councils in Victoria generally had a smaller number of councillors than those of similar area or financial activity elsewhere in Australia.

The South Australian local government elections in May 2000 were the first to be conducted under the new South Australian Local Government (Elections) Act 1999 and were therefore the subject of a review published in February 2001. This review generally dealt with the mechanisms of local government electoral roll management and postal voting procedures.

Councillor remuneration

In October 2000, the Victorian Government released its report, Flexibility and Accountability, on a review of the remuneration of mayors and councillors in that State. The terms of reference were to review the current provisions for remuneration taking into account:

  • the adequacy of current levels of remuneration;
  • the potential for refinement of the current structure by introducing a classification of councils according to different levels of complexity; and
  • the adequacy of current specific allowances.

In comparison with other States, the review found that:

  • Victoria generally has fewer councillors per council, regardless of council size;
  • Victorian councillors were generally better paid (than councillors servicing smaller populations in other States); and
  • Victorian councillors (in councils with larger populations) were generally paid in the middle of the range, whereas mayors were paid at the lower end of the range.

In Victoria, councillors allowances were set by regulation and ranged from a minimum of $5,000 to a maximum of $12,000 per annum, with mayors receiving three times the councillor allowance. South Australia had similar arrangements. New South Wales and Tasmania used categories of councils with remuneration of councillors related to these categories. In Western Australia, councils have the option to pay all councillors sitting fees that are set by regulation, with a higher fee for mayors. Queensland councillors are free to determine their level of remuneration provided the determination is justified in accordance with the relevant local government Act and the public are informed and given opportunity to comment.

The Victorian review's recommendations included Councils:

  • moving towards fully determining their allowance levels, and being responsible for taking into account community response to proposed remuneration;
  • using an initial framework for allowances, based on three categories of councils based on population;
  • implementing a clear reimbursement and support policy that should include, but not be limited to:
    • family carer allowance
    • allowance for travel time
    • vehicle travel costs.

Local government training

The Commonwealth, State and Territory Vocational Education and Training Ministers agreed in March 2000 on the National Training Framework. Under this framework, competencies within training packages are now the basis of recognised national qualifications for employees. The National Local Government Training Board National Industry Training Ltd services the vocational, educational and training needs of local government in connection with the State and Territory Local Government Training Board Network. The National Local Government Training Board encourages all Australian councils to help implement the local government training package.

The local government-specific qualifications are divided into three broad and overlapping qualification pathways, each representing a central focus of local government activity. The pathways are:

  • governance and administration;
  • planning and management of the physical environment; and
  • environmental health and regulation.

Under the agreed arrangements for nationally recognised qualifications, only registered training organisations may issue qualifications. However, a local authority can seek registration through the relevant State training agency or work in partnership with an existing registered training organisation (such as a technical and further education college) to enable its employees to achieve qualifications.

The National Local Government Industry Training Board has, with the Australian Services Union, the Australian Local Government Association and Local Government Managers Australia, documented case studies that demonstrate how useful the Local Government Training Package can be. The Cities of Melbourne, Hobart, Devonport and Logan, and the Department of Urban Services in the Australian Capital Territory and the Eurobodalla Shire have all contributed to the most recent study. The study demonstrates continuous improvement strategies in the three broad qualification pathways as well as successful training of entry-level apprentices.

Local Government Associations have also taken up the challenge to provide training for officers and councillors. In partnership with State Departments they provide courses for councillors, to help them become more effective in public administration and accountability as quickly as possible.

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Local government finance

The Federal Government provides considerable financial assistance to local government, through the financial assistance grants, specific purpose payments and programme funding. The States also provide funding to local government.

There is a relatively complex financial relationship between local government, the State Government and the Commonwealth Government. The complexities in this relationship arise from the nature of the institutional arrangements in Australia and because of the blurred division of the respective roles and responsibilities of the three spheres of government, despite the constitutional division of powers. Whilst respective taxing powers are relatively well differentiated, the exact role of local government, as distinct from other spheres of government, is not always clear. This can lead to some duplication and overlap and an array of financial transfers between governments.

