Draft constitutional amendment - the local government issue

The government's proposed Consitutional amendment to recognise local government has so far failed to capture widespread public interest. Now the Federal Government has released the draft bill and explanatory memorandum for public comment, calling the proposed alteration a "small but important change...about recognising modern reality." 

The Bill proposes the addition of 17 words to the Constitution, aimed at allowing the Commonwealth to make grants to local governments as well as to the States. In reality, the Federal government currently provides approximately $2.7% billion to local governments annually, with around 20% of this provided directly through infrastructure projects and programs such as Roads to Recovery. However, there is no clear constitutional power supporting this, and the risk exists that these programs could be put in jeopardy by future High Court challenges (indeed, cases such as Pape v Commissioner of Taxation [2009] HCA 23 have already raised doubts over the practice).

The proposed constitutional amendment would address this uncertainty by making it clear that the Commonwealth has the power to fund local governments directly. It is also hoped that the change would cut administrative costs, and would recognise the important role played by local governments in the wider scope of Australian society.

However, critics have argued that the amendment may have an unwanted centralising effect on government in Australia, and allow the government to exclude the states by channeling local government funding directly to the local level. It might also allow the federal government to gain greater control over local government policies by attaching unwanted terms and conditions to funding. 

The Conversation has been critical of the government's handling of the proposed change in the media. Section 96 of the Constitution, which the government hopes to amend, sets out that the Commonwealth has the power to “grant financial assistance to any State on such terms and conditions as the Parliament thinks fit”. However, the media release does not make any mention of this conditional aspect of the power, noting only that the amendment would allow funding for local governments.

Professor Anne Twomey has questioned whether this ommission was "a bit of spin by a media adviser who thought it might be clever not to mention that the funding to local government would be tied up by burdensome and intrusive conditions? Or was it simply ignorance?"

It is expected that the Government will introduce the Bill in the next sitting fortnight.

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