Wednesday, November 02, 2011

Local Government & the Australian Constitution

Just at present, an expert panel is reviewing the question of whether or not there should be some form of constitutional recognition for local government. The following submission to the panel was written by Newcastle accountant, Greg Howell, the president of the emerging Northern New State Movement.

Constitutional recognition for local government raises some complicated issues from a new state perspective. Many new staters support an enhanced role for local government, but how to achieve that without destroying the ideal of real self government raises complicated issues.

I will explore some of those issues tomorrow drawing from Greg's analysis. For the moment, I note that Greg is writing in a personal capacity to place issues and ideas on the table.   

29th October, 2011
The Secretariat
Expert Panel on Constitutional Recognition of Local Government
GPO Box 803
Canberra ACT 2601

Submission to Expert Panel on Constitutional Recognition of Local Government

As an interested citizen, I am responding to the discussion paper published on the website

I have no political affiliations, but I am acutely aware of the difficulties and challenges faced by regional Australia. My own perspective is that of a resident of Newcastle – Australia’s largest non-capital city, and a significant but often neglected large regional centre.


The role of government should be to provide its’ citizens with fairness in terms of democratic representation, self-government where possible and equitable distribution of funding and services to all citizens, regardless of whether they live in capital cities or regional cities and towns. Regional Australia gets a very poor deal in this regard.

Consider this:

1) The Newcastle region has over 550,000 people residing in five LGA’s. Those five LGA’s have no unifying strategy for the Lower Hunter, nor do they have any significant capability of developing any such strategy. They are largely in competition with each other and have limited financial resources. Most significant government matters are administered at state level in Sydney by bureaucrats with little knowledge or understanding of the Lower Hunter.

2) The Newcastle region alone has a larger population than the state of Tasmania and also larger than the territories of ACT and NT, each of which has self-government, Senate representation, a voice at COAG and a share of Commonwealth funding. The Hunter and Northern NSW generally have no such independent voice or advocacy.

3) Northern NSW from the Hunter to the Queensland border has a population exceeding 1.5 million people, similar to that of South Australia. This represents approximately 7% of Australia’s total population in an area larger than the state of Victoria. Yet it's voice, unique needs and aspirations are swamped by metropolitan Sydney which dominates the state of NSW.

4) The people of Northern NSW have held aspirations of self-government which pre-date the creation of Victoria in 1851 and Queensland in 1859. Those states have far outstripped Northern NSW since their creation. Without self-government, Northern NSW slips ever further behind in infrastructure, services and relative importance. This is not only to the disadvantage of Northern NSW but also the disadvantage of Australia.

5) Politically, Northern NSW currently provides just one of the 76 Senators to the Australian Parliament. It has not provided a NSW state premier since the first years of federation and it’s only Prime Minister was Earle Page from Grafton (for just 20 days in 1939). That is an appallingly poor representation for Australia’s largest, and arguably it’s most important, region.

Northern NSW has Australia’s largest regional population, yet the above suggests that it is under-represented at higher levels of government and suffers from a lack of self-empowerment. All levels of government have failed Northern NSW badly. Regional Australia clearly needs more than just token recognition of relatively weak local government.

The discussion paper states that:

“The Constitution sets the basic rules on how governments, and the different arms of government, operate in Australia. Due to historical circumstances, it addresses only the relationships between State Governments, Territories and the Commonwealth. Local government is not mentioned anywhere in the Constitution.”

As the discussion paper states, Australia has indeed changed significantly since Federation. A nation of fewer than 4 million has grown to 22 million. Sydney’s population has grown from about ½ million to 4.4 million and its’ share of NSW population has grown from 36% to more than 60%. Northern NSW now has a greater population than had the entire state of NSW at the time of Federation. but a significantly lower proportion of the total state population.

In spite of these demographic changes Australia’s political landscape has remained static with no new states having been added in the 110 years since Federation. By comparison, USA has added 5 new states to their Federation in that time reflecting their continuing evolution and progress.

The relationship between the Commonwealth and the States has not always been smooth. The Commonwealth increasingly micro-manages state affairs, to the disadvantage of the States, via fiscal dominance and the state grants power contained in section 96 of the Constitution. It is hard to imagine how the Commonwealth might now also micro-manage some 560 competing local government bodies.

