Diseases
desperate grown / By desperate appliance are relieved / Or not at all. Hamlet IV,iii,9
In November 2012, the then Treasurer,
Wayne Swan commissioned a review from the Commonwealth Grants Commission (CGC)
on various issues related to the allocation of local government Financial
Assistance Grants (FAGs) within the current fiscal envelope available to each
state.
Here
is the link to the Terms of Reference, which included a specific request for
the CGC to examine funding adequacy for local governments which service remote communities
(para 3(d) of the Terms of Reference). This post is focussed primarily on this
latter term of reference. The system of fiscal equalisation built into the Commonwealth
financial assistance program is fundamentally flawed, and has been criticised
for over a decade including my me, but the Terms of Reference effectively ruled
out any reconsideration of that fundamental issue.
On the CGC web site there are a number
of documents relating to the review, including an Issues Paper (link here),
copies of submissions (link here),
and notes taken by CGC staff of discussions with the WA and SA Local Government
Grants Commissions (link here).
The Issues Paper sets out the
Commission’s proposed approach to the Inquiry. I reproduce some select extracts
below:
14. Further, consistent with the
funding envelope direction, we will not consider options which improve
effectiveness by increasing the funds available from the Commonwealth or the
States, or which change the interstate distribution. However, a different
intrastate distribution of funding, or a different grant design, might improve
effectiveness or encourage greater effectiveness over time…
26. We also note the Act requires the
Minister to prepare a report on the operation of the Act as soon as practicable
after 30 June in each year. We think our review should examine the impact of
that report and if there are options to change this reporting which would
increase the effectiveness of local governments and their ability to improve
services.
The Commission also canvassed issues
such as the merits of tied grants, and the impact of the minimum grant
principle.
At Attachment
A, the Commission included an appendix titled The Current Arrangements for Financial Assistance Grants. This
reproduced extracts and associated discussion
including the ‘Objectives of The Local Government (Financial
Assistance) Act 1995, amended 2012’; the National Principles governing the
allocation of FAGS within each jurisdiction (a requirement of the legislation),
and the Reporting requirements of the legislation.
In relation to the Objects, of the
legislation, section 3(2) provides that ‘The
Parliament wishes to provide financial assistance to the States for the
purposes of improving: (e) the provision by local governing bodies of services
to Aboriginal and Torres Strait Islander communities’.
The National Principles provide, inter
alia, ‘5. Aboriginal peoples and Torres
Strait Islanders Financial assistance shall be allocated to local government
bodies in a way which recognises the needs of Aboriginal peoples and Torres
Strait Islanders within their boundaries.’
In relation to accountability, the
Issues Paper notes:
Accountability
requirements
8 The Act requires the Minister to
prepare an annual report relating to the operation of the grant processes and
addressing a range of other matters such as the efficiency of local government,
as soon as practicable, after 30 June each year. The reporting requirements are
listed in Box A3.
9 However, it appears the 2008-09
report is the last, publicly available one.
In relation to the Commission’s 2001
Review of the legislation, the Issues Paper noted, inter alia,
The Aboriginal Peoples and Torres
Strait Islanders purpose is not being achieved. This is not a relevant purpose
for an Act that provides for the distribution of untied assistance.
Transparency of and accountability in
the grant distribution process can and should be improved.
And added:
The Aboriginal Peoples and Torres
Strait Islanders Principle has not been consistently addressed by LGGCs. The
Principle should be retained and strengthened to make explicit that the needs
of Indigenous people must be recognised in equalisation assessments.
It is beyond the scope of this post to
assess each of the submissions provided to the Commission, but I reproduce an extract
from the WA and NT Local Government Grants Commission submissions respectively:
Remote Indigenous Communities - the
provision of local government services to remote Indigenous communities is a
significant and ongoing issue which is still subject to funding negotiations
between the State and Commonwealth in Western Australia.
While the WALGGC recognises Indigenous populations within its General Purpose
methodology, it also acknowledges that many of these communities receive little
or few services from their respective local governments. This remains a
significant and ongoing concern for the WALGGC.
****************
In
concluding, the methodology can only go so far in delivering equity and
improvement in the delivery of local government services when the real issue is
insufficient funding from both the Commonwealth pool and an inability for shire
councils to generate own source funding.