The financial transfers involving local government can be categorised as:

  • grants from the Commonwealth Government;
  • grants from the State Government;
  • State Government subsidies of local government costs;
  • local government exemptions from State taxes and charges and State exemptions from council general rates;
  • levies and charges paid by councils to the State Government; and
  • charges paid by councils for the use of State Government services.

Local government financial management is also important with regard to their respective State Government financial positions. Rating agencies and the Australian Loan Council include local government in their assessments of State Government finances. State Governments must also manage the annual financial performance of the State public sector (including local government borrowing) within the constraints set by the Australian Loan Council. These constraints seek to ensure that the demands placed on financial markets by the public sector, including local government, are at a level that will not significantly impact on the availability of capital to the private sector. The constraints also ensure that the various jurisdictions within the public sector are adopting appropriate long-term fiscal strategies.

Local government share of taxation revenue

In 1999 2000 the Federal Government raised $152.5 billion in tax representing 77.7 per cent of public revenue (see figure 2.1). It comprised 57.7 per cent income tax and 20 per cent tax on the provision of goods and services. At the same time, the States and Territories raised $37.7 billion representing 19.2 per cent of public revenue mostly from payroll taxes, financial transactions and the use of goods. Local government s share of taxation revenue was $5.7 billion or 3.1 per cent and this was all raised from land rates. This continued a trend of local government receiving a declining share of total taxation revenue (it received 3.2 per cent in 1998-99).

Figure 2.1: Composition of taxation revenue, by sphere of government, 1998-2000

The Federal Government redistributes some of the taxation revenue it receives to the other two spheres of government. In 2000 01 it provided tied funding to local government through specific purpose payments totalling over $111 million (see table 2.4). This assistance recognises the work of local government in providing such services as child care, aged care, care for the disabled, natural disaster relief and for local roads. Of the total specific purpose payments made, more than $45 million was provided to ensure affordable quality childcare and more than $21 million to help local government provide access to residential and other care services for the aged.

Table 2.4: Specific purpose payments to local governments, 2000-01 ($'000)

In 2000 01, the Federal Government also provided funding and other assistance to local government through a range of programmes including the Local Government Online (part of Networking the Nation) the Natural Heritage Trust and the Rural Transaction Centres Programme. These initiatives recognise the importance of local government in reducing the costs imposed on local businesses and communities through achieving genuine improvements in local government operational efficiency. These issues are discussed further in chapter 4.

State funding for local government

Table 2.5 provides details of grants from the States to local government by type of servicein 1999 2000. This includes some $1.24 billion paid through the State by the Commonwealth in local government financial assistance grants in 1999 2000. The remaining State grants directed to local government are for a number of purposes. While the focus of State grants varies significantly from State to State and from year to year, the major purpose remains transport and communications, with the exception of Victoria and the Northern Territory. Another major focus for 1999 2000 for most States, with the exception of Western Australia and Tasmania, was housing and community amenities.

Table 2.5: Grants from States to local governments, by purpose, 1999-2000 ($m)

The table suggests that the States provided some $1.22 billion to local government out of their own funds representing an increase of 54 per cent over the previous year. However the majority of this increase is the result of increased grants from the Victorian and Queensland governments to housing and community amenities, Queensland funding is up from $71 million in 1998 99 to $465 million and Victorian funding is up from $9 million to $312 million. At the same time, Victoria recorded a large reduction in funding designated for other purposes from $293 million in 1998 99 to nil in 1999 2000. Ignoring the increases in State grants to housing in Queensland and Victoria and the change in other funding for Victoria, total funding by the States to local government remained very similar to the previous year.

Research by the Commonwealth Grants Commission as part of a review of the Local Government (Financial Assistance) Act 1995 reveals some trends in State Government funding of local government that are significant. Volume 2 of the background paper, prepared as part of the review, shows in figure15 5 of that report that in Victoria, State Government grants to local government appear to have declined since the introduction of Commonwealth assistance to local government in 1974-75. They have declined from around 14 per cent of local government revenue in 1974-75 to around 10 per cent in 1997 98.

