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Chapter 1 : Local Governance in Australia

Local government is an integral part of Australian culture and society and its formation dates from the early years of formal governance in Australia.

Official local government began in Australia in October 1840 when the Adelaide Corporation was created. This was followed by the incorporation of the City of Sydney in July 1842 and the Town of Melbourne the following month.

Through the second half of the nineteenth century local government grew in tandem with colonial/state governments as governance developed across Australia. Local government initially delivered property-based services such as building and maintaining local roads and collecting and disposing of rubbish.

At the time of Federation in 1901 the States gave up power over certain areas they deemed would be better administered at a national level, to the Commonwealth. These powers included immigration, foreign affairs, defence, customs and excise, international and interstate trade, and currency. The Commonwealth also assumed responsibility for Australian territories that were not within any State, notably the Northern Territory and the island territories.

Under the Constitution the States retained power over roles deemed to be best dealt with at a sub-national level, such as health, education, most rail transport, water and sewerage, land development, policing and justice.

The division of responsibilities between the Australian Government and the State governments flows from the Australian Constitution. Section 51 of the Constitution enumerates the areas of responsibility the States granted to the Commonwealth at the time of Federation. The States reserved all other areas to themselves. The area of control for the Commonwealth has since been extended or clarified either by constitutional amendment or by decision of the High Court.

Local government is not one of the areas identified as a Commonwealth responsibility and thus remains a State responsibility. Each State and the Northern Territory provides the legal and regulatory framework for council operations. As a consequence there are often significant differences in the State systems responsible for overseeing councils, the roles, functions and responsibilities of councils and the services they deliver.

The Australian Government has recognised that the national interest is served through improving local governments' capacity to deliver services to all Australians, while also enhancing the performance and efficiency of the sector. The Australian Government uses the Local Government (Financial Assistance) Act 1995 as the primary means to achieve these goals.

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Local government roles

State legislation provides the framework for the roles of local government. While in the past the roles of local government were enumerated in detailed and prescriptive legislation, local government bodies in all jurisdictions have now been given the authority to provide generally for the good government of their local government area. This has been viewed as conferring on local government the powers of general competence, or the power to take action in any area not expressly precluded by other legislation.

Local government has roles in governance, advocacy, service delivery, planning and community development, and regulation. There is no longer a standard definition of 'core' local government services such 'roads, rates and rubbish'. Local government now delivers a greater range of services, broadening its focus from 'hard' infrastructure provision to include spending on social services such as health, welfare, safety and community amenities.

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Local government functions

Councils determine service provision according to local needs and the requirements of the various State local government Acts and they are increasingly providing services above and beyond those traditionally associated with local government. Examples of local government functions and services include:

• engineering (public works design, construction and maintenance of roads, bridges, footpaths, drainage, cleaning, waste collection and management)
• recreation (golf courses, swimming pools, sports courts, recreation centres, halls, kiosks, camping grounds and caravan parks)
• health (water sampling, food sampling, immunisation, toilets, noise control, meat inspection and animal control)
• community services (child care, elderly care and accommodation, refuge facilities, meals on wheels, counselling and welfare)
• building (inspection, licensing, certification and enforcement)
• planning and development approval
• administration (of aerodromes, quarries, cemeteries, parking stations and street parking)
• cultural/educational (libraries, art galleries and museums)
• water and sewerage, in some States
• other (abattoirs, sale-yards, markets and group purchasing schemes).

Unlike local government in many other member countries of the Organization for Economic Cooperation and Development, including the United Kingdom, the United States of America and Canada, Australian local governments do not have primary responsibility for services such as health (hospitals), education, policing and public housing.

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Size and diversity

Local government has a small but significant role in the Australian economy, with local government expenditure around $17.6 billion in 2002-03, representing 2.3 per cent of gross domestic product (GDP).

In 2003-04, 721 local governing bodies were eligible for financial assistance grants and of these 91 were Indigenous bodies. Local governing bodies include councils established under State legislation as well as 'declared bodies'. Declared bodies are provided with financial assistance grants and are treated as councils for the purposes of grant allocations. However, declared bodies are not councils and do not have the same legislative requirements as councils. Declared bodies include the Outback Areas Community Development Trust in South Australia, the Roads Trust in the Northern Territory and certain Indigenous community councils. Due to differences in the definition of councils and local governing bodies, some of the data provided in tables and figures in this report that relate to councils may not be strictly comparable with those for local governing bodies.

Number of local governing bodies

Under the Australian Classification of Local Government (ACLG) system, 560 of the local governing bodies are categorised as 'regional' or 'rural' (see Appendix F for further information on the ACLG). Table 1.1 shows the different numbers of urban and rural and regional local governing bodies in each State and Territory. The number of local governing bodies in Australia decreased by one from the previous year - the number in Victoria increased by one and the number in the Northern Territory decreased by two.

Table 1.1 Distribution of urban, regional and rural local governing bodies, by State, 2003-04

	NSW	Vic.	Qld	WA	SA	Tas.	NT a	Total
Urban
No.	44	33	32	29	19	2	2	161
%	25	41	20	20	26	7	3	22
Regional and rural
No.	131	47	125	113	55	27	62	560
%	75	59	80	80	74	93	97	78
Total	175	80	157	142	74	29	64	721

Note: ^a Includes Northern Territory Trust Account.
Source: Department of Transport and Regional Services.

Employees

In February 2004, 160 500 people were estimated to be employed by the local government sector nationally (see Table 1.2). Following a significant decrease in the number of local government employees between February 1996 and February 2000 to an estimated 139 000 employees in February 2000, local government employment has now increased to well above the 1996 level (see Figure 1.1).

It is difficult to attribute the increased local government sector employment rates to any one factor although the Roads to Recovery program introduced in 2000 would be responsible for some of the growth. A review into the Roads to Recovery program, (Department of Transport and Regional Services and the Australian Local Government Association 2003) found that, especially in rural and regional areas, the Roads to Recovery program generated employment and provided economic stimulation. The review found that rural councils on average directly employed an additional three to four employees as a result of the program.

The population served per employee varies considerably across jurisdictions - from 60 in the Northern Territory to 195 in South Australia with the national average being 123. The differences between States would reflect the relative size of the local government sector in the State and the extent of outsourcing.