I will address my views in relation to the specific points in the discussion paper under the same headings.

Why recognise local government in the Constitution?

The discussion paper makes the claim that:

“Local government would be better able to attract the support and resources it needs, and to develop the new capacities to fulfil its increasingly important role in our system of government.”

This is a dubious claim without evidence. It is hard to imagine that local government would or could be any better positioned unless recognition is also accompanied by the ability to raise taxation revenue and make laws of its’ own. This in turn would change the entire nature of government in Australia and would probably have little chance of success in any referendum. This claim is not one that lends any significant weight to the need for local government recognition.

Ideas for changing the Constitution

The discussion paper has sought ideas that will:

  • “make a practical difference
  • have a reasonable chance at a referendum
  • resonate with the public.”

The expert panel noted a real potential Constitutional impediment to including any substantive provisions in the Constitution in that it could be held to “prohibit a State from altering the fundamental characteristics of a system of local government.”

It is hard to imagine any ideas that lack substantive provisions resonating with the public and having a reasonable chance of success at a referendum.

“The panel would also like to know whether there are any other ideas you would like to add.”

I have addressed my own ideas in detail under the heading “Further Questions”.

Symbolic recognition

“Do you think that, if the Constitution is changed to include a preamble or statement of values, local government should be referred to in either?”

“Symbolic recognition of local government would seek to enhance the status of local government in the Australian Federation in a way that has minimal or no legal effects.”

It is hard to see the purpose of any mere symbolic recognition of local government. If there is no substantive change from this process then this would be a truly wasted opportunity.

The discussion paper failed to examine just what, if anything, such a “preamble or statement of values” would be designed to achieve. This would seem to add little advancement to either the interpretation of the Constitution or the status of local government. Given that local government is recognised in each of the state constitutions, further reference in the Commonwealth Constitution would seem to be an unnecessary duplication.

We need to be careful to ensure that there is no overlap and confusion as to which level of government is ultimately responsible for the conduct of local government. If it is to remain the responsibility of the states (and there is no reason to believe that any change to this responsibility is either necessary or desirable) then why local government should be mentioned in the Commonwealth Constitution needs some explanation. Without an objective or an explanation of what this is intended to achieve I would not support this proposal.

Financial recognition

“Should the Constitution be changed to explicitly say that the Commonwealth Government can provide funding directly to local councils? Do you agree with either of the suggested changes to section 96 of the Constitution?”

Funding of local government services is a significant issue. Councils have relatively limited ability to raise revenue and limited powers delegated by their states. The states have ultimate fiscal responsibility for government within their state boundaries.

As pointed out in the discussion paper, direct funding by the Commonwealth is of questionable constitutional validity. I also do not agree that direct funding would be desirable since the demands of 560 LGA’s would potentially raise questions of equitable allocation of Commonwealth resources, as well as the real likelihood of further undesirable centralisation of power and control in Canberra.

It should be remembered why our states federated into one nation. The original purpose was for the common good with respect to matters of shared interest (eg. defence, foreign affairs, trade, communications, currency, pensions & welfare etc.). Local and regional matters such as public hospitals, education, roads, and justice remained, quite properly, state responsibilities. The states remain the cornerstone of our federation.

I doubt that our founding fathers had ever intended or even considered that the Commonwealth would become so fiscally dominant as it is today and that it would apply the state grants powers under section 96 in such a questionable manner in order to micro-manage state affairs, much less bypass the states altogether.

This is a significant issue in relations between the levels of government.

I would not support any proposals which have the effect of giving the Commonwealth more power to direct spending via tied grants to either the states or to bypass the states directly to local government bodies. This would only serve to increase centralisation, bureaucratic control and waste from Canberra, when the object should be more decentralisation and regional empowerment.

For reasons outlined above I would strongly oppose any of the suggested changes to section 96 of the Constitution.

Democratic recognition

“Should democratic elections for local governments be guaranteed by the Constitution? If so, which of the proposed provisions should be included in the Constitution?”

Councils have relatively limited ability to raise revenue and limited law making powers. The states remain ultimately responsible for administrations within their borders and therefore should retain the right to dismiss dysfunctional councils where necessary.

