LOCAL GOVER. NM'ENT ASSOCIATION CONFERENCE LUNCHEON
CAN BE IRMA
Statement by the Prime Minister, the Rt Hon. William McMahon, CH, MP.
2.3 October 1972
Thank you for giving me the opportunity to come to such
a wonderful meeting as this in Canberra. I think it indicates not only
the approach of the Local Government Authorities themselves, but it also
indicates clearly that you recognise that the Commonwealth Government
must take its part in assisting Local Government Authorities and permitting
them to participate in government as the third tier. And I believe, Sir,
it's proper that I should say to you as Chairman, that there can be no
doubt at all that * part of the credit.-for attracting so many people to
come to a meeting like this is due to you and the efforts that you've
made in Local Government for so many years in the past.
I do appreciate the efforts that you have made to give
me the opportunity to speak on behalf of the Government, and to speak
about Local Government itself and what it means to this country. I do
so because as you know, we are approaching a Federal election and we.
are doing so at a time when crucial decisions relating to the concepts
and structures of Governments which have guided the progress and development
of society for so many years are now un~ der review, and very substantial
review too.
It is true to say that there's no exaggeration in the
phrase ' that what is at stake is the system of Federalism and the
three-tiered system of Government'. No matter what phrases you might
use, no matter how you might care to disguise intentions, it becomes
clear that that is the choice that faces us.
And that three-tiered system is one of Federal, State
and Local Government. This is, I assure you again, and I want the
words to sink in, no vague and undocumented threat. Nor is it an
invention of Liberal Party politicians for electoral purposes*
Let me quote the evidence of this by one of your own
most respected Local Government experts, Mr Roy Stuckey. In commenting
on the radical proposals of our politic-al opponents to attack and
ultimately destroy the role of State and Local Governments as we know
them today, he said, and I quote him " In effect, in one fell swoop,
Mr Whitlam proposes doing away with the State Parliaments and 900 Local

Government-uni ' ts and-replacing them by what must * become a centralist
and bureaucratic control from Canberra". And he goes on to say, and
I completely agree with him in this, that " the people of Australia would
never stand for such a proposal".
But it is the last few words of Mr Stuckey's comment
that I want to particularly draw to your attention today in looking at
these dangerous designs for centralism. He said, and these are his
words, " it would provide initially a dictatorship for the Party in
power". No warning could be in clearer or in more distinct terms.
Before I go on to delineate this serious threat to
Local Government in more detail, I first want to describe to you my
own attitudes to this problem as a Liberal and as a person who can
claim a very long experience in Government. I am unashamedly a
Federalist, and I believe that my record bears this out, particularly
in the period since I took office as Prime Minister.
Inherent in the Liberal philosophy of the individual
is a distrust of, and A' emphasise these words, great concentrations
of power and authority. And from this flows our commitment to the
principle that Government should be as close to the people as possible
through effective decentralisation and through maximum voluntary
participation in Local Government.
Now the.. proof : 6hat these principles are the ones which
are more acceptable to Australians lies in the fact of the existence
of the three-tiered system of government itself. It is the natural
result of our history and our geography. And we intend to preserve
and to strengthen it.
A few months ago we had in Australia Professor David
Donnison. Many of you will no doubt remember his presence here. And
he is theC" Dir~ ctor of the Centre for Environmental Studies in London
and an expert in these matters. He had an important message. He said
" We should be suspicious of over-ambitious proposals which start from
the top and work downwards. Since we barely know enouch to co-ordinate
policies in one street, we should beqig not * by proposing brand-new
systems for a whole society but by trying more effectively to link up
the things we already know best".
Only a few months ago, in July, I received here in
Canberra, a deputation from the Australian Council of Local Government
Associations. I understand too, that this was the first time in more
than twenty years that a Prime Minister had received a deputation from
the national representatives of the Local Government Associations.
I told the deputation of my own and my Government's
continuing concern for Local Government, and my own belief in the
maintenance of truly local forms of Government. As life in our great
cities in particular becomes more complex and more populous, I am
convinced that our Local, Municipal and Shire administrations will need
to play an even greater role in improving the quality of life of our
citizens., not only over the range of traditional responsibilities, but
in recreational, sporting and cultural activities to an increasing'-
degree. Big cities should mean a greater, not a lesser role for
Local Government, and I support this greater role. I have strongly 1/ 3