Table 1.2 Local government employment, by State, 2000-04

State	Population a Mar. 2004 ('000)	Employees b ('000)			Population served per employee Feb. 2004
		Feb. 2000	Feb. 200 2	Feb. 2004
NSW	6 719.8	44.6	47.8	51.6	130
Vic.	4 962.0	32.1	34.6	36.7	135
Qld	3 863.6	34.7	40.0	39.2	99
WA	1 975.8	13.6	14.3	15.5	99
SA	1 533.2	7.9	8.8	10.1	196
Tas.	481.7	3.8	3.9	4.2	115
NT	199.2	2.7	3.1	3.3	60
Total	19 735.2	139.4	152.6	160.5	123

Sources: ^a Australian Bureau of Statistics, Australian Demographic Statistics, cat. no. 3101.0, March 2004.
^b Australian Bureau of Statistics, Employed Wage and Salary Earners, Australia: Original Series, cat. no. 6248.0, various issues.
Australian Bureau of Statistics, Wage and Salary Earners, Public Sector, Australia: Original Series, cat. no. 6248.0.55.001, March 2004.

Figure 1.1 Total local government employment, Feb. 1996 to Feb. 2004

Sources: Australian Bureau of Statistics, Employed Wage and Salary Earners, Australia: Original Series, cat. no. 6248.0, various issues.
Australian Bureau of Statistics, Wage and Salary Earners, Public Sector, Australia: Original Series, cat. no. 6248.0.55.001, March 2004.

Population

Table 1.3 shows that across all States, the average population for local governing bodies in 2003-04 was just over 26 800. However, 50 per cent of local governing bodies have less than 6800 residents. Population ranges from zero for the Roads Trust in the Northern Territory to 917 216 for Brisbane City Council. Although the Road Trust is considered a local governing body for the purpose of grants, it has no physical area and no responsibility for providing local government services other than roads.

The average population size of local governing bodies by State differs markedly, varying from just over 3100 in the Northern Territory, where there are many small Indigenous communities, to almost 61 000 in Victoria, which underwent significant State government-imposed structural reform in the mid-1990s.

Table 1.3 shows different characteristics of the distribution of local governing bodies by population within States and across all States.

These different measures are provided because using average population size alone can mask the variability of the population of local governing bodies within a State. For instance, the average population for Queensland local governing bodies is around 23 600, but half of them have a population of less than 3480.

In the late 1990s, the number of councils in South Australia declined from 118 to 68 as a result of a voluntary structural reform process. Despite this reduction, the median of the population for local governing bodies in South Australia is 8307: less than the median for Tasmania (11 075) and considerably less than the median for Victoria (36 831), both of which also underwent processes of rationalisation of council numbers in the mid-1990s.

The median for population size for Western Australian councils is 2683 - the smallest median for all the States. Western Australia is the only State not to have undergone a major structural reform process.

Table 1.3 Selected characteristics of the distribution of population of local governing bodies ^a by State, 2003-04

State	No. of bodies	Population of local governing bodies (no.)
		Minimum	First quartile b	Median c	Third quartile d	Maximum	Average size
NSW	175	57	4936	13 556	51 927	270 109	37 941
Vic.	80	789	14 891	36 831	100 935	198 164	60 906
Qld	157	57	1009	3480	12 326	917 216	23 613
WA	142	143	960	2683	11 912	177 962	13 573
SA	74	73	2335	8307	19 713	152 106	20 544
Tas.	29	868	5736	11 075	20 913	62 582	16 297
NT	64	0	284	546	1207	73 856	3122
All States	721	0	1563	6799	26 860	917 216	26 823

Notes:
^a Includes all local government bodies that received financial assistance grant funding in 2003-04.
^b The first quartile is the population size at which 25 per cent of councils have smaller populations and 75 per cent have larger populations.
^c The median is the population size at which 50 per cent of councils have smaller populations and 50 per cent have larger populations.
^d The third quartile is the population size at which 75 per cent of councils have smaller populations and 25 per cent have larger populations.
Source: Derived from State Grants Commission unpublished data.

Local road length maintained

Local governing bodies are responsible for over 642 000 kilometres of local roads nationally. This is a significant proportion (over 80 per cent) of the nation's roads by length. The proportion of the length of local government roads that is sealed is around 35 per cent nationally with the proportion varying from about 15 per cent in the Northern Territory to almost 50 per cent in Tasmania.

Table 1.4 shows the average length of road for which local governing bodies are responsible is 892 kilometres. However, 25 per cent of local governing bodies are responsible for less than 300 kilometres of local road and 25 per cent are responsible for more than 1235 kilometres. The council responsible for the longest road length is Brisbane City Council with 5285 kilometres.

Table 1.4 shows that in New South Wales and South Australia the minimum road length is zero. This is due to some local governing bodies, although eligible for assistance under the Local Government (Financial Assistance) Act 1995, not having a local roads responsibility.

Table 1.4 Selected characteristics of the distribution of road length of local governing bodies ^a by State, 2003-04

State	No. of bodies	Road length of local governing bodies (km)
		Minimum	First quartile b	Median c	Third quartile d	Maximum	Average length
NSW	175	0	433	733	1147	3245	818
Vic.	80	6	586	1296	2387	5076	1604
Qld	157	2	350	865	1323	5292	941
WA	142	8	508	725	1130	4179	854
SA	74	0	270	940	1560	3878	1016
Tas.	29	153	297	432	739	979	484
NT	64	5	42	117	302	2197	213
All States	721	0	304	707	1235	5292	892

Notes:
^a Includes all local government bodies that received financial assistance grant funding in 2003 - 04.
^b The first quartile is the local road length at which 25 per cent of councils have smaller local road lengths and 75 per cent have larger local road lengths.
^c The median is the local road length at which 50 per cent of councils have smaller road lengths and 50 per cent have larger road lengths.
^d The third quartile is the local road length at which 75 per cent of councils have smaller road lengths and 25 per cent have larger road lengths.
Source: Derived from State Grants Commission unpublished data.

Area

Table 1.5 highlights some of the variations in the area of local governing bodies in Australia. It shows that, like population, the area of local governing bodies varies considerably within and between States.

Nationally, the average area of local governing bodies is just over 7570 square kilometres. However, 50 per cent of local governing bodies have an area of less than 1813 square kilometres. Some local governing bodies in Western Australia and Queensland cover areas greater than 100 000 square kilometres. The shire with the largest area is East Pilbara in Western Australia with 378 533 square kilometres.

