Regional Development and Local Government: Three Generations of Federal Intervention (Report‪)‬

1. INTRODUCTION Contemporary Australian local government is beset by a number of difficult problems. Three distinct constellations of economic and political forces seem to have led to these problems. Firstly, grinding ongoing nnancial distress has given rise to grave concerns over the financial sustainability of many local authorities, particularly in regional, rural and remote areas of the country. In a path-breaking report, the Commonwealth Grants Commission (CGC 2001, pp. 52-3) identined five chief causes for the financial crisis in Australian local government: (i) 'Devolution'--where a higher tier of government obliges local councils to assume new functions; (u) 'Raising the Bar'--where a higher level of government, through legislative enactments, increases the complexity and/or standard of provision of local government services thus raising costs; (iii) 'Cost Shifting'--where a municipal council provides a service for federal or state government agencies without adequate financial compensation and where a higher tier of government no longer provides an essential service thereby forcing a local authority to accept responsibility; (iv) 'Increased Community Expectations'--where local communities demand improvements to local services or the provision of an entirely new service; and (v) 'Policy Choice' where a given council voluntarily expands or improves services. In addition, local councils are also sometimes partially responsible for their financial problems; for example, in many instances local councils have been reluctant to strike rates and other charges and fees at realistic levels (Johnson, 2003).