supported the attendance of Local Government reoresentatives at the
forthcoming Constitutional Convention, and although it is more a matter
of decision for the States themselves, I have expresssed a definite view
that Local Government representatives at the Convention will not only
be able to speak, but they should be able to vote as well.
I mentioned the States then because we should not forget
that Local Government Authorities are created and function under State
laws, as you well pointed out, Mr Chairman. And the Commonwealth does
not wish to disturb at present the constitutional structure whereby the
responsibility for determining the revenue-raising powers and supplementing
the resources of Local Government lies with the State Parliaments.
In accordance with that attitude, the Commonwealth does
not normally provide direct grants to Lccal Governments. What it does
do is to provide large amounts of untied assistance to the State Governments
which they are free to disburrse as they themselves decide; so that
it is true to say that indirectl bul-: in a very real way the Commonwealth
provides considerable assistance to Local Government Authorities. May I
now spell out some of our recent actions to illustrate this point
The general revenue grants to the States have been
increased considerably in recent years and this year we agreed to something
of the ot ' 92 million, that is for the Burget year
1972/ 73. Now t'is was an increase of something like $ 15r million, or
over last year. The arrangements under which these grants will be paid
over a five year period ending 1974/ 75 were initially determined at the
Premiers' Conference of June 1970. However, they were very substantially
revised as a result of the Premiers' Conference in June 1971 and 1972
at which I had the good fortune to preside.
There have, as a result, been very significant increases.
For example it is estimated that the States wil. receive in 1972-73 over
$ 420 million more in Commonwealth general revenue grants than they
would have received had the 1970 arrrnvements continued unchanged. At
the June 1971 Conference, besides agreeing tothese additional revenue
grants, the States accepted our offer, the Commonwealth's offer, to
transfer payroll tax to them and they have been levying that tax since
September of last year.
At the same Conference, and I think this is of enormous
importance to you and your colleagues, ! r Chairman, we also agreed as
a special measure cf assistance to Local Government Authorities that we,
the Commonwealth, would meet the full cost of exempting the non-business
activities of Local Government from pay-roll tax. The cost of that was
$ 8 million in a full year and $ 6 million in 1971/ 72.
In rural areas , e also provide the general range of
Commonwealth assistance to rural industry. We have instituted an
unemployment relief scheme, and we have included the provision of
relief work grants as eligible under State drought relief measures. / 4

In addition, at the Loan Council meeting in June this year,
the limit on Local Government borrowings without the approval of the
Council was aised from $ 300,000 to S40n, 00n.
I believe, and I want to emphasise this point, that all
these actions demonstrate our clear concern for the problems of Local
Government and our support f'lr the Federalist system of Government too.
Tgis is not to pretend that the present system is perfect by any means.
But with all its shortcomings, it does through a division and a balance
of power provide for decentralised administration, and an essential
barrier ot the abuse of authority by an all powerful central Government
which would replace elected bodies with commissions responsible only to
one Parliament. Let there be no mistake about it. It is an all-powerful
central Govenrment in Canberra that our opponents are dedicated to
impose. Many of you will remember the speech in Canberra eleven months
ago when the Leader of the Opposition spelt out his plan, and I now
quote from it " We should have a House of Representatives for international
matters and nationwide national matters, an assembly for the
affairs of each of our dozen largest cities and regional assemblies
for the few score areas of rural production and resource development
outside these cities". There in clear and unmistakable and unambiguous terms
the Leader of the Opposition advocates not only the abolition of the
Senate and eisting State Governments, but also the destruction' of
900 existing Municipal and Shire Councils and their replacement with a
series of arogant and disinterested bureaucracies, bodies that would
be answerable to Canberra, remote from the local problems of the
citizne himself.
citizen trying w d not be hard tn imacfine, the ligh
tdoan a response from a remote eacrtabout
an offensive drain or an unsatisfactory garbage service. And if
anyone imagines that a Labor Government would be prevented from
implementing its centralist dream by constitutional limitations,
I'm sure that in these words you'll find that the Leader of the
Opposition has the answer to that too.
Speaking to the Fabian Society in Victoria last July,
he said tat if Section 92 could be held up to be the bulwark of private
enterprise, then Section 96 is the Charter qf rublic enterprise. And
he went on to say that it would be intolerable if Labor was to use the
alibi of the Constitution to excuse failure to achieve its social
objectives; doubly intolerable because, he say3, that it is just not
true that it need do so.
Now this is clear notice from our opponents that a
Labor Government would use Section 96 which allows the Commonwealth
to grant assistance to the States on such terms and conditions as the
Commonwealth things fit; as a vehicle for '-entralism by financial
squeeze or as Professor Donnison put it more suczinctly, and now
again I quote from him, to " tear the guts o. of r'tate Governments".

The message is therefore clear. A condition of
obtaining financial assistance is toeing the centralist line, or if
you like " Do what we say with Local Government or you don't get
the money". So nobody can preterdthat the threat has not been spelled
out. It is there. It is real, and to ignore it would I believe, be completely
foolhardy. In our view, the present structure of Municipalities
and Shires provides the indispensable network for grass roots contact
between the citizens and. what can be an arbitrary leviathan of central
government. Other countries are struggling to return Government to
the people, to put decisions back down into the hands of those close to
and responsible to the citizen at t~ v~ qrass roots.
Do Australians want to go the way of the dictatorship of
centralism, control by commission, the recioe of remote control I
do not believe it for a second.
Before I conclude, Mr Chairman, let me mention one other
aspect of our pponentis delusions and at te same time let me issue a
warning. They offer you the lure of Local Government representation
on the Loan Council and that has a superficial attractiveness. But what
again is the price tag Reduction of Local Government to a " few score
bodies" for the whole of Australia.
So I say we must beware of the lure of a " widened role"
for Local Government in a unitary centralised system, which in reality
is nothing n~ re than an invitation to destroy any vestige of so-called
" Local" Government, and reolace Federalism with a centralised system
dominated by the barons of boards and commissions reporting only tc
Federal Parliament. Mr Chairman, thank you for giving me the opportunity
of addressubg today so many distinguished Australian citizens, and
thank you also for giving me the opportunity to speak here at a
Conference where representatives of New Zealand are present, and
representatives of most of the Local Government Authorities are ablP
to come to Canberra, aid in time I hope, after the Constitutional ConventlLi
is held theywillbe able to participate more fullyin the work of government,
particularly helping those at the grass-roots of this great country of
ours and with whom they are in the most immediate contact.