Table 1.5 shows that the minimum for many States is zero square kilometres. Some local governing bodies are recorded as having no area because either their boundaries are not defined (for example, some Indigenous community councils) or they are not responsible for providing property services within a particular area of land, such as the Outback Areas Community Development Trust in South Australia.

With 75 per cent of the local governing bodies in the Northern Territory occupying less than 100 square kilometres, local governing bodies in the Northern Territory are responsible for the smallest areas. This is because a large proportion of the Northern Territory is unincorporated (that is, not included within the boundary of a local governing body) and many Indigenous community councils do not have their boundaries defined. The area of local governing bodies in South Australia is generally smaller than the area in other States and this reflects the fact that a large proportion (85%) of South Australia is unincorporated.

Table 1.5 Selected characteristics of the distribution of area of local governing bodies ^a by State, 2003-04

State	No. of bodies	Area of local governing bodies (sq. kms)
		Minimum	First quartile b	Median c	Third quartile d	Maximum	Average size
NSW	175	0	186	2481	4 345	53 511	4 046
Vic.	80	0	113	1529	4 032	22 082	2 843
Qld	157	0	695	2422	10 501	117 084	11 153
WA	142	2	835	1989	6 934	378 533	17 515
SA	74	0	52	934	3 468	8 902	2 107
Tas.	29	80	654	1158	3 821	9 750	2 379
NT	64	0	0	3	100	22 142	951
All States	721	0	103	1813	4 423	378 533	7 572

Notes:
^a Includes all local government bodies that received financial assistance grant funding in 2003-04.
^b The first quartile is the area at which 25 per cent of councils have smaller areas and 75 per cent have larger areas.
^c The median is the area at which 50 per cent of councils have smaller areas and 50 per cent have larger areas.
^d The third quartile is the area at which 75 per cent of councils have smaller areas and 25 per cent have larger areas.
Source: Derived from State Grants Commission unpublished data.

Diversity

Local governing bodies differ in almost every way. In addition to size and population, other significant differences between local governing bodies include:

• range and scale of functions
• councils' fiscal position (including wide disparity in revenue-raising capacity), resources and skills base
• physical, economic, social and cultural environments of local government areas
• attitudes and aspirations of local communities
• legislative frameworks within which councils operate, including voting rights and electoral systems.

Indigenous councils are also established under different arrangements in each State and Territory. Indigenous councils can be established under the mainstream local government legislation of the State, or through separate, specific legislation, or can be 'declared' to be local governing bodies by the Australian Minister for Local Government, on advice from a State Minister.

Diversity can be great both within and between States and goes beyond rural-metropolitan differences. Table 1.6 gives some flavour of this diversity showing, for a selection of councils, the range of areas, populations, local road lengths, income from rates and financial assistance grants per capita. For example, the population of an urban developed council, such as Prospect in South Australia, of 19 285 is similar to that of a rural growth council like Surf Coast in Victoria of 21 617 but there is a disparity in area they serve - 8 square kilometres and 1553 square kilometres respectively.

Total grants per capita in rural areas are significantly higher than in urban areas. This can be explained by the need for assistance in accessing services in rural areas like Perry in Queensland with a population of 439 and an area of 2359 square kilometres. Per capita grant versus per capita rate income varies significantly. The grant per capita for Perry of $2541.63 is more than 130 times that of the grant per capita for Stonnington in Victoria ($18.93) with a population of 90 470 in an area of less than 26 square kilometres. Conversely, rates for Stonnington are an average of $361.71 per capita, about 45 per cent lower than the average per capita rates in Perry of $526.20. Appendix D lists all councils, the area they cover, their population, their local road length and details of financial assistance grants they receive.

Table 1.6 Characteristics of selected councils, 2003-04

Council	State	Classification	Population	Area (sq km)	Road length (km)	Rate income ($)	Rate income per capita ($/capita)	2003-04 grant entitlement
								General purpose ($)	Local Road ($)	Total ($)	Total grant per capita ($/capita)
Hobart #	Tas.	Capital city	47 478	120	297	42 039 760	885.46	751 507	1 221 032	1 972 539	41.55
Stonnington #	Vic.	Urban developed	90 470	26	257	32 724 000	361.71	1 432 718	280 132	1 712 850	18.93
Prospect #	SA	Urban developed	19 285	8	90	7 705 856	399.58	304 850	137 150	442 000	22.92
Palmerston	NT	Urban fringe	22 947	56	162	6 332 087	275.94	822 186	430 337	1 252 523	54.58
Adelaide Hills	SA	Urban fringe	38 921	795	1096	14 323 006	368.00	714 829	490 855	1 205 684	30.98
Cairns	Qld	Urban regional	119 256	1850	1132	95 047 000	797.00	2 233 103	1 449 503	3 682 606	30.88
Coolgardie	WA	Urban regional	4176	30 400	795	2 464 446	590.15	457 488	315 794	773 282	185.17
Surf Coast	Vic.	Rural growth	21 617	1553	991	10 860 000	502.38	1 357 260	839 836	2 197 096	101.64
Busselton #	WA	Rural growth	24 368	1454	959	11 197 665	459.52	386 653	798 106	1 184 759	48.62
Nambucca	NSW	Rural agricultural	18 233	1490	639	4 872 763	267.25	1 742 932	767 224	2 510 156	137.67
Perry	Qld	Rural agricultural	439	2359	358	231 000	526.20	979 734	135 282	1 115 016	2 539.90
Central Darling	NSW	Rural remote	2424	53 511	1602	509 385	210.14	1 782 529	989 625	2 772 154	1 143.63
Binjari	NT	Rural remote	274	3	5	0	0.00	31 244	12 538	43 782	159.79

Note: # These councils received the minimum per capita general purpose grant.
Source: Derived from State Grants Commission unpublished data.

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Electoral representation

There is significant variation between the States and the Northern Territory in electoral systems for local government.

Table 1.7 highlights the variety in local government electoral systems across the country covering term lengths, who can vote, voting obligation and the voting system itself. For instance, South Australia has fixed three-year terms, Western Australia and Tasmania hold elections every two years for half of each council and the remaining States have fixed four-year terms. Most States use a proportional representation voting system but Queensland and Western Australia have a 'first past the post' system.