Graphic
examples of this are Geelong receiving a grant in excess of the total NT
general purpose allocation to deliver local government services in one small
urbanised environment and the South Australian supplementary road funding which
is the equivalent of the total NT road funding allocation. We know the arguments about the invalidly of
such comparisons, but you can’t escape the fact that the per capita approach to
interstate distribution, the contradictory principles, unequal population
spread across jurisdictions, and the head start the states had on the Northern
Territory, all combine to produce perverse outcomes.
The
submission
by the Department of Regional Australia, Local Government, Arts and Sport is
almost entirely process oriented, and does not express a view on the issues
related to the provision of local government services to remote Indigenous
citizens.
The
CGC Staff Notes
of the discussions with the Local Government Grant Commissions for WA and SA
include the following comment in relation to WA (emphasis added):
Local
government services in indigenous communities. While some councils provide specialist
Indigenous services, such as language centres, interpreters and child care, indigenous communities reported that some
councils were not providing services in Indigenous communities. The old
methodology recognised indigenous needs through an indigenous assessment (based
on indigenous populations) and a dispersion assessment (recognising the number
of Indigenous communities in a council area). To better assess council
Indigenous needs, the new methodology no longer recognises indigenous communities
in the dispersion assessment although it still includes an indigenous
population assessment. This reduced the level of funding to councils with
indigenous communities. The amount allocated to indigenous needs in the new
methodology is $7 million. It is not based on what councils are actually
spending on Indigenous services.
It
is clear from the information available on the CGC website that the Review considered
a range of substantive issues related to remote communities and in particular
that options for more effective provision of local government services to
Indigenous citizens was under active consideration. A number of the most
salient issues were probably outside the Terms of Reference provided by the
then Treasurer. This does not mean however that they are not issues which demand
attention by policymakers, and which have an ongoing deleterious impact on the
quality of life of remote Indigenous citizens.
There
are also suggestions that the Review would likely have made recommendations
relating to improving the accountability and transparency in Australian
Government funding for local government.
The
CGC website notes that
The commission reported to
the Treasurer in mid-December 2013 on tangible measures for improving the
impact of the Local Government Financial Assistance Grants (FAGs) on the effectiveness
of local governments and their ability to provide services to their residents
within the current funding envelope.
The report has not yet
been publicly released.
Earlier this month, when the
Productivity Commission released its Overcoming Indigenous Disadvantage Report,
a chorus of voices, including Minister Scullion, claimed that part of the
reason for lack of progress relates to a lack of effective evaluation of Commonwealth
funding to Indigenous citizens. This is a view which had previously been articulated
by the Secretary of the Prime Ministers Department. See my earlier post on this
issue here.
The CGC review is an example of a
policy relevant review by a reputable and independent body of a significant Australian
Government mainstream program with an explicit mandate to address Indigenous disadvantage.
Yet the Review appears to have been shelved, its recommendations hidden, and no
action taken.
It is not clear why the Government has
not released the Commission’s Report. It is however clear that shortfalls and
deficiencies in the arrangements for funding local government services by the
Commonwealth are having an adverse impact on remote citizens, most of whom are
Indigenous. It is time that the Commonwealth put its shoulder to this wheel.
A first step would be to provide the
Australian public and relevant stakeholders with the benefit of the
Commonwealth Grants Commission’s report on these issues. A second step would be
to provide an Australian Government Response. A third would be to initiate
public discussion and dialogue around options for reform.
The importance of effective local government
services for remote communities has been increased by the policy shifts under
the present Government (achieved through one off financial incentives to key
states and territories) to confirm that states and territories should take on responsibility
for the provision of essential services in remote communities. These are
largely services that are delivered by local government. See my previous post
on this issue in relation to Western Australia here.
The fact that important issues
relating to the effectiveness of local government and essential services funding
for remote communities can be effectively ignored and receive no public
attention raises questions regarding the effectiveness of parliamentary
oversight (the Senate Estimates Cross Portfolio arrangement does not include
the agencies which deal with local government), and the effectiveness of key
stakeholder groups. There is no peak body for remote local governments, the
Australian Local Government Association appears to be a creature of the
hundreds of local governments throughout settled Australia (and thus does not
appear to advocate enthusiastically for remote services), and peak Indigenous
bodies appear not to have a focus on monitoring key developments in local
government.
Of course, one would hope that the
Minister for Indigenous Affairs and his Department would play an active role in
encouraging other agencies and portfolio ministers to drive positive reform for
Indigenous Australians. Based on the outcomes to date on this issue, the
performance of the Indigenous affairs portfolio has been less than optimal.
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