Perspectives on the Changing Role of Australian Local Government

The past few decades have witnessed a significant transformation in the composition of Australian local government service provision away from its traditional narrow emphasis on ‘services to property’ towards a broader ‘services to people’ approach. This process has occurred by default in an ad hoc incremental manner with virtually no debate on the changing role of local councils, unlike the New Zealand experience where a similar transition in service delivery generated a vigorous public debate. In an effort to stimulate a ‘debate that had to happen but never did’, this paper seeks to establish whether a significant shift in the service mix of Australian municipalities has indeed taken place and then evaluates three stylized models of local government that could be adopted in Australia: Minimalist councils; optimalist councils; and maximalist councils. ∗ The views expressed in this paper do not necessarily reflect the opinions of Independent Inquiry into the Financial Sustainability of NSW Local Government and are solely attributable to the authors alone. Brian Dollery gratefully acknowledges the financial support provided by the Australian Research Council Discovery Grant DP 0558-400. ∗∗ Dollery is Professor of Economics and Director, Centre for Local Government, at the University of New England. Joe Wallis is Associate Professor of Economics at the American University of Sharjar. Percy Allan AM is the principal of Percy Allan & Associates as well as visiting Professor in the Graduate School of Management, Macquarie University and Adjunct Professor in Public Policy at the University of Canberra. Contact information: School of Economics, University of New England, Armidale, NSW 2351, Australia. Email: bdollery@une.edu. au. 3 INTRODUCTION Australian local government is presently in a state of flux characterized by ongoing and substantial changes in the composition of its service provision, with its traditional stress on ‘services to property’ giving way to an increasing emphasis on ‘services to people’. This transformation resembles a comparable earlier evolution in the role of local government in New Zealand the country whose local government system most closely mirrors Australian municipal arrangements of all advanced nations. In New Zealand, the past twenty years have witnessed a dramatic restructuring of local councils with more than 800 local authorities consolidated into only 87 municipal bodies each with a much greater degree of financial autonomy. With the passage of the Local Government Act 2002, these developments culminated in a re-orientation of the statutory focus of New Zealand local government activities away from the traditional ‘roads, rates and rubbish’ bias towards broader social objectives based on ‘promoting the social, economic, environmental, and cultural well-being of communities, in the present and in the future’ (McKinlay 2006, 5). This has been accompanied by a seismic shift from central government oversight to local accountability as the most efficacious method of protecting the ratepayer. 1 An analogous process has also occurred in England with the promulgation of the Local Government Act 2000 (see, for example, Cole 2003), although central government control in Britain remains strong and local government is still heavily dependent on national government funding. Canadian local government has also experienced a similar transition (see, for instance, Garcea and LeSage 2005)