Table 1.8 shows the arrangements for elected members in local government for all States. It shows differences in the maximum and minimum numbers of members, the electoral structures, the election of the mayor and the processes for reviewing and changing these arrangements.

Table 1.7 Comparison of arrangements for local government elections in Australia

State	Is there a residency franchise? a	Is there a property franchise? b	Is voting compulsory?	Voting system	Electoral cycle
NSW	Yes	Yes	Yes, for residents	Proportional representation	4 years
Vic.	Yes	Yes	Yes, for residents	Proportional representation	4 years
Qld	Yes	No	Yes	First past the post	4 years
WA	Yes	Yes	No	First past the post	4 years but election for half the members occurs every two years
SA	Yes	Yes	No	Proportional representation	3 years
Tas.	Yes	Yes	No	Proportional representation modelled on Hare-Clark system	4 years but election for half the members occurs every two years
NT	Yes	No	Yes	Full exhaustive preferential	4 years

Notes:
^a A 'residency franchise' gives an entitlement to vote to residents in the council area if the resident is on the State electoral roll for the area.
^b A 'property franchise' gives an entitlement to vote to owners or occupiers of rateable property in the council area. There are differences in the State legislation on the way this operates.
Source: Local Government Association of South Australia Elections Review Information Sheets.

Table 1.8 Comparison of arrangements for election of members in Australia

State	No. of members		Options for electoral structure	Manner of election of principal member (e.g. Mayor)	How arrangements are reviewed and changed
	Min.	Max.
NSW	5	15	Wards, whole of area or a combination	Either chosen from within council or elected at large	Referendum of electors in the area
Vic.	5	12	Wards, whole of area	Chosen within council (only City of Melbourne has Mayor elected at large)	Independent review by Electoral Commissioner who recommends to the Minister
Qld	5	None specified	Wards, whole of area	At large	Local Government Electoral and Boundaries Review Commissioner, on referral from Minister
WA	5	15	Wards, whole of area	Either chosen from within council or elected at large	Councils review and recommend to Minister
SA	None specified	None specified	Wards, whole of area or a combination	Either chosen from within council or elected at large	Councils review, Electoral Commissioner certifies process
Tas.	Legislation specifies number of elected members for each council	Legislation specifies number of elected members for each council	Wards, whole of area or combination	At large	Local Government Board reviews and recommends to Minister
NT	5	None specified	Wards, whole of area	At large	Councils review and recommends to Minister

Source: Local Government Association of South Australia Elections Review Information Sheets.

Characteristics of elected members

There is significant variation in councillor numbers across the States and the Northern Territory (see Table 1.9). Where Victorian councillors represent, on average, almost 8000 people each, Northern Territory councillors represent less than 300 people each.

The national proportion of councillors who are female is around 30 per cent but varies between the jurisdictions from around 21 per cent in Tasmania to 34 per cent in the Northern Territory .

The number of councillors of Aboriginal or Torres Strait Islander descent is not available for all States. For those States where estimates were made, they represent about 18 per cent of councillors on average. The average has been affected by the result for the Northern Territory where more than 85 per cent of councillors are of Aboriginal or Torres Strait Islander descent.

Table 1.9 Local government councillor numbers by State, September 2004

State	Population December 2003 ('000)	No. of councils with data a	No of councillors	Councillors who are women		Councillors of Aboriginal or Torres Strait Islander descent		Average no. of councillors per council	Average population per councillor
				(no.)	(%)	(no.)	(%)
NSW b	6 719.8	134	1 426	376	26.4	28	2.0	10.6	4 712
Vic.	4 962.0	79	623	174	27.9	n/a	n/a	7.9	7 965
Qld c	3 863.6	157	1 215	353	29.1	91	7.5	7.7	3 180
WA	1 975.8	144	1 362	355	26.1	26	1.9	9.5	1 451
SA d	1 533.2	68	751	198	26.4	1	0.1	11.0	2 042
Tas.	481.7	29	283	60	21.2	n/a	n/a	9.8	1 702
NT	199.2	63	731	250	34.2	629	86.0	11.6	273

Notes:
^a The number of councils for which data was available.
^b New South Wales data is for 134 of the councils that held elections in 2004.
^c For Queensland , the number of women is from Local Communities Decide 2004 (Local Government Association of Queensland 2004) added to the number of women councillors from the Aboriginal and Island Councils. The number of councillors of Aboriginal and Islander descent is taken as the number of councillors from Aboriginal and Island Councils.
^d For South Australia, identification as Aboriginal or Torres Strait Islander is optional on councillor declaration forms.
Sources: Unpublished data from State Local Government Associations and State departments responsible for local government. Population data from Australian Bureau of Statistics 2004, Australian demographic statistics, cat. no. 3101.0, March 2004.

Remuneration of elected members

The mechanism for setting the remuneration of mayors and councillors is contained in the respective State local government Act. The mechanisms differ across States as do the levels of remuneration that apply.

Generally, the remuneration is in the form of allowances and fees and not a salary. That is, councillors are seen as making a voluntarily contribution to their community on a part-time basis and that remuneration is set in recognition of their contribution (Cameron 2000, p. 4).

The Municipal Association of Victoria has issued a draft discussion paper on remuneration for councillors and mayors and has provided some details on the arrangements for setting remuneration both in Australian and overseas (Municipal Association of Victoria 2004).

Under the Local Government Act 1993 in New South Wales , an independent Local Government Remuneration Tribunal determines the remuneration for councillors and mayors. The Act requires that, for setting remuneration, the Tribunal determines remuneration categories into which councils can be placed. Categories are based upon characteristics of the council including the size, the physical terrain, the population and the distribution of the population, the nature and volume of business dealt with by each council, the nature and extent of the development of areas, the diversity of communities served and the regional, national and international significance of the council. The Tribunal allocates councils to categories and sets the maximum and minimum levels of remuneration for councillors and mayors for each category.

New South Wales has eight remuneration categories with the City of Sydney occupying a remuneration category separate from other councils. The fees determined by the Remuneration Tribunal for 2004-05 are in Table 1.10.

