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Local government fights for light despite a scrapped referendum

Now that the local government referendum has been scrapped, what is the issue’s future? AAP/Sophie Marr

Local government has once again been crowded out of the limelight as the big boys fight for control of the Australian political sandpit. The referendum to give constitutional recognition to local government was already in doubt when speculation over the election date forced it completely off the agenda. Legally, the referendum could not be held before September 14, meaning it was automatically abandoned when the election was called for September 7.

However, even before that, cracks were appearing in bipartisan support for the referendum. A number of opposition MPs clearly opposed constitutional recognition of local government, some using the disproportionate funding of the Yes/No publicity campaigns to question the legitimacy of the referendum itself.

Clearly, prime minister Kevin Rudd did not see it as a priority when choosing an election date. He likely thought it could prove to be a distraction if some opposition MPs and candidates campaigned against the referendum, claiming it to be a Labor initiative and that the slim funding of the “No” campaign was an unfair Labor tactic aimed at sneaking it through.

Although the question could still be put at a referendum on a later date, much momentum has clearly been lost. Another reason for delay is the estimated A$121 million it would cost to run a referendum separately from a general election.

While local councils and local government associations overwhelmingly support the referendum question, there is little sign of active public support or opposition for it. This means it may struggle to gain traction in the future, but who is in government may also affect this.

If Labor is re-elected, the government is likely to try and gain solid bipartisan support for the passage of the referendum. The cost would almost certainly force it to be held with the next election in 2016.

If the Coalition is elected, there is nothing to suggest it would be a high priority for putative prime minister Tony Abbott. The doubts within Coalition ranks, the absence of a groundswell of public enthusiasm and the costs of campaigning militate against a Coalition government pushing ahead with a referendum.

The failure to put and pass the change to the Australia Constitution leaves local government where it has been since federation. It is a creature of the states and territories, with no direct link to federal powers or funds. The purpose of the change was to remove legal doubts about the right of the federal government to give money directly to local governments.

As things stand, especially since a 2009 High Court decision (Pape v Commissioner of Taxation), it is argued that federal funds should pass through state governments to local government. This leaves open the possibility that funds allocated for specific local government programs could be diverted or blocked if a state government disagreed with federal policies or priorities. As Melbourne’s Boroondara councillor Philip Mallis said before the referendum was scrapped:

There are countless projects and services provided by local councils across the country which were made possible with federal government funding (such as the Roads to Recovery program). Should the referendum be unsuccessful, this funding could well be put into jeopardy.

In practice, state governments have generally respected federal government funding decisions and passed the money on. This means that the constitutional problem is rarely a practical problem. Nonetheless, it is desirable to clarify and confirm the right of the national government to offer funds to local government in accordance with the national interest. Until that constitutional change occurs, Australia will continue to muddle through, passing federal funds via state governments to local governments.

Local councils are no more under threat now that at any time since the Pape case. However, the referendum has reminded us of just how vulnerable and weak our local government is compared to many other countries.

Australian local government has enormous potential to provide much more leadership as the level of government closest to each of us. Instead, however, it is left to pick up the crumbs of power and authority that fall from the tables of state and territory governments.

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