The latest reforms to the Local Government Act 1995 in Australia represent the most significant changes in 25 years. These reforms aim to ensure local governments better serve residents and ratepayers. The reforms are focused on six key themes: earlier intervention and stronger penalties, reducing red tape and increasing consistency, greater transparency and accountability, stronger local democracy and community engagement, clearer roles and responsibilities, and improved financial management and reporting. The first tranche of amendments, the Local Government Amendment Act 2023, focused on electoral reform, while the second tranche will introduce a new Local Government Inspector and monitors for early intervention, as well as other important reforms to the local government sector.
Key Takeaways
- The latest reforms to the Local Government Act 1995 in Australia aim to improve how local governments serve residents and ratepayers.
- The reforms focus on themes like reducing red tape, increasing transparency and accountability, and strengthening local democracy and community engagement.
- The reforms are being introduced in two tranches, with the first focusing on electoral reform and the second introducing new oversight mechanisms.
- The reforms represent the most significant changes to local government in Australia in the past 25 years.
- Residents and ratepayers are expected to benefit from the improved services and increased community involvement under the new reforms.
Key Drivers of Population Growth in Regional Australia
According to research, the key factors driving population growth in regional Australia include proximity to the coast, major metropolitan areas, and availability of air services, as well as the affordability of housing. Respondents highlighted ‘lifestyle’, ‘personal reasons’, and ’employment’ as the top factors influencing their decision to relocate.
Factors Influencing Relocation Decisions
Over the past five years, more affordable housing and an enhanced lifestyle have been major drivers for people moving from metropolitan to regional areas. However, higher regional housing prices can discourage people from making the move. Employment remains a crucial factor, making policies that foster economic growth and local job creation vital for expanding regional populations.
Coastal ‘sea change’ and high environmental amenity ‘tree change’ regions continue to attract high numbers of migrants, with some areas being the fastest growing regions in Australia such as the Sunshine Coast and Gold Coast. Connectivity through major railways, roads, airports, and internet connection speeds is also positively related to growth in regional cities.
Retention Challenges and Policy Implications
Despite the appeal, respondents were more likely to move again within five years due to gaps in health and education services, unaffordable housing or lack of rental availability, crime rates, and climate concerns. To foster population growth and retention, policies aimed at enhancing liveability, such as improving housing affordability and availability, bolstering local health and education services, upgrading local infrastructure, and increasing funding for regional airports and tertiary campuses, are crucial.
| Region | Likely to Move Within 5 Years |
|---|---|
| Broken Hill | 44% |
| Ballarat | 35% |
| Port Macquarie Hastings | 30% |
“46 percent of respondents expressed a preference to move to other regional cities over capital cities, countering the broader urbanization trend in Australia.”
Local Government’s Role in Enhancing Community Wellbeing
Local governments play a vital role in fostering community wellbeing, social cohesion, and national productivity across Australia. As the level of government closest to the people, local councils are fundamental in shaping the liveability of our cities, towns, and rural areas. However, local governments face significant fiscal challenges, managing 33% of public non-financial assets while raising only 3.6% of Australia’s total taxation revenue.
The resilience of local communities is closely tied to the financial sustainability of their local governments. Restoring the quantum of Financial Assistance Grants to at least 1% of Commonwealth taxation revenue can greatly advance the ability of councils to deliver essential services and infrastructure that enhance community wellbeing.
Local governments are required to develop municipal public health and wellbeing plans every four years, following a council general election. These plans, mandated by the Public Health and Wellbeing Act, must align with the state’s public health and wellbeing priorities to address community needs effectively. By collaborating with regional Department of Health staff, councils can ensure their plans are implemented and evaluated to drive tangible improvements in community health and liveability.
“Local governments are fundamental to achieving liveability in our cities, towns, and rural areas.”