Table 1.10 Fees determined by the New South Wales Local Government Remuneration Tribunal for 2004-05

Remuneration category	Additional fee for mayor		Annual fee for councillors
	Min.	Max.	Min.	Max.
S1 ( Sydney )	$107 840	$141 900	$17 625	$25 850
S2-3 councils (e.g. Newcastle )	$24 970	$56 505	$11 745	$19 385
Category 1A ( Blacktown and Penrith)	$24 970	$56 505	$11 745	$19 385
Category 1-16 councils (e.g. Bankstown )	$18 730	$43 705	$8 810	$16 450
Category 2-21 councils (e.g. Ashfield)	$12 490	$28 215	$5 875	$12 925
Category 3-32 councils (e.g. Albury City )	$12 490	$28 215	$5 875	$12 925
Category 4-32 councils (e.g. Bellingen)	$6 240	$16 920	$5 875	$7 750
Category 5-47 councils (e.g. Balranald)	$6 240	$10 615	$5 875	$6 460

Source: Local Government Remuneration Tribunal 2004.

The Victorian Government released a revised framework for councillor and mayoral allowances in 2000 (Cameron 2000). The new framework, phased in over three years, introduced a three- tiered system based on the population and total revenue of each council. All municipalities are required to pay the minimum of $5000 per annum to all councillors. Upper limits on mayoral allowances have been set for each level. Councils set their remuneration levels within these bands when deciding upon the first budget for a newly elected council. The City of Melbourne operates under a separate allowance structure. Table 1.11 provides the allowances under this framework.

Table 1.11 Allowances for Victorian councillors, 2003-04

Council classification	Mayor		Councillor
	Max.	Min.	Max.
Level 1	$36 000	$5000	$12 000
Level 2	$46 500	$5000	$15 000
Level 3	$57 500	$5000	$18 000

Note: The level is determined by adding population and total revenue (in $'000) for a council and dividing by 1000 to determine the framework points. Councils in Level 1 have framework points less than 40; in Level 2 between 40 and 190; and in Level 3 greater than 190.
Source: Cameron, B 2000, 'Flexibility and Accountability - the Victorian Government's new approach to councillor and mayoral allowances', Policy Statement.

The Queensland Local Government Act 1993 sets the framework for each council to determine its own allowances. Under the Act, councils are required to specify the criteria upon which the remuneration levels are based, and to publicise, in the council's annual report, the total remuneration, including superannuation, paid to councillors and mayors. They are also required to publicise the number of meetings councillors attended. The Act also requires the annual report to contain a copy of all remuneration resolutions made during the year.

As a result, the allowance levels and criteria vary across the State. The larger councils tend to set their remuneration as a proportion of the annual income of a member of the Queensland Parliament's Legislative Assembly. Smaller shires often base remuneration on the number of council meetings councillors attend each year. Some councils complement the meeting fees with a fixed annual allowance.

The Queensland allowance system has resulted in large variations in allowance levels across the State. The relatively high remuneration levels particularly in some of the larger municipalities permit the mayors and councillors to be employed full-time.

The remuneration system in Western Australia is based upon sitting fees for council and committee meetings, or a fixed annual amount for meeting attendance. Mayors also receive an annual allowance. These amounts are set out in regulations.

For councillors, the sitting fee for attending council meetings is between $50 and $120, and for committee meetings between $25 and $60 but the total amount of sitting fees for councillors attending these meetings must not be more than $6000 per year. However, if the council decides to set a fixed annual fee rather than sitting fees, it must be within the range of $2000 to $6000 per year.

For mayors, the sitting fee for attending council meetings is between $100 and $240 per meeting and for committee meetings between $25 and $60 but the total amount of sitting fees for mayors attending meetings must not be more than $12 000 per year. However, if the council decides to set a fixed annual fee rather than sitting fees, it must be within the range of $5000 to $12 000 per year.

Mayors are also entitled to an annual allowance ranging from $500 to either $10 000 or 0.002per cent of the council's operating revenue whichever is the greater amount provided it is not more than $60 000. A deputy mayor can be paid up to 25 per cent of the allowance of the mayor.

Under the Local Government Act 1999 in South Australia , allowances are prescribed by regulations. Under the current regulations, South Australia has adopted State-wide remuneration bands for all councils with councils able to set the remuneration levels of elected members within these bands. For councillors, the remuneration ranges from a minimum of $1670 to a maximum of $6680 per year. For a deputy mayor, the minimum and maximum are set at 1.25 times the amounts for councillors (that is, ranging from $2087 to $8350). For mayors, the minimum and maximum are set at four times that of a councillor (that is, ranging from $6680 to $26 720 per annum). Arrangements for the City of Adelaide are different.

A Board of Inquiry has been established under section 215(1)(b) of the Tasmanian Local Government Act 1993 to review allowances for mayors, deputy mayors and councillors in that State.

In its most recent report, the Board has placed the councils into seven categories with the categories based on the number of voters and the total revenue for the council. The Board of Inquiry also recommended indexation of allowances and this will now occur on 1 November annually when the allowances will be adjusted by the CPI All Groups Index for Hobart . The Board of Inquiry recommendations resulted in the allowances shown in Table 1.12.

Table 1.12 Allowances resulting from Tasmanian Board of Inquiry recommendations with effect from 1 November 2004

Council	Mayor ($)	Deputy Mayor ($)	Councillor ($)
Hobart City	72 000	15 500	12 000
Launceston City	72 000	15 500	12 000
Clarence City	57 000	13 500	11 000
Glenorchy City	57 000	13 500	11 000
Kingborough	57 000	13 500	11 000
Burnie City	42 000	11 500	9 500
Central Coast	42 000	11 500	9 500
Devonport City	42 000	11 500	9 500
Huon Valley	27 000	9 500	8 000
Meander Valley	27 000	9 500	8 000
Northern Midlands	27 000	9 500	8 000
Waratah-Wynyard	27 000	9 500	8 000
West Tamar	27 000	9 500	8 000
Break O'Day	20 500	8 000	7 000
Brighton	20 500	8 000	7 000
Circular Head	20 500	8 000	7 000
Derwent Valley	20 500	8 000	7 000
Dorset	20 500	8 000	7 000
George Town	20 500	8 000	7 000
Latrobe	20 500	8 000	7 000
Sorell	20 500	8 000	7 000
Glamorgan-Spring Bay	17 000	7 000	6 000
West Coast	17 000	7 000	6 000
Central Highlands	14 000	6 500	5 500
Flinders	14 000	6 500	5 500
Kentish	14 000	6 500	5 500
King Island	14 000	6 500	5 500
Southern Midlands	14 000	6 500	5 500
Tasman	14 000	6 500	5 500

Note:
The allowances payable to a Mayor or Deputy Mayor are in addition to those payable to a Councillor.
Source: Department of the Premier and Cabinet, Tasmania.