Council elections are already a democratic tradition across all states and territories. Dismissal of a democratically elected council is a rare event and unlikely to be taken for spurious reasons. I do support the principle that local government should be democratically elected and should not be dismissed except by an act of the state parliament as opposed to ministerial directive. However, this is and should remain a matter for each state and territory Constitution rather than a Commonwealth constitutional issue. I do not believe that local government is a Commonwealth matter and would be hesitant to support amendment of the Commonwealth Constitution in this regard.

Recognition through federal cooperation

“If the Constitution is changed to refer to the desirability of cooperation between the Commonwealth and the States, should local government be included in any such provision?”

In a practical sense governments already co-operate, although tension naturally occurs when state rights are impinged, when governments of opposing political persuasions disagree or when the Commonwealth and the States have different objectives.

I see little potential for improving and streamlining government by including local government in this process. It could potentially lead to a further blurring of responsibilities, bogging down the business of government in excessive consultation. The states should be free to carry out the business of government within their borders without Commonwealth interference. The Commonwealth’s primary responsibility must be to manage matters of national significance rather than to become involved in local or regional issues. I would oppose any such provision.

Further questions

“What do you think are the advantages and disadvantages of the particular ideas discussed in this paper?”

Mere symbolic recognition of local government would be a wasted opportunity. Yet I am even more concerned that something more than symbolic recognition for local government would represent a substantial shift in our system of government and potentially lead to greater regulation and control from Canberra. Regional Australia needs more decentralisation.

“Which ideas, or combination of ideas, do you think could best provide a basis for constitutional recognition of local government in Australia?”

For the reasons stated above I cannot support any of the ideas presented. Given the poor history of referenda in Australia and the failure of the 1974 and 1988 referendum questions, it would seem unlikely that enough support can be gathered for constitutional change without an exceptionally strong argument. None of the arguments presented in the discussion paper were persuasive and most proposals have significant ramifications barely considered.

“Are there any other ideas not covered in this discussion paper that you support?”

The Constitution has an existing but never used mechanism contained in Chapter 6 “New States”, sections 121 – 124. This should be activated to create the decentralised government that regional Australia desperately needs.

The constitution requires no amendment to create new self-governing states, although an intransigent state refusing to cede territory could still be an impediment under the provisions as they currently stand. However, this would run counter to the principles of self-determination and a state parliament would find it difficult not to accede to regional self-government if there was a plebiscite in the proposed new state area in favour.

There is a long precedent for states acquiring and ceding territory. During the 19th Century NSW relinquished control of territory as needed for the self-government of Tas, SA, Vic and Qld. In the 20th Century NSW ceded the ACT and Jervis Bay to the control of the Commonwealth, which in turn subsequently established self-government for the ACT. NT has been variously part of NSW and SA before assuming it’s present day borders and self-government. South Australia and Queensland have also both had border adjustments before assuming their present day borders.

There is no logical reason to assume that all existing state borders are set in stone or that no new Australian states should now be created from territory ceded by a parent state. The Cohen and Nicholas Royal Commissions in the first half of the 20th Century both recommended the creation of a new state of New England in Northern NSW. It is now time for the question of self-government for New England to be revisited and for an honest and fair plebiscite to be conducted throughout Northern NSW. Other regions such as North Queensland may also have strong desires for self-government and should also be given this opportunity.

“Do you think that there are other ways of recognising the role of local government and enhancing its status, apart from constitutional change?”

Local government has little or no ability to plan for an entire region or even one metropolis, where there are multiple LGA’s that together make up a broader community. State government is required for matters of regional significance, rather than enhanced recognition of local government.

For example, the Newcastle City Council LGA has approximately 155,000 residents while neighbouring Lake Macquarie City Council LGA has 200,000 residents. The other three neighbouring LGA’s of Maitland, Cessnock and Port Stephens add almost another 200,000 people to the Lower Hunter population. Yet Newcastle, as the major CBD, bears the greatest responsibility for regional facilities which benefit the entire Newcastle region. For example, Number 1 Sports Ground, Newcastle Region Art Gallery, Newcastle Region Museum, Civic Theatre, Blackbutt Reserve are maintained by Newcastle City Council. The ratepayers of the city of Newcastle also bear the cost of maintaining public roads that service other state owned regional facilities such as John Hunter Hospital, Ausgrid Stadium, Broadmeadow Railway Station and Newcastle University.