Beyond their formal planning responsibilities, local councils play a crucial role in fostering social cohesion and community identity. By supporting local initiatives, events, and community groups, councils contribute to the overall wellbeing and sense of belonging within their jurisdictions. This, in turn, strengthens the social fabric and national productivity, as thriving local communities are the backbone of a prosperous Australia.
As the level of government closest to the people, local councils must be empowered and resourced to fulfill their vital function in enhancing community wellbeing. By addressing fiscal challenges and collaborating with state and federal counterparts, local governments can continue to make a significant impact on the lives of Australians, ensuring the livability and sustainability of our communities.
Fiscal Challenges Faced by Local Governments
Local governments in Australia face substantial fiscal challenges as they manage a significant portion of public non-financial assets (33%) but have a relatively small revenue base, raising only 3.6% of Australia’s total taxation revenue. This disparity has important implications for the ability of local councils to provide social services and local infrastructure to respond to changing demographics and population growth or decline.
Inadequate Revenue Sources
Property rates are the primary revenue source for local governments in Australia, though they face challenges due to their narrow tax base and shared taxation with State governments. Additionally, there are legislative restrictions on local government’s ability to raise revenue, particularly regarding property rates and user charges, limiting their capacity for revenue generation.
Infrastructure Maintenance Burden
Local governments have the largest relative infrastructure task in terms of asset management, with responsibility for more than 75% of the nation’s roads. However, their financial circumstances make it difficult to maintain and expand existing roads or build new ones due to inadequate funds. Rising cost pressures on local governments have been exacerbated by wage increases and infrastructure costs due to labor shortages and rising infrastructure expenses.
| Statistic | Value |
|---|---|
| Local governments in Australia employ nearly 200,000 people and manage assets valued at $643 billion. | – |
| Annual operational spend for local governments exceeds $38 billion. | – |
| Local governments are responsible for one-third of Australia’s public infrastructure, including 77% of the national road network. | – |
| Increasing block transfers of Commonwealth funds to local governments can deliver greater efficiency and administrative cost savings of $236 million per year and increase GDP by $330.8 million annually. | – |
| Investing an additional $1 billion each year into the maintenance of local government roads would increase GDP by $354.6 million annually. | – |
| The share of local government revenue (including grants and subsidies) as a percentage of total revenue raised by Australian and State governments declined from 5.7% in 1998-99 to 5.4% in 2005-06. | – |
These fiscal challenges faced by local governments have far-reaching implications for the maintenance and expansion of critical infrastructure, as well as the delivery of essential community services. Addressing these issues will require a collaborative approach between local, state, and federal governments to ensure the long-term sustainability of local communities.
Latest Australian Local Government Changes Affecting Residents
The Australian government has introduced a series of reforms to the Local Government Act 1995, aiming to ensure local councils better serve their residents and ratepayers. These changes focus on six key areas: earlier intervention and stronger penalties, reducing red tape and increasing consistency, greater transparency and accountability, stronger local democracy and community engagement, clearer roles and responsibilities, and improved financial management and reporting.
The first tranche of amendments, known as the Local Government Amendment Act 2023, centered on electoral reform. The second tranche will introduce a new Local Government Inspector and monitors for early intervention, as well as other critical reforms to the local government sector.
Some of the notable changes include:
- The May 2023 budget reduced the withholding tax rate for foreign investors in build-to-rent properties from 30% to 15%.
- The tax depreciation rate for eligible new build-to-rent projects increased from 2.5% to 4% per annum.
- The Commonwealth Government provides a Guarantee of up to 18% of the value of a home loan through the Home Guarantee Scheme for eligible home buyers.
- The Commonwealth Government offers an equity contribution of up to 40% for new homes and up to 30% for existing homes under the Help to Buy shared equity scheme.