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National representation of local government

Australian Local Government Association

The Australian Local Government Association (ALGA) is a federation of local governing body associations from each of Australia's six States and the Northern Territory. Since early 2001 ALGA membership has included the Australian Capital Territory Government. The Association aims to add value, at the national level, to the work of State and Territory associations and their member councils. ALGA represents the interests of local government through its participation in the Council of Australian Governments (COAG) and membership of a number of ministerial councils.

Local Government Managers Australia

Local Government Managers Australia is a professional association of local government managers throughout Australia and the Asia- Pacific. Local Government Managers Australia is committed to developing and improving local government management, maintaining high professional and ethical standards and ensuring that its members are at the forefront of change and innovation.

Local Government Managers Australia has State Divisions in New South Wales, Victoria, Queensland, Western Australia, South Australia and Tasmania with a national office in Melbourne, Victoria.

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Involvement in inter­-governmental structures

Council of Australian Governments

COAG is the peak intergovernmental forum in Australia comprising the Prime Minister, State Premiers, Territory Chief Ministers and the ALGA President. COAG's role is to initiate, develop and monitor the implementation of policy reforms which are of national significance and which require cooperative action by Australian governments.

The issues that COAG considers generally arise from international treaties that affect the States and Territories, initiatives of one government that impact on other governments, and ministerial council deliberations. Ministerial councils are regular meetings of Commonwealth, State and Territory Ministers sharing common responsibilities.

There are over 40 Commonwealth-State ministerial councils and forums currently facilitating consultation and cooperation between governments. Ministerial councils initiate, develop and monitor policy reform and take joint action to resolve issues that arise between governments. In particular, they develop policy reforms for COAG consideration and oversee implementation of policy reforms agreed to by COAG.

Local Government and Planning Ministers' Council

In June 2001, COAG announced the streamlining of ministerial councils. Ministerial councils in related functional fields were combined to strengthen their strategic direction and improve opportunities for cooperative policy development.

The Local Government and Planning Ministers' Council is an amalgamation of the former Local Government Ministers' Conference and the Planning Ministers' Conference. The Council includes Federal, State and Territory local government and planning ministers, the New Zealand Minister and the ALGA President.

The Council met for the first time in Darwin in July 2003 and subsequently in Perth in February 2004. Its primary objective is to lead debate and decision making on key strategic policy matters for local government and planning in Australia and New Zealand that can be addressed at the national level.

The Council's terms of reference are:

• to agree policy and strategic approaches for local government and planning issues
• to exchange information and brief jurisdictions on significant current and emerging local government and planning issues, experiences and initiatives
• to promote cooperation between all spheres of government and to encourage harmonisation across jurisdictional boundaries in the development and implementation of public policy, strategies and programs affecting local government and planning
• to foster accountability to stakeholders through the monitoring and evaluation of policies, strategies and programs developed and implemented under the aegis of the Council to provide leadership to all areas of government, industry and the community in working collaboratively to advance local government and planning issues
• to liaise with other Ministerial Councils and other bodies on matters relevant to the activities of the Council.

See 'Outcomes from the Local Government and Planning Ministers' Council in 2003-04' for a report on the issues the Council considered in 2003-04.

The Council is supported by the Local Government and Planning Joint Committee; with the Local Government Joint Officers Group and the Planning Officials Group as standing sub-committees. The Local Government and Planning Joint Committee consists of senior officers from Commonwealth, State, Territory and the New Zealand departments with responsibility for local government and planning matters, and a senior representative from ALGA.

Other ministerial councils

In its 2001 review of ministerial councils, COAG agreed that the ALGA be represented on ministerial councils where there is a clear local government interest. Other than where membership is explicitly set out by statute or agreement, it is up to individual ministerial councils to decide whether ALGA should be a member or attend proceedings.

Within the Transport and Regional Services portfolio, in addition to being a member of the Local Government and Planning Ministers' Council, ALGA is also a member of the Regional Development Council and an observer on the Australian Transport Council.

Outcomes from the Local Government and Planning Ministers' Council in 2003-04 During 2003-04, the Council addressed the following issues: House of Representatives Standing Committee on Economics, Finance and Public Administration Inquiry into Local Government and Cost Shifting (the Hawker Inquiry) - Members considered the recommendations of the inquiry report and agreed to hold a special roundtable meeting with the State and Territory peak local government bodies to inform the Australian Government's response to the report. The meeting was held in Canberra on 10 June 2004. Participants agreed that further work on developing draft principles for a possible intergovernmental agreement and on financial arrangements would be undertaken out of session with Council members informed of progress. COAG review report Natural Disasters in Australia - Reforming mitigation, relief and recovery arrangements - Members considered the report and agreed to develop a three-year work program for implementation of the relevant land use planning reform recommendations. Affordable Housing - Members met jointly with members of the Housing Ministers' Conference at their meeting in Perth to discuss affordable housing issues. Members agreed to again meet jointly following completion of the National Affordable Housing Project and release of the Productivity Commission's final report on First Home Ownership. Development Assessment Forum - Members supported broad-based consultation on the draft Leading Practice Model for Development Assessment, commissioned by the Forum, and committed funding for this purpose. Water Recycling/Urban Water Reuse - Members agreed to seek, through the Natural Resource Management Ministerial Council, the inclusion of urban water reuse in the National Water Reform Framework. National Charter of Integrated Land Use and Transport Planning - Members endorsed the National Charter and endorsed arrangements to promote its application in jurisdictions. Community Strengthening - Members supported the development of community strengthening and community resilience strategies for local government. Aboriginal and Torres Strait Islander Reconciliation Action Plan - Members endorsed the draft Aboriginal and Torres Strait Islander Reconciliation Action Plan for the Local Government and Planning Ministers' Council and supported continuing work on the Plan.

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Local government finances

Share of taxation revenue by level of government

In 2002-03, local government directly raised $7.2 billion in taxation revenue - that is 3 per cent of all taxes raised across all spheres of government in Australia. Local government's taxation revenue is through a tax on property (see Table 1.13) that is exclusively raised through land rates. This represents a slight decrease in local government's share of taxation revenue compared with 2001-02, see Figure 1.2.

