Subjects: Centenary of Federation; local government; salinity and water quality; road funding; petrol prices; tax reform
E&OE..................
Well thank you very much Mr Ross, Senator Ian Macdonald, ladies and gentlemen. It is for me a real pleasure this morning, the beginning of the last sitting week of the national parliament this year, to have this opportunity of addressing the largest national gathering of representatives of the network of local government throughout our country.
From the 1st of January onwards we begin a year long celebration of the Centenary of Federation. It's a celebration that essentially will mark that great achievement a hundred years ago of the then six colonies coming together to form the Commonwealth of Australia. During the year we'll have an opportunity of commemorating the triumphs, recognising some of the failures, but overwhelmingly celebrating the great achievement of Australia over that one hundred year period.
It will overwhelmingly be a grass roots celebration. There will be some national highlights, in particular the commemoration of the inauguration of the Commonwealth in Sydney on the 1st of January, and also the commemorative sitting of the first federal parliament in Melbourne on the 9th of May. But it will be remembered as a year of celebration and a year to reflect on the Australian achievement if it is something in which the people of Australia at a grass roots level can play a role. And in that I draw an analogy between the way in which we celebrate our centenary as a nation and the contribution made by the various local government organisations of Australia.
It's often been said that this country is over governed. If you looked at it from a purely theoretical point of view you may in fact endorse that view. But if you understand the size and the history of this country you will all understand all too readily why it is we have three levels of government, and why it is that it's part and parcel of the political life of this country for those three levels of government to vigorously interact.
There are imperfections in our federation, there are overlaps, there is duplication, in some cases there's triplication, and alongside that there are things that fall between the three schools of government. But overwhelmingly the last hundred years has been a period of success and achievement and local government has played a very significant role. That is not to say its role in the next one hundred years will be exactly the same. That is not to say there won't be ongoing debate about the size and the responsibilities of local councils, and inevitably within different districts of our country, argument about the size of councils and whether some should be made smaller or indeed some should be made larger by amalgamation.
But if you look back on the last one hundred years it has been a period of achievement and a period of success. And my message to you today before everything else on behalf of the federal government is that we respect and appreciate, and support the key role of local government in the overall governance of Australia. The old idea that local government was purely a creature of state government and dealt only with state governments is of course an outworn notion. We might differ as between the federal government and your association about such things as constitutional recognition. But there can be no doubt that we in the federal government believe that there is a lively and active and very productive direct relationship between the federal government and local government. And I'll return to the issue of that direct relationship in a moment.
As you know we currently allocate very significant general financial grants to local government to the tune of $1.3 billion in the current financial year. And around 881 of that $1.3 billion goes to councils within rural and regional areas. And over the last year there has been very understandably because of the difficulties faced by many communities in country Australia, there has been a focus on services and support systems within rural and regional Australia. But it's important from a federal government perspective that when we look at local government in Australia we not only look to the role of councils in country areas, but we also importantly look to the role of local government in the major metropolitan centres because the spirit of localism in Australian politics now whether it's in the country or it's in the cities is as strong and as lively as it has ever been over the last one hundred years. And as I look around at the plethora of intense local issues that are debated out with great passion in the major metropolitan areas of Australia it reminds me very forcibly of that.
But over the last several years, indeed in the time that we have been in government, the Coalition Government has made a number of very important decisions and inaugurated a number of very important programs that have required the ongoing involvement and commitment not only of local community groups, but also importantly of local government.
At the last meeting of the Council of Australian Governments, when your councils were represented by your President John Ross, who sat around the table with the representatives of the Federal Government and the various State and Territory governments, I won the support of Premiers and Chief Ministers to the development of a salinity and water quality action plan. A commitment between governments of $1.4 billion over a period of six to seven years, to begin for the first time in this country's history to put together a really comprehensive plan to tackle the ongoing problem of salinity and water quality. And we did that against the background of all Australians recognising that one of our most precious assets is the quality of our soil, and the quality and the adequacy of our water supply. And when you bear in mind that unless action were taken in 20 years time the drinking water for the city of Adelaide might be unfit for human consumption in two out of five days you have an idea of the dimension of the problem.
We'll only be able to successfully tackle the salinity and water quality problem if we can marshal federal government, state governments, local government and local communities together, all working towards the same objective and that is what our salinity action plan designs to do. And in many of the 20 catchment areas that have been denominated as being the areas of greatest challenge, and they come from all around Australia, there will be a very important role for local government. I was reminded only the weekend before last when with the Deputy Prime Minister I went to Gunnedah to get some first hand briefing on the damage done to local communities and the damage done to the wheat crop of that very important part of rural Australia, of the role and the importance of local government especially in country communities.
So we see that ongoing partnership between the federal government and local government as being of great importance. It's also important in areas such as flood mitigation programs. Local government has played a very important role in the implementation of the Government's extremely successful Work for the Dole schemes. Local government has also played a very important role in relation to expenditure under the Natural Heritage Trust, $1.25 billion made possible through the sale of the initial 30% of the government's ownership of Telstra. Local government has played an important role in the programme of Networking the Nation which is designed to improve communications and communications facilities throughout the bush.