These reforms aim to enhance the responsiveness and effectiveness of local governments in addressing the needs and concerns of their constituents, fostering greater community engagement and sustainable development.
| Key Changes | Impact |
|---|---|
| Reduced withholding tax rate for foreign investors in build-to-rent properties | Incentivizes investment in affordable housing options |
| Increased tax depreciation rate for new build-to-rent projects | Encourages the development of rental properties |
| Home Guarantee Scheme and Help to Buy shared equity program | Improves accessibility and affordability of home ownership |
These reforms aim to enhance the responsiveness and effectiveness of local governments in addressing the needs and concerns of their constituents, fostering greater community engagement and sustainable development.
Initiatives to Boost Local Community Investment
The Australian Local Government Association (ALGA) has proposed several budget initiatives to support additional investment in local communities and boost national productivity. These initiatives focus on restoring financial assistance grants and funding for critical infrastructure projects, such as freight routes and local roads.
Restoring Financial Assistance Grants
ALGA has called for the restoration of the quantum of Financial Assistance Grants to at least 1% of Commonwealth taxation revenue. This would add more than $1.42 billion to Australia’s GDP and create 4,000 new jobs, bolstering the local community investment and national productivity.
Funding for Freight Routes and Local Roads
Additionally, ALGA has proposed a Local Government – Higher Productivity Investment Plan to fund freight routes and local roads. This initiative would contribute $1.07 billion to GDP and create 2,300 jobs, further strengthening the local community’s infrastructure and enhancing national productivity.
These budget-focused initiatives demonstrate the Australian Local Government Association’s commitment to empowering local communities and driving national economic growth through strategic investments in critical infrastructure and financial assistance programs.
| Initiative | Impact on GDP | Job Creation |
|---|---|---|
| Restoring Financial Assistance Grants | $1.42 billion | 4,000 new jobs |
| Local Government – Higher Productivity Investment Plan | $1.07 billion | 2,300 jobs |
“These budget-focused initiatives demonstrate the Australian Local Government Association’s commitment to empowering local communities and driving national economic growth through strategic investments in critical infrastructure and financial assistance programs.”
Promoting Equitable Access to Community Services
In an effort to enhance the liveability and sustainability of communities across Australia, the Australian Local Government Association (ALGA) has proposed a Local Government Community Infrastructure Program. This initiative would invest $300 million per annum over four years, with the aim of promoting equitable access to community services. By investing in local infrastructure, the program seeks to not only improve the quality of life for residents but also attract and retain a skilled workforce, ensuring the efficient and productive operation of local areas.
According to economic modeling, the ALGA’s proposed initiatives could add more than $8.97 billion to Australia’s Gross Domestic Product (GDP) and create over 24,000 new jobs. Specific benefits of the Local Government Community Infrastructure Program include a projected $1.41 billion contribution to the GDP and the creation of 3,600 jobs.
Investing in local community infrastructure is essential for fostering vibrant and inclusive communities. By ensuring equitable access to community services, the program aims to enhance the overall liveability and sustainability of communities, ultimately benefiting residents and supporting national productivity and job creation.
“Local governments raise 3.6% of Australia’s total taxation revenue but manage 33% of public non-financial assets. They are responsible for over 75% of the nation’s roads, despite having the smallest revenue base among the three levels of government.”
- The Local Government Community Infrastructure Program is expected to contribute $1.41 billion to the GDP and create 3,600 jobs.
- Proposed initiatives could add an estimated $8.97 billion to national GDP and create around 24,000 new jobs over three years.
- The ALGA is advocating for federal support in providing at least $5.5 billion over the next decade to address Indigenous community needs, which could add $1.66 billion to the GDP and lead to 5,300 job opportunities.
By investing in local community infrastructure, the Local Government Community Infrastructure Program aims to enhance the equitable access to community services, boost national productivity, and create new job opportunities, ultimately improving the quality of life for all Australians.
Disaster Mitigation and Climate Change Response
As the impacts of climate change continue to intensify, local governments in Australia are playing a crucial role in disaster mitigation and community resilience. The Australian Local Government Association (ALGA) has called for the establishment of a targeted disaster mitigation program, funded at $200 million per annum for four years, to protect communities from the devastating effects of natural disasters.