Compared with local government, States raise almost twice as much in taxes on property. This includes taxes on financial and capital transactions of almost $11.0 billion as well as land taxes of almost $2.6 billion.

Table 1.13 Share of taxation revenue by sphere of government and source of revenue, 2002-03

Revenue source	Federal (%)	State (%)	Local (%)	Total (%)
Taxes on income	55.28	0.00	0.00	55.28
Employers payroll taxes	1.30	4.28	0.00	5.43
Taxes on property	0.01	5.97	3.03	9.00
Taxes on the provision of goods and services	24.93	2.94	0.00	27.86
Taxes on use of goods and performance of activities	0.31	2.11	0.00	2.43
Total	81.82	15.29	3.03	100.00

Source: Australian Bureau of Statistics, Taxation Revenue, Table 1, cat. no. 5506.0.

Figure 1.2 Composition of taxation revenue, by sphere of government, 1998-99 to 2002-03

Note: The increase in Federal taxation revenue and corresponding decrease in State revenue in 2000-01 is due to introduction of the goods and services tax (GST). All GST revenue is provided to the States.

Source: Australian Bureau of Statistics, Taxation Revenue, Table 2, cat. no. 5506.0.

Expenditure by purpose across spheres of government

Table 1.14 highlights the variety of roles in which local government is engaged. Apart from defence spending, where only the Federal Government has a role, local governing bodies expend part of their revenue on all other major functions of the three spheres of government. Transport and communications (27%), and housing and community amenity (24%) represent the areas of highest expenditure for local governing bodies. Further information on local government expenditure is in the section 'Expenditure' later in this chapter.

Table 1.14 Composition of expenditure for the Australian public sector, 2002-03

Expenditure	Federal (%)	Multi-jurisdictional sector (%)	State (%)	Local (%)	Total (%)
General public services	3.90	0.05	1.40	0.99	5.96
Defence	4.84	-	-	-	4.84
Public order and safety	0.71	-	3.92	0.15	4.76
Education	4.40	4.07	10.55	0.03	14.90
Health	10.69	-	9.70	0.10	17.30
Social security and welfare	25.90	-	2.46	0.40	28.12
Housing and community amenity	0.64	-	1.57	1.54	3.35
Recreation and culture	0.75	-	1.03	0.88	2.65
Fuel and energy	1.23	-	0.33	0.01	1.56
Agriculture, forestry and fishing	0.64	-	0.92	0.01	1.50
Mining, manufacturing and construction	0.55	-	0.16	0.08	0.78
Transport and communications	0.79	-	3.56	1.73	5.61
Other	17.64	0.01	3.13	0.48	8.65
Total	72.69	4.13	38.73	6.39	100.00

Notes:
The multi-jurisdictional sector comprises mainly public universities.
The total of each expenditure category may not equal the sum of the expenditure on that category across each level of government due to transfers between spheres of government.
Source: Australian Bureau of Statistics, Government Finance Statistics, cat. no. 5512.0

Australian Government funding

The Australian Government provides considerable financial assistance to local government through specific purpose payments and direct program funding.

Specific purpose payments

Specific purpose payments to local governments from the Australian Government are either made direct to local governing bodies (for example, Roads to Recovery funding) or through the States (for example, local government financial assistance grants). Direct specific purpose payments funding to local governments in 2003-04 amounted to almost $368 million (see Table 1.15). This assistance recognises the work of local government in providing such services as child care, care for the disabled and local roads. Of the direct specific purpose payments paid to local governing authorities, $300 million was provided under the Roads to Recovery program.

The main specific purpose payments that provide funding through the States to local government is the financial assistance grants. In 2003-04 the Australian Government provided around $1.5 billion in local government financial assistance grants to local governing bodies. These grants are administered through the Local Government (Financial Assistance) Act 1995. More information on the means of distributing financial assistance grants is provided in Chapter 2.

Table 1.15 Specific purpose payments from the Australian Government direct to local government authorities by State, 2003-04 ($'000)

Payment title	NSW	Vic.	Qld	WA	SA	Tas.	NT	ACT	Total
Direct payments - current
Disability services	378	-21	504	0	0	0	0	0	861
Children's services	17 292	19 147	6 421	3 715	2 192	2 216	4 186	0	55 169
Roads to Recovery program	94 934	59 414	56 528	45 779	24 190	11 166	2 957	5 032	300 000
Weipa Structural Adjustment Package	0	0	0	0	0	0	0	0	0
Total current	112 604	78 540	63 453	49 494	26 382	13 382	7 143	5 032	356 030
Direct payments - capital
Children's services	129	143	48	28	16	17	31	0	412
Natural Heritage and Water Park, Goondiwindi	0	0	530	0	0	0	0	0	530
Bert Hinkler Hall of Aviation	0	0	0	0	0	0	0	0	0
Development of Sewerage Schemes for Boat Harbour Beach and Sisters Beach	0	0	0	0	0	1 000	0	0	1 000
Mount Panorama motor racing circuit	10 000	0	0	0	0	0	0	0	10 000
Total capital	10 129	143	578	28	16	1 n017	31	0	11 942
Total direct payments	122 733	78 683	64 031	49 522	26 398	14 399	7 174	5 032	367 972

Source: Costello, P & Minchin, N 2004, Final Budget Outcome 2003-04, Department of the Treasury, Australian Government, Canberra.

Other Australian Government Program Funding

In 2003-04, local government was eligible to apply for and receive funding from a wide range of Australian Government programs, such as the Natural Heritage Trust, the Road Safety Black Spot Program and the Regional Partnerships Program. However, details of the funding received by local government under all such programs are not readily accessible.

Information about the range of Australian Government funding programs available to local government can be found at http://www.grantslink.gov.au/.

State funding

The States and the Northern Territory offer a variety of grants to local government for specific purposes and services. Table 1.16 details the grants made available to local government by purpose for 2002-03 using Australian Bureau of Statistics Government Finance Statistics. This table also includes Australian Government funding provided to local governing bodies through the States, including more than $1.437 billion in Australian Government financial assistance grants provided in that year. The remaining State grants are directed to a wide variety of purposes, reflecting the different functions required of local governing bodies.