So in all of these areas we can't operate effectively unless we have the support and the understanding and the co-operation of local government. This country is simply too big and the distances to be travelled between population centres are too long for any national government to imagine that it can operate without the co-operation of local government. And we don't just seek that co-operation through state governments. State governments are sometimes on some issues even less decentralised than federal governments and sometimes the best way to get the right outcome is for the federal government to deal directly with local government.
And that of course is what we decided to do in relation to a very significant announcement I made here in Canberra just a week ago today. As you are aware in the current financial year the federal government has allocated $406.4 million to local councils for local road purposes. I have been aware for a long time of the concern of local councils about the state of local roads. I've seen the poor condition of many of them as I've travelled to every part of Australia. Whenever I go out of the capital cities and indeed in some areas of capital cities as well I find that there's always a very strong argument to spend more money on local roads. And that is why we decided because of the fortuitous circumstances being advised by the Treasury that our prospective Budget surplus this financial year was going to be greater than we thought at Budget time we've decided to allocate an additional $1.6 billion over the next four years for expenditure on roads throughout Australia. And of that $1.6 billion, $1.2 billion will be added to the Local Roads' Programme which as you all know is essentially administered by local government. That represents a 75% increase in the amount of money being spent by the federal government, the amount of money being given by the federal government direct to local government for local road purposes.
In addition we're going to allocate $400 million for the purposes of augmenting and further supporting expenditure by the federal government over that four year period on national highways and roads of national importance. And importantly and to those who have sought to portray this decision as being politically distorted as between different areas of Australia, what we have done in relation to each portion of money allocated to the councils within each state is to say that that money will be allocated strictly in accordance with the criteria laid down by state grants' commissions some ten years ago. In other words within each state the money will be allocated to each council in accordance with a formula devised when the former Federal Labor Government was in office. And the money will therefore be distributed without regard to the political colour of the federal representatives of the different areas. And also I hasten to say without regard to the political colour of the people who run the various local councils. The money will go directly to the states and provided there is no opposition offered in Federal Parliament this week by either the Labor Party or the Australian Democrats, the legislation will be passed when Parliament rises for the Christmas break at the end of this week. So that from your point of view the money can begin flowing almost immediately as soon as you can authorise and commission the beginning of additional work.
$850 million of the $1.2 billion will go to councils in rural and regional Australia. The remaining $350 million will be allocated to councils in what could be broadly described as the greater metropolitan areas of Australia. In other words it's not some kind of porkbarrelling for the bush, it's a genuine injection, a genuine increase of 75% in the amount of money available to all local councils in every part of Australia. And I believe that it is the best possible way of delivering quickly and fairly and as easily as the circumstances require, additional resources to the people who know how best to spend it to the benefit of local communities. And there is no doubt that the state of many local roads, particularly in country areas is a matter of concern. As the rate bases of many country councils due to declining economic circumstances in rural communities have declined so the burden that is thrown on those councils in relation to road maintenance has risen.
It's an important ingredient of what the Government is doing that current levels of expenditure on roads by local councils be maintained. And it's a condition of the money going to each council that commitments to that effect be given. I've also sought assurances from every state government in Australia that none of them will take advantage of our decision to increase our share of money going to local government by 75%, I've sought assurances from each of the state governments that none of them will take advantage of that to reduce the money that they give to local councils themselves for local road purposes. In the case of two states, namely Tasmania and South Australia it won't be difficult for them to give that undertaking because at the moment they don't give any money according to my advice to local government for local road purposes. Now, but I do want all you as part of this compact directly between us to make certain that in those states where money is given for local road purposes, none of your state governments whatever their political complexion and I'm completely neutral on this part of it, whatever their political complexion, none of them are allowed to say oh well the Federal Government's giving you more money so we'll wind back what we're now giving you. Let me assure you they're going to do very well out of the GST. Very well indeed. And they will have greater resources rather than fewer resources in order to provide you with additional assistance. Now we can all be winners out of this and most particularly ladies and gentlemen the constituencies you service and the services that you have responsibility for, you can all be winners out of this if current funding levels both by local government and by states and I would encourage those councils in the states that don't give any money for local roads to increase your lobbying efforts, your lobbying efforts on local councils within those states so that they might try and match the contribution of those states that are being a little more generous.