Natural Disaster Preparedness
Natural disasters, such as bushfires, floods, and cyclones, have become increasingly frequent and severe due to climate change. Local governments are at the forefront of these challenges, responsible for implementing measures to enhance community disaster mitigation and preparedness. This includes investing in infrastructure upgrades, improving emergency response plans, and educating residents on disaster risk reduction strategies.
Climate Change Partnership Fund
In addition to disaster mitigation efforts, ALGA has proposed a Local Government Climate Change Partnership Fund of $200 million over four years to support communities with their climate change response. This fund would enable local governments to implement community resilience initiatives, such as renewable energy projects, sustainable urban planning, and adaptation measures to address the impacts of climate change. These efforts would contribute $620 million to GDP and create 1,500 jobs, further strengthening the sustainability and adaptability of local communities.
“Investing in disaster mitigation and climate change response is not only crucial for protecting our communities, but it also presents an opportunity to create jobs and drive sustainable economic growth.”
Supporting Indigenous Communities and Digital Transformation
The Australian government has recognized the importance of digital inclusion for Indigenous communities, setting a goal to achieve equal levels of digital inclusion among Aboriginal and Torres Strait Islander people by 2026. The recently announced Plan outlines a strategic framework and a series of actions to enhance digital inclusion for First Nations people from 2023 to 2026.
Digital connectivity plays a crucial role in fostering economic, social, and environmental well-being. The Australian technology industry has experienced substantial growth, offering significant opportunities for First Nations people. Digital inclusion provides avenues for education, cultural preservation, community engagement, and entrepreneurship for Indigenous individuals.
However, reports highlight that many Aboriginal households and communities, especially in remote areas, face multiple barriers to digital inclusion. Factors influencing digital exclusion include reliance on mobile internet, limited low-cost plans, low data allowances, and poor infrastructure for reliable connections. Targeted and place-based solutions developed in consultation with Aboriginal communities are essential to ensure affordable and reliable access to digital services that reflect local community needs.
To address these challenges, the Australian Local Government Association (ALGA) has advocated for continued funding of at least $5.5 billion over the next decade to address the needs of Indigenous communities. This investment would add $1.66 billion to GDP and create 5,300 jobs. Additionally, ALGA has proposed a Smart Communities Program of $100 million per annum and a Digital Local Government and Rural/Regional Telecommunications Program of $100 million over four years to support communities on their digital transformation journeys, contributing $340.4 million to GDP and creating 1,000 jobs.
These initiatives underscore the importance of supporting Indigenous communities and enabling their digital transformation, which holds the potential to drive national productivity and job creation.
| Initiative | Funding | Economic Impact | Job Creation |
|---|---|---|---|
| Funding for Indigenous Communities | $5.5 billion over 10 years | $1.66 billion added to GDP | 5,300 jobs |
| Smart Communities Program | $100 million per annum | $340.4 million added to GDP | 1,000 jobs |
| Digital Local Government and Rural/Regional Telecommunications Program | $100 million over 4 years | $340.4 million added to GDP | 1,000 jobs |
“Digital inclusion is crucial for the economic, social, and environmental well-being of Indigenous communities. Targeted and place-based solutions, developed in consultation with Aboriginal communities, are essential to ensure affordable and reliable access to digital services that reflect local needs.”
Addressing Affordable Housing and Homelessness
The Australian Local Government Association (ALGA) has called for the reinstatement of a national governance model to address the critical issues of affordable housing and homelessness. This initiative aims to involve local governments in developing more cost-effective and equitable funding approaches across all parties involved.
Australia has set an ambitious goal of delivering 1.2 million new houses over the next five years, representing a 40% increase in annual housing supply. This accelerated housing construction could boost economic activity by around $30 billion per year, or 1% of GDP. However, the total trunk infrastructure funding gap to achieve this target is estimated at $19.4 billion over five years, with 80% of local governments unable to cover these expenses.