Newcastle Airport, another regional facility is a partnership of Newcastle City Council and Port Stephens Shire Council. This is a rare example of what can be achieved when there is a regional focus. A New England state government with its’ own treasury, taxation base, public service and sharper northern focus could achieve so much more for Northern NSW.

There might be certain minimum criteria for identification of a particular region deserving of recognition as a proposed new state. For example there should be:

  • a desire for self-government;
  • a distinct regional identity (such as Hunter/New England and Northern NSW); and
  • a population not less than the existing smallest state of Tasmania.

“Do you think that there are any implications beyond the benefits to local government that might result from the suggested changes to the Constitution?”

There are substantial implications which have the potential to change our system of government and make it more centralised, cumbersome and less responsible, with few obvious outweighing benefits.

States blame the Commonwealth for failing to provide sufficient funds for state programs while the Commonwealth blames the states for inefficient use of the funds provided. The addition of 560 local government bodies in this process could only exacerbate this.


For the reasons outlined above, I would not support any of the proposals in the discussion paper for recognition of local government. It would have the potential to fundamentally change the way that governments operate and interact in Australia. It is likely to lead to greater centralisation and Commonwealth control without enhancing the values of good government.

The provisions contained under Chapter 6 for creation of new states were included in the Constitution by our founding fathers to recognise and empower regions deserving of self-government and to enhance decentralisation. In more than a century since Federation we have lacked the vision, courage and commitment to use this mechanism for the benefit of regional Australia. Worse still, self-interested state capitals fearful of losing territory in NSW and Queensland have stymied progress towards creation of new states.

Chapter 6 requires no constitutional convention or amendment. All that is required is a commitment to the ideals of democracy and the UN Charter for self-determination, to which Australia is a signatory.

It is long overdue that significant regions with long held desires for self-government, such as Northern NSW, be given the opportunity to vote in a fair and balanced plebiscite in accordance with the conclusions of the Nicholas Royal Commissions and the principles of self-determination.

I urge the panel to broaden the discussion to include recommendations for creation of new states as needed to provide decentralised government and more equitable distribution of resources, infrastructure and services for the major regional populations of Australia.

Yours sincerely,
Gregory J. Howley,
B. Comm., CA, FPA, Reg. Tax Agent


Rod said...

Hi Jim, Personally... well (deep breath). Local government in NSW was destroyed by the introduction of the Local Government act of 1993. It made local government very political which it should aim at not being (in my opinion). The result of the new act was to take local government into areas that it should not have to be involved in and moved the focus away from the basics.

Another thing that I know has changed is that Councillors were made of much sterner stuff in the old days and because of this so much more was achieved. Now it is all about short term political wins and the big issues get pushed aside and decisions that need to be made are not. It is a mess!

I think if we want to keep local government it should be somewhat a replacement for the state government.

Anyway... there is my 2cents!

Jim Belshaw said...

Thanks, Rod with the deep breath! You comments point to some very real issues that I will try to pick up today.

Ian Mott said...

The case for a new state in the Hunter Valley is very strong, as is the case for a new state for northern NSW. But you do everyone's cause a serious disservice by persisting with this notion that, together, we form a single community of interest.

It clearly wasn't the case in 1967 and it is even less of a case today. The last thing the people of northern NSW want is a smaller version of Sydney that is still 8 hours away, instead of 10.

The hard economic facts of the matter are that the circular flow of funds from a seat of government is seriously retarded beyond 2 hours drive of the capital. And that means the people of New North Wales will be best served by a capital that is half way between Taree and Murwillumbah and half way between the coast and the Divide.

The outdated, and demonstrably failed, New England model would have its capital in the bottom corner and concentrate both population and resources there. It would duplicate the Queensland model which now chokes the SE corner with unsustainable congestion while the regions continue to languish.

For all our sakes, dump this outdated notion and move on.

Rod said...