The States provided $846 million to local government out of their own funds in 2002-03. This represents a decrease of around 25 per cent on the previous year. On a per capita basis, State grants vary considerably from $10.64 per capita in Tasmania to $103.59 per capita in the Northern Territory.

Table 1.16 Grants from States to local government, by purpose, 2002-03 ($m)

Purpose	NSW	Vic.	Qld	WA	SA	Tas.	NT	Total
General public services	5.3	100.8	2.3	1.6	-	-	1.9	112.0
Fire protection	57.2	-	0.4	-	-	-	0.1	57.7
Public order and safety	0.5	0.5	1.7	-	-	-	0.1	2.7
Water/Sanitation/ Environment	114.9	7.5	2.4	-	9.9	3.2	-	138.0
Education	-	1.0	0.2	-	-	-	0.3	1.5
Social security and welfare	-	0.1	8.4	-	10.4	-	3.0	21.9
Recreation and culture	29.3	110.8	52.9	8.0	9.9	-	25.2	236.0
Agriculture, forestry and fishing	7.0	5.0	8.2	-	-	-	0.1	20.4
Road transport	141.2	121.5	28.3	254.5	27.7	25.2	0.2	598.6
Other transport and communication	1.5	92.6	0.2	-	-	0.4	-	94.6
Other natural disaster relief	9.4	-	24.0	-	-	-	-	33.3
General purpose inter-government transactions	341.1	-	382.8	-	79.0	24.8	6.3	834.0
Housing and other community development	-	0.2	39.3	0.5	-	-	3.7	43.7
Other economic affairs	6.4	41.3	28.4	4.6	-	-	0.1	80.8
Other	1.8	0.8	1.0	0.1	3.8	-	0.8	8.3
Total	715.5	482.1	580.5	269.4	140.8	53.5	41.7	2283.5
Less Australian Government financial assistance grantsa
General purpose grants	346.6	250.6	190.0	99.0	79.0	24.6	10.4	1000.2
Local road grants	131.0	93.1	84.6	69.0	24.8	23.9	10.6	436.9
Net State grants	237.9	138.4	305.9	101.4	36.9	5.0	20.7	846.4
Net State grants per capita	35.82	28.52	83.35	52.87	24.31	10.64	103.59	43.90

Note: ^a These grants are included in the grants paid by States to local government although the purpose does not appear to be reported consistently across States in the table. Source: Australian Bureau of Statistics unpublished data, Department and Transport and Regional Services

Reporting on Local Government Funding in State Budgets Budget papers for Victoria, Queensland, South Australia and Tasmania for 2004 reported on State-local government relations and grant funding to be paid to local government. In Budget Paper 4 Statement of Finances 2004-05, the Victorian Government showed grants and transfer payments to local government of $493 million in the 2004-05 Budget. In its Budget Strategy and Outlook for 2004-05, Queensland reported the actual State grants paid to local government in 2002-03 as $438 million, the estimated grants paid in 2003-04 as $526 million and the Budget figures for 2004-05 as $489 million. These grant figures are broken down by portfolio. The table also shows that the Australian Government will provide a further $354 million in grants in 2004-05. In its 2004 budget papers, the South Australian Government outlined the financial position of local government in the State showing that local government consistently returns a relatively small net borrowing result and that the level of debt compared with physical assets leaves local government in South Australia in a sound financial position. The State also provides a listing of special purpose payments to local government by program within portfolio for 2003-04 and 2004-05. The estimated expenditure for 2003-04 is $82 million and the budget for 2004-05 is $85 million. The Tasmanian Department of Premier and Cabinet issued State and Local Government: Working in Partnership for the 2004 Budget. It reported on progress with the Partnership Agreement Program, local government's role in the economy, measuring the performance of local government in Tasmania, the review of the Tasmanian Local Government Act and a report on the operation of the Local Government Board.

Reliance on grants

Figures 1.3 and 1.4 show the distribution of the proportion of total local government revenue derived from government grants for Tasmanian and New South Wales councils respectively. These figures show that generally urban councils are less reliant on grants compared with regional councils, regional councils are less reliant than rural councils and remote councils are the most reliant. Generally, New South Wales councils are less reliant on grants when compared with Tasmanian councils.

Figure 1.3 Distribution of the proportion of revenue from government grants for Tasmanian councils, 2002-03

Source: Tasmanian State Grants Commission, unpublished data.

Figure 1.4 Distribution of the proportion of revenue from government grants for New South Wales councils, 2002-03

Source: NSW Department of Local Government 2004.

Revenue

There is a wide disparity in the ability of individual councils to raise revenue due largely to differences between urban, rural and remote councils, in population size, rating base and the ability or willingness of councils to levy user charges.

The national averages for proportions of revenue from particular sources do however disguise the circumstances of individual councils that vary considerably. While a general indication of these variations can be obtained from Figure 1.5 and Table 1.17, it should be noted that significant variation in revenue raised between councils within the States and the Northern Territory remains.

Table 1.18 shows the variation of revenue per capita across States for the various revenue sources.

Figure 1.5 Local government revenue by source, by State, 2002-03

Source: Australian Bureau of Statistics, Government Finance Statistics, cat. no. 5512.0 and unpublished Australian Bureau of Statistics data

Table 1.17 Local government revenue sources by State, 2002-03

		NSW	Vic.	Qld	WA	SA	Tas.	NT	Total
Taxation revenue	$m	2346	1826	1423	752	629	175	49	7201
	%	35.6	45.9	27.6	45.6	58.8	34.6	26.1	37.7
Sale of goods and services	$m	2223	790	2316	351	201	208	65	6152
	%	33.8	19.9	45.0	21.3	18.8	41.1	34.6	32.2
Interest	$m	210	47	91	38	14	12	4	415
	%	3.2	1.2	1.8	2.3	1.3	2.4	2.1	2.2
Current grants and subsidies	$m	765	516	465	187	152	72	46	2202
	%	11.6	13.0	9.0	11.3	14.2	14.2	24.5	11.5
Capital grants	$m	109	35	165	93	12	9	3	426
	%	1.7	0.9	3.2	5.6	1.1	1.8	1.6	2.2
Other revenue	$m	933	763	691	227	61	31	21	2727
	%	14.2	19.2	13.4	13.8	5.7	6.1	11.2	14.3
Total	$m	6586	3977	5151	1648	1069	506	188	19 124