Historic agreement to ease cost shifting burden on councils

Intergovernmental agreement on cost shifting

An historic intergovernmental agreement (IGA), signed in Canberra today, will help ease the cost shifting burden carried by Australia's 700 councils.

Representatives form the three spheres of government - federal, local and state - met in Canberra today as the Local Government and Planning Ministers Council and agreed to the IGA. President of the Australian Local Government Association, Cr Paul Bell, signed the agreement on behalf of local government.

"This is an historic agreement that has the potential to make a real difference to every council in Australia," Cr Bell said.

"Cost shifting by state and federal governments has been estimated by ALGA to have a negative impact on councils of between $500m and $1.1bn each and every year.

"The IGA was a key recommendation of the bipartisan, Rates and Taxes: A fair share for responsible local government report, tabled in Federal Parliament in November 2003. It found that there 'was no doubt that local government has, over a number of years, been on the wrong end of cost shifting'.

"I congratulate the Federal Minister for Local Government, Jim Lloyd, for providing his leadership on this issue and applaud all state and territory ministers for working together to get an agreement that was acceptable to all parties.

"The IGA provides a framework to improve the way the three spheres of government relate to each other to achieve the best possible outcomes for communities. The focus is on the way services or functions are transferred by federal and state governments to local government.

Key features include:

• guiding principles covering future arrangements between the three spheres of government for the delivery of services and functions by local government
  
• a framework for further, bilateral and trilateral agreements to be developed covering the delivery of specific services and functions
  
• review and compliance provisions

"The provision for the development of further bilateral or trilateral agreements to cover the transfer of specific responsibilities is of critical importance.

"These agreements will need to have clear outcomes, clearly defined roles and responsibilities of each sphere of government, clear financial mechanisms, monitoring and evaluation processes and dispute resolution mechanisms.

"We now hope that - when future services and functions are negotiated, agreed and transferred to local government - councils won't be short-changed and left out-of-pocket.

"In short, the IGA gives us a high level agreement that will help ensure local government and local communities receive fair treatment.

"The impact of cost shifting has varied from council to council. Cost shifting can take many forms. It might be the transfer of a state or federal asset to councils, such as a regional airport, regional roads or sea walls. Or it might take the form of regulatory functions, previously undertaken by a state which is transferred to local government.

"Sometimes the responsibility is transferred with funding attached. But the funding is often inadequate or short-lived, leaving local government significantly out of pocket. At the end of the day, it's the community that pays.

"The IGA on cost shifting opens a new, more optimistic chapter in intergovernmental relations. It addresses one of the key concerns of local government. The major concern - fair funding arrangements - remains to be addressed," Cr Bell said.

For further information on the IGA see the ALGA website.
Contacts
Cr Paul Bell AM, ALGA President 0418 791 596
Rohan Greenland, Director, Public Affairs 0412 859 434 or 02 6122 9434