So it does represent a very important, even an historic additional injection of resources. And it was made against the background of a stronger financial position. It was also made against the background of the Government believing that putting another $1.6 billion into road funding in Australia was something that would last for decades. None of us like expensive petrol. I don't like it - you don't like it. We would all like to see the price of petrol come down. It's more expensive than it normally is because the world price of crude oil is higher than it normally is. And we all look to an improvement on that front. Some relatively minor reduction in fuel excise - a one to two cent reduction costing $600-$700 million a year could have been given but that could have disappeared overnight with a fluctuation in the world price of crude oil. And we asked ourselves was it a better long-term investment to put another $1.6 billion into roads or into what might prove to be a transitory adjustment to a very small degree in the level of excise. As governments are constantly required to do, we took a decision. We decided it was a better long-term investment in the future of this country to put the $1.6 billion into additional road funding.
That doesn't alter our concern about the level of fuel prices. That doesn't alter our determination in terms of international lobbying to do all we can to bring about some abatement in that price. And of course the price of petrol can be affected not only by the world price of crude oil but also by the exchange rate of the Australian dollar against the United States dollar. I can't let the opportunity go by without reminding this audience of the very significant additional measures in the tax reform plan that were designed to reduce to a lower level than it would otherwise have been the cost of certain fuels, not only in rural and regional Australia but also in the metropolitan areas. And I refer in particular to the reduction in the excise on diesel fuel, the extension of the full rebate to certain usages of diesel fuel, not only for on-farm purposes but also in relation to rail and other areas.
And if you look at the totality of the fuel package, although this has been disguised and indeed overwhelmed by the increase in world fuel prices over the last four months, you will see dotted throughout that taxation package, you will see many examples of the willingness of the government to give very particular concessions to people who depend for their livelihood on the use of fuel.
The tax reform plan represented a major reversal of a trend away from relative financial independence for the states towards a greater accumulation of financial authority in Canberra in the hands of the Commonwealth Government. One of the great advantages of tax reform was that we gave to all of the states of Australia something they'd asked for for forty years - and that is a guaranteed source of revenue. They get all of the proceeds of the goods and services tax and over time the amount of money they will have for their ordinary purposes will rise very significantly. On current indications the transition period whereby we guarantee they get the same amount of money as they would have got under the old formula, before the benefits of the GST click in, on current estimation that is certainly well on target and it may possibly in the case of one or two states, certainly in the case of one, it may arrive ahead of time. So can I say in your dealings with state governments don't be misled by propositions that the financial arrangements between the Federal Government and the state governments have left them disadvantaged. Despite political posturing on the GST, there was no reluctance on the part of any Premier to sign up on the dotted line because each of them, even those who'd spoken the loudest against the new tax plan in public, recognise that the new system would provide them with access to a growth source of revenue, something that they had been asking for for a long time.
Ladies and gentlemen, it is a very important time in reflecting upon what this country has achieved over the last one hundred years and it's a very important time in projecting to the future. There are many things that in the life of a hundred years in a nation will change. And if we look back over the last century we think of the unbelievable change in the social, the political, the economic and the lifestyle landscape of our country. We think of all that has been achieved, all that has been endured, the mistakes as well as the achievements and the triumphs. But the fundamental importance of having representative government, the fundamental importance of having a network of governments that gives proper expression to local opinion, whilst marshalling a focus where it is necessary on a national outcome or a national goal, is the challenge of any system of government.
We Australians have made our mistakes but by and large we have done things well. We remain a very cohesive, open and democratic society. We are a country that has succeeded in successfully absorbing people from 140 different nations around the world. And although the different groups that have come here have not lost a feeling for their respective homelands, which is very understandable, they have always put the interests of this country against those, above and beyond, those affections and those natural links. So the Australian achievement at the beginning of the year 2001 is a very considerable achievement. Our country was on best display at the Olympic Games and the credit that was bought to this country, all around the world, is so evident when you travel overseas now. And the great volunteer spirit which is so important to your local communities was also very much on display. And local government plays a very major role in fostering that sense of volunteerism and that sense of local commitment and local effort.
Finally, ladies and gentlemen, can I thank your President, Mr Ross, for the way in which he effectively communicates the concerns and the aspirations of local government to the Federal Government. And can I particularly thank my colleague Senator Ian Macdonald who has ministerial responsibility for local government matters for the very energetic and urgent way in which he has put the concerns of local government to us. I can assure you that when we decided on the roads package, he was one very happy Minister because he knew that it was a concern of all of you and he knew it was something that was going to address, in a very practical way, a very legitimate concern of local government.
I thank you very warmly for the invitation to come here. I regret that I can't stay with you after my address because I have to return to a Cabinet meeting which is still in progress but I do want to assure you on behalf of all of my colleagues that we have a very strong commitment to the maintenance of the role of local government in our system of government throughout Australia. Where appropriate we like to deal direct with local government as we are doing in relation to local road funding, because when you deal directly with local government you don't have the decisions of the Federal Government filtered by the local political priorities of state governments. And I think that is a benefit to you as it is a benefit for us. I wish all of you and your families and your staff a very merry Christmas and a year in 2001 in which all of us - whatever our political views, whatever our backgrounds may be - can reflect with an enormous amount of pride on the scale of the Australian achievement over the last one hundred years to which local government itself has made a very important contribution.
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