Local government: the road to Constitutional recognition

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Local government: the road to Constitutional recognition

Posted 11/01/2012 by Sophia Fernandes

As part of the agreements to form government in September 2010, the ALP committed to advancing constitutional recognition of local government, including holding a referendum during the 43rd Parliament or at the next election.

An independent Expert Panel on Constitutional Recognition of Local Government was appointed in April 2011 by the federal government. Headed by NSW Chief Justice the Hon. James Spigelman AC QC, the panel circulated a discussion paper and conducted community consultation releasing their final report on 22 December 2011. This post will discuss findings and conclusions from the panel's final report.

The panel considered four types of recognition; symbolic recognition, democratic recognition, financial recognition and recognition through federal cooperation. The panel noted that both symbolic recognition (via an insertion of a preamble to the Constitution) and recognition through federal cooperation gave rise to issues that extended beyond local government and therefore were beyond its scope.

The panel commissioned Newspoll to conduct polling research on public sentiment including the level and nature of support for constitutional recognition of local government (available at Appendix C). The research revealed strong in-principle support for recognition but when faced with challenges to the proposal, public support decreased significantly. The report pointed out that while polling showed high initial support, the reality when faced with a referendum question could be far different.

In context, out of the forty-four referenda put to the Australian people, only eight have passed. The expert panel report acknowledges the general historical reluctance of Australians to change the Constitution. The panel took this into consideration in recommending support for a referendum in 2013 on financial recognition, placing two conditions on the proposal:

...first, that the Commonwealth negotiate with the States to achieve their support for the financial recognition option; and second, that the Commonwealth adopt steps suggested by ALGA necessary to achieve informed and positive public engagement with the issue, as set out in the section of this report on the concerns about a failed referendum. (p.2)

In submissions made to the panel, out of the four proposed forms of recognition, financial recognition received the most support both at federal and state levels, although conditional upon the wording of any referendum question. Currently, the federal government does provide direct funding to local government for example through the National Building Roads to Recovery program and through the Regional Development Australia Fund. The constitutional validity of funding is often debated, citing the High Court decision in Pape vs Commissioner of Taxation (2009). The panel notes that in submissions, the argument of constitutional validity is most commonly made in support of recognition as local governments assert that they depend on Commonwealth funding to ensure financial stability. While the ALP is known for long-standing support of constitutional recognition of local government, stated Coalition policy is to support financial recognition with both the Opposition leader and Leader of the Nationals expressing in-principle support. At a State level, most governments expressed in their submissions that they would reserve judgement until release of the wording of the referendum, some stating in-principle support while others (Vic, WA) were against any of the proposals and questioned whether maintaining the status quo would adversely affect current Commonwealth-local government funding arrangements. Overall the panel points out:

...there is a very real doubt about the constitutional validity of direct grant programs that do not fall under a head of Commonwealth legislative power. (p.4)
The report does not provide a concrete definition of the manner in which financial recognition would be included in the Constitution. Broadly, financial recognition would remove doubts as to the validity of the Commonwealth providing direct funds to local government.

Although the report points out that financial recognition is the most viable type of change to the Constitution, as long as it meets the conditions as discussed above, it does caution about the inclusion of the term 'local government' in the Constitution and the potential effect this might have as a 'constitutional expression'. The manner in which the term is included in the Constitution could mean that 'local government' would be subject to interpretation by the High Court and would create the possibility of the High Court determining the legal definition of local government. As a starting point for the consideration of the wording of the referendum, the report summarises the manner in which the term 'local government' is currently characterised in Commonwealth, State and Territory legislation (Appendix E).

Two previous referenda on the issue, one in 1974 and one in 1988 had previously failed largely due to lack of bi-partisan support for constitutional recognition, a lack of urgency to reform the system, the manner in which the question was worded, and multiple questions being put to Australians that drew attention away from the issue. The Parliamentary Library publication, Local government and the Commonwealth: an evolving relationship, provides a historical overview of the development of local governments and details on the two previous referenda.

The Minister for Regional Australia, Regional Development and Local Government
Minister for the Arts, the Hon. Simon Crean announced that the government is expected to respond to the report in early 2012.

The Australian Local Government Association (ALGA) welcomed the report and recommendation for financial recognition of local government in the Constitution. ALGA announced that they would respond to the report in early 2012.

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