Widespread housing affordability issues can have far-reaching macroeconomic impacts, including on inflation and labor costs, potentially jeopardizing economic growth and competitiveness. Shortages of affordable housing can also lead to increased risks of homelessness, overcrowding, or poor housing quality, further straining government resources.
To address these challenges, the government has committed $118 million over five years to support young people who are homeless or at risk through the Reconnect program. Prevention and early intervention strategies are also being prioritized, aiming to shift the service system from crisis management towards post-crisis support and long-term solutions.
By involving local governments in the national governance model, the initiative seeks to develop more effective and equitable approaches to affordable housing and homelessness. This collaborative effort aims to leverage the unique insights and resources of local communities to tackle these critical issues and improve the overall wellbeing of residents across Australia.
| Key Statistic | Value |
|---|---|
| Increase in annual housing supply target | 40% |
| Estimated trunk infrastructure funding gap over 5 years | $19.4 billion |
| Local governments unable to cover trunk infrastructure expenses | 80% |
| Commitment for Reconnect program funding over 5 years | $118 million |
“Prevention and early intervention strategies represent the most cost-efficient approach to addressing homelessness, being more effective in maintaining tenancy, providing rapid rehousing, and investing early in protective factors such as health and education.”
Enhancing Transparency, Accountability, and Local Democracy
The latest reforms to the Local Government Act 1995 in Australia focus on improving transparency, accountability, and local democracy within the sector. These changes aim to strengthen community engagement, clarify roles and responsibilities, and enhance financial management and reporting practices in local governments.
One key aspect of the reforms is the emphasis on transparency. Local governments are now required to provide more detailed and accessible information to their residents and ratepayers. This includes publishing comprehensive financial reports, council meeting minutes, and other relevant data online. The goal is to foster a culture of openness and empower citizens to better understand and engage with their local government’s decision-making processes.
Alongside transparency, the reforms also aim to enhance accountability. Local governments are now subject to stricter performance monitoring and reporting requirements, with clear guidelines on their roles and responsibilities. This helps ensure that elected officials and council staff are held accountable for their actions and decisions, ultimately improving the quality of public service delivery.
Furthermore, the reforms encourage greater local democracy by creating more opportunities for community engagement. Local governments are now required to establish various consultative forums and engagement strategies to gather feedback from residents on issues that affect them. This helps to ensure that local decision-making aligns with the needs and priorities of the community.
| Key Reforms to Enhance Transparency, Accountability, and Local Democracy |
|---|
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These reforms are designed to ensure that local governments in Australia are better equipped to serve the needs of their residents and ratepayers, fostering a more transparent, accountable, and democratic system of local governance.
“These reforms are a crucial step in strengthening the relationship between local governments and the communities they serve. By enhancing transparency and accountability, we can build trust and empower citizens to be more engaged in the decision-making process.”
Conclusion
The latest reforms to the Australian Local Government Act 1995 represent a significant overhaul of the sector, aiming to ensure local governments better serve their residents and ratepayers. These changes, coupled with the budget initiatives proposed by the Australian Local Government Association, focus on enhancing community wellbeing, boosting national productivity, and investing in local communities across the nation.
By addressing the fiscal challenges faced by local governments and aligning policies with the evolving needs of communities, these reforms and initiatives seek to create more livable, sustainable, and prosperous local areas. From mitigating disasters and climate change to supporting digital transformation and addressing affordable housing and homelessness, the comprehensive approach outlined in this article underscores the critical role of local governments in shaping the future of Australia.
As local governments navigate these changes and implement new strategies, it is crucial that they maintain a steadfast commitment to transparency, accountability, and local democracy. Only through this holistic approach can local authorities truly empower their communities and drive sustainable progress that benefits all Australians.
