Everything you need to know about the Federal Parliament’s Interim Report into the Local Government Financial Sustainability

What is the House of Representatives inquiry about?

In March 2024, the Minister for Infrastructure, Transport, Regional Development and Local Government, the Hon Catherine King MP issued the House of Representatives Standing Committee on Regional Development, Infrastructure and Transport with a Terms of Reference for an inquiry into local government sustainability.

Over the course of the last 12 months, the Committee has held 16 public hearings, many in Canberra, but also many in regional areas around the country, and has received 287 submissions plus several supplementary submissions. About 170 of those are from individual Councils, and about 32 submissions from national, state, territory associations of local government and regional groupings of councils. There were 31 submissions from industry bodies and professional associations, 10 from State government departments and agencies, 9 from Commonwealth departments and agencies, and 9 from academic institutions or universities and 18 from individual people.

What is the Interim Report and why has it been released now?

On 14 February 2025, the Committee released its Interim Report.  It is fair to say, what the Committee has done is to ensure that the forthcoming election does not leave a void. The next federal election must be held before the 17th of May 2025, and, as yet, we don’t know when the Prime Minister will call it. Once it is called, the Parliament is prorogued and it can’t do any further work until the next Parliament is sworn in. At the very least, the Committee wanted to put an overview of the submissions and evidence the Committee had received on the public record before the election is called. That is a positive sign.

As a Standing Committee of the House of Representatives, the Committee will be reconstituted. Albeit with some changes in membership, depending on the outcome of the election. While Parliamentary Standing Committees do have some discretion as to whether or not they will resume an incomplete inquiry after an election, it is noteworthy that the Committee has said that it is thoroughly reviewing the evidence it has received and considering the numerous submissions and recommendations that have been made.

What does Interim Report say?

The Interim Report provides a thorough overview of the submissions it has received and the evidence it has heard through its public hearings. However, the Interim Report is very light in terms of analysis of the issues and setting some directions for its final recommendations. We will have to wait and see how the Committee decides to conduct the next phase of its inquiry. One observation the Committee has made is that local governments’ role is evolving. Well, that is true of every level of government and is not unique to local government. Other themes raised include revenue raising pressures, cost shifting between levels of government, workforce pressures, housing pressures, infrastructure and asset maintenance, the ever broadening scope of community services, and the ever increasing impacts of natural disasters due to climate change,

The issue the Committee’s Interim Report glosses over is, what the role of the Federal Government has in providing annual financial assistance to local government, how that assistance maintains the financial sustainability of local government, and what needs to happen to improve that support. And the answer is not just providing more funding, but rather what can be done to ensure the current level of financial assistance made by the Australian Government is used as effectively as possible to improve local government’s future financial sustainability.

What is next?

The Terms of Reference do not require the Committee to report by a certain date, and it does not have any other inquiries underway.  As a Standing Committee of the House of Representatives, technically, it is possible for the Committee to take the next two to three years to produce its final report. What it could do to add substance to the Committee’s deliberations, is produce a draft position paper and issue it for further submissions. The Committee could also hold one or more roundtables of various stakeholders to collect more evidence before making its final report. We will have to wait and see what happens next once the Standing Committee has been re-constituted in the next Parliament.

Where to from here?

One observation I will make about this Inquiry is that it differs from the many previous inquiries that have been conducted by various bodies into local government financing and sustainability over the last 40-50 years. This Inquiry did not commence by producing an Issues Paper providing a consolidation of the facts and circumstances of how we got to where we are and the issues that need to be teased out by this Inquiry. Several previous inquiries in this space have done exactly that.

For those reasons, I have documented the course of Commonwealth-Local Government relations from the early 1920s to the present, and made my own submission to the Inquiry drawing attention to the key events that have shaped that relationship, especially over the last 50 years since the Whitlam Government introduced what has become the Financial Assistance Grants to local government under the Local Government (Financial Assistance) Act 1995 (Cth).

During the month of March, I will be publishing two policy briefings for LGIU based on my submission to the Committee. The first is now available to LGIU members here. It provides a very brief overview of key events that have shaped Commonwealth-Local Government relations over the last 50 years. The second will provide an analysis of the issues and some insights on what needs to happen to improve the financial sustainability of local government into the future.