The local government referednum: What is it?

What is the local government referendum?

The local government referendum, to be held on the same day as the 2013 federal election, will ask the Australian people to vote on financial recognition of local councils in Australia.

The Australian Electoral Commission explains:
''"The proposed law would amend the Constitution to make specific provision in relation to the granting of financial assistance by the Commonwealth to local government bodies.

The provisions of the Constitution, as they would be affected by this proposed law, are set out below. Words proposed to be inserted in the Constitution are presented in bold text.

96 Financial assistance to States and local government bodies
During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State, or to any local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit."''

In essence, a ‘yes’ vote would mean the federal government could continue to directly provide money to local councils for services such as basic infrastructure.

Why does it matter?

Federal governments have provided money to local councils for generations, but two recent High Court cases have cast doubt on the legality of this funding system.

The rulings may have a profound effect on the way local councils are able to operate, by essentially making any direct funding of local councils by federal governments illegal.

"The commonwealth may well find now that it's made what could amount to billions of dollars in illegal payments," Professor George Williams, the Anthony Mason professor of law at the University of NSW said after one of the High Court rulings.

“It's one of those very rare High Court decisions you get that's going to change the way government operates.”

A ‘yes’ vote would enshrine a system which has been operating for some time, allowing governments to provide funding to local councils.

The case for a ‘Yes’ vote

The Australian Local Government Association says a ‘Yes’ vote will allow local governments to continue to provide basic services, without the fear of the funding being subject to legal challenge.

“In the absence of greater funding from Commonwealth and state governments, local government faces the choice of reducing services, further delaying repair work, or trying to raise more local revenue (from local communities already paying their fair share), the association says.

“Funding certainty is critical to the short and long-term planning of councils, particularly in rural and regional areas where there is a greater reliance on external funding.”

The ‘Yes’ vote initially enjoyed the support of both major parties (both parties, when in power, will want to be able to provide the funding)

But the Coalition’s support for the change appears to have waned, with Opposition Leader Tony Abbott criticising the government’s handling of the sensitive issue.

"I say to the Australian people, if you don't understand it, don't vote for it," Mr Abbott said in July.

"If you're not fully persuaded, don't vote for it because our constitution is far too important to be trifled with."

The case for a ‘No’ vote

Critics of the say it is simply a ‘power grab’ from Canberra.

Leading the case in the fight for a ‘No’ vote is free-market think tank The Institute of Public Affairs.

“The referendum might sound well intentioned, but in practice it will lead to a massive concentration of power in the hands of Canberra politicians and bureaucrats”, the IPA’s Tim Wilson says.

“The change isn't just to allow Canberra to fund councils, it also allows them to attach strings to every dollar based on Canberra's priorities.”

Mr Wilson argues a ‘Yes’ vote would allow a federal government to withhold or withdraw funding to local councils, unless those councils aligned with the federal government’s political aims.

“The Federal Government already gives tied grants to states based on what makes it easier for Canberra bureaucrats to tick a box on a form, not local need”, Mr Wilson says.

“Our political system already lacks accountability. This referendum will make it worse. Sadly, local councils are more attracted by invitations to the Lodge for tea and the glittering pot of Canberra gold at the end of the referendum rainbow than defending local services based on local need.”

Will it pass?

Only eight of 44 constitutional referenda have passed in Australia’s history, due mainly to the so-called ‘double majority’, which is necessary to amend the constitution.

The ‘double majority’ means the referendum requires a majority in a majority of states – a proposition which is all but impossible without bipartisan support in Canberra.

As it stands, Labor and the Greens both wholeheartedly support a ‘Yes’ vote. The coalition, however, is divided along ideological lines, with some arguing for smaller government (the ‘No case) and others claiming a ‘Yes’ vote will ensure local councils are able to properly service their constituents.