At the same time, revenue from municipal rates has declined, from around 55 per cent of local government revenue in 1974 75 to around 46 per cent of revenue in 1997 98. This has resulted in an increased reliance on user charges and on Commonwealth grants. Over the period, the report shows that Commonwealth grants have increased from 8 per cent of local government revenue to nearly 14 per cent of revenue (see figure 2.2).

Figure 2.2: Local government revenue sources, 1999-2000

Local government revenue

In 1999 2000, local government received an average of 38 per cent of its revenue from taxes, mostly municipal rates, and 33 per cent from the sale of goods and services. This represents a large increase in the proportion of council revenue coming from operations compared to the previous year when it was around 12 per cent. On average, for 1999 2000, 18 per cent of council revenue was from grants, including financial assistance grants, a very similar level to the previous year.

The circumstances of individual councils do, however, vary considerably from the national average. While indications of these variations can be obtained from the State and Territory data in table 2.6 and figure 2.2, it should be noted that significant variations exist between councils within each State and in the Northern Territory.

Table 2.6: Local government revenue sources, 1999-2000 ($m)

Revenue raised by local government from taxation (predominantly rates) varied from around the average of 37 per cent of total local government revenue for most States to a maximum of 56 per cent for South Australia and a minimum of 18 per cent for the Northern Territory. Revenue from grants was close to the average of 13 per cent for all States except the Northern Territory where councils received an average of 38 per cent of their revenue from grants (see table 2.7).

Table 2.7: Local government revenue sources, $ per capita, 1999-2000

On a per capita basis, taxation (rates) revenue remained relatively close to the national average of $311 per person in all States. The Northern Territory had the lowest taxation revenue per capita of $219, whilst South Australia had the highest per capita taxation revenue for local government with $340 per person. Victoria had the second lowest taxation revenue per capita of $297. This is probably a result of mandated cuts in rates imposed by the State government in the mid 1990s.

Local government received a significant proportion of revenue from the sale of goods and services. It represents on average close to a third of council revenue, with Tasmania and Queensland receiving more than 40 per cent of their revenue in 1999 2000 from these sources. This may be because, in those States, local government has responsibility for provision of water and sewerage services.

On average, interest did not represent a significant proportion of council revenue, whilst revenue from other sources contributed 16 per cent of local government income. The proportion of revenue from other sources ranged from 4 per cent in Tasmania to 21 per cent in the Northern Territory. Other revenue is derived from capital grants, current revenue, capital revenue and fines.

Local government expenditure

Australia-wide the main categories of local government expenditure continue to be transport and communication (about 30 per cent) and housing and community amenities (23 per cent). See table 2.8 and figure 2.3. Local government, in all jurisdictions except the Northern Territory, expended between about 23 per cent and 36 per cent on transport and communications with New South Wales councils recording the highest proportion of their outlays on this purpose. The Northern Territory recorded only 9 per cent of its expenditure on transport and communication but, at the same time, nearly a quarter of its expenditure was recorded as being spent on other economic affairs which may have included transport and communication related activities.

Table 2.8: General government expenditure, by purpose, 1999-2000 ($m)

Figure 2.3: Local government expenditure, by purpose, 1999-2000

Housing and community amenities was the next largest expenditure item for councils, with Tasmania recording the highest proportion of expenditure at 35.1 per cent and Western Australia the lowest proportion at 15.3 per cent.

In 1999 2000 local government in Australia had a net worth of close to $142.5 billion with net assets of $151 billion and liabilities of $8.9 billion (see tables 2.9 and 2.10). On average, councils continued to be in a sound financial situation in 1999 2000, indeed this year for the first time since records commenced, in 1993, total cash, deposits and lending exceeded gross debt.

Table 2.9: Local government assets and liabilities, 1999-2000 ($m)

Table 2.10: Financial assets and liabilities for local government, 30 June 1993 to 30 June 2000 ($m)

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