I tend to think a new State in NE NSW whether it be limited to the New England Tablelands or extent to the extent of the previous referendum would empower the citizens of this area a great deal more than either the status quo or any modification to local government.

Greg said...

Ian, with respect, I have to disagree. Many parts of the north share many similarites beyond the mere desire to break free of Sydney's gravity. Hunter New England Health, the New England Hwy, the Northern TV aggregation are all manifestations of common broader northern interests.

Having said that, ultimately, it doesn't matter whether it is a broader northern state or multiple states along the lines of the Hunter, New England, Northern Rivers or other. The issue that is important to us all is self-government. If that means NSW is carved up into 2, 3, 4 or more states - then so be it.

The political reality is that there is a great deal of misunderstanding about the roles of the states and whether we should have more of them or even none at all.

Any new state is going to be a hard fought battle. It hasn't been achieved since Federation. One small region going it alone is probably not going to be successful. A wider northern revolt stands a much better chance of achieving concessions from NSW.

Having established that the north needs to separate from NSW it would then be appropriate to decide just what the boundaries should look like - one, two or more states. People will decide that in a plebiscite.

What we must do is make that argument that we are different from Sydney and have a right to self-determination.

Jim Belshaw said...

Ian, I support a broader new state on the grounds of sentiment, history and economics. You disagree.

This issue was addressed earlier in discussion. Following the principle of self determination that you laid down yourself, the broader boundary was adopted, but on the proviso that final boundaries should be determined by vote, that it was open to areas within New England to opt for self government in smaller areas. That might be two or even three states.

Further, new states once created may chose to subdivide again or even to merge.

At a purely personal level, I may have my own views that I will promote, but none of us can say just what views will prevail over time. I would be especially hesitant to predict the views of the younger support that we seem to be gathering.

In terms of my role as a writer and publicist, a key part of my role is simply reporting. This includes reporting on difference. Indeed, there are advantages in the presence of differences because it has news value.

The key thing that unites us all is, as Rod and Greg noted, that we believe that more states would lead to better government.

Greg said...

Agree Jim. Let's not put the cart before the horse.

We'll just end up like the republic movement. Going nowhere because we're too busy arguing amongst ourselves over who should open the batting before we even have a team. Once we get entry into the league we can select our XI.

The last thing that we need at this stage is distraction over boundaries. That is a discussion for another time.

Greg said...

Some submissions to the constitutional reform for local goverment website suggest that local government is unconstitutional since there is no authority under the Constitution for either the Commonwealth or the States to create a 3rd tier of government.

There may be some substance to these claims since Australians rejected constitutional recognition of local government in the 1988 referendum. A referendum is a binding statement of the will of the people, so it would be interesting what attitude the High Court would take if it ever came to examine this question.

The questionable validity of local government and it's ability to raise taxes (in the form of council rates), or it's ability to receive direct Commonwealth funding, lends even more weight to the need for more regional based states which are clearly permitted by the constitution.

Jim Belshaw said...

Greg, the idea that local government is in some way a breach of the constitution is a confusion that, of itself, suggests that people don't understand our system of Government.

Within the framework set by the constitution, each parliament has the power to create bodies and give powers to those bodies. In theory, the NSW Parliament could create a New England entity and give it powers as part of NSW.

The problem that arises with the territories and local government is that the authorising power can then withdraw those powers or otherwise modify them.
States are in a special case because they have powers that, subject to varying High Court interpretations, cannot be over ridden.

Greg said...

I think that the point being made was that local government is not really a recognised 3rd tier of government but an extention of the 2nd tier (the states). So if it is not really government, but an agency, does it then have authority to raise taxes in the form of council rates? I'm not a constituional lawyer so I don't know if it is a reasonalbe question or not.

But it might lend some weight to the argument that to have truly local government that we need the state carved up into smaller self-governing states rather than rely on local councils which of themselves have no power over and above that delegated at the whim of the state.

Jim Belshaw said...

I would be a bit surprised on the rate issue, Greg, because of its long history. However, and my memory fails me, there is I think a high court case on the delegation of taxing powers by the Australian parliament. However, the territories do tax. They are a bit like local government in that the Commonwealth can override. I obviously agree totally with your last point.