With great pleasure I rise to speak on the Constitution Alteration (Local Government) 2013, which would provide a modest amendment to our Constitution for the recognition of local government for the purposes of financial grants from the Commonwealth to local governments. I listened with great interest to the member for Hughes in his contribution and was surprised to hear some of the claims that he made. I will deal with them first before addressing some of the substance of the bill.

If you listened to the member the Hughes, there were two concerns raised in his contribution. The first concern was that somehow this was a massive overreach of central government into the affairs which have traditionally been the privilege of state governments and that this is somehow improper. We have seen similar claims made by a former senator for South Australia, Nick Minchin, and more recently by others on that side of politics. I find it very strange that these claims are made because they come from the only party, as far as I am aware, which has introduced laws and come to arrangements in this parliament, together with other parliaments around the country, which tie to grants made to independent organisations political requirements that those organisations do not speak out against the policies or decisions of the government of the day. If the member for Hughes or the former senator for South Australia were so concerned that financial grants via this or any other level of government would somehow tie, inhibit or constrain the political independence of a local government or any other organisation in this country then I suspect those concerns would be best voiced in their party rooms and not in the parliament. It is the Liberal and National parties in this country that have a track record of ensuring that there is political constraint on the grant finances to independent organisations, not those on this side of the House. If they are concerned about the political interference in independent bodies, raise them in their party rooms. Raise those objections, particularly in New South Wales and Queensland, but also in Victoria, where coalition governments in those states are including those constraints within their contractual arrangements with independent bodies at this very point in time.

The second point that was raised by the member for Hughes was that he is a great advocate for local governments, particularly in our own state of New South Wales, and he wished them to continue in their independence, financially and otherwise. The member for Hughes has probably not picked up a newspaper or has not been following the raging debate that is going on in New South Wales, where there is a debate about the financial sustainability of local governmentsand, I suspect, local governments in New South Wales do not have a monopoly on this issue. It goes to the nub of the issue. We know that there are financial constraints on local government. It is a part of what we like to call in public finances the vertical fiscal imbalancethat is, the imbalance between the responsibility for delivering services and the capacity to raise revenue to pay for those services. At no level of government is that constraint greater than in the area of local government.

I know this very well in my own electorate, where we have the Shellharbour City Council, a fine council, with a relatively low ratepayer base and a great need for provision of new servicesparticularly new roads and infrastructure services to new urban developments within its local government boundaries. The Shellharbour City Council is faced with a situation where it can seek to increase ratesand there is a debate going on within the Shellharbour City Council about its capacity to do that. The ratepayers in this region are within the lower band of socioeconomic status. They are not high wage and salary earners in that particular local government area. So there is a limited capacity to raise those rates. The other area you can turn to is developer leviesplacing a levy on the developers who are proposing to put new subdivisions into a particular area. There are also constraints on the capacity to do that, particularly when you are trying to develop affordable housing within the electorate. So a council like Shellharbour relies on the grants that it can gain from other sources, whether that is direct financial grants from the state government or direct financial grants from the federal government.

The member for Hughes in his contribution quoted some constitutional scholars, including Prof. Anne Twomey. Students of constitutional law would be familiar with the work of Prof. Anne Twomey, but she is not the only voice in the debate. Whilst I respect her expertise in this area, she is not the only voice in this debate. People who have been following this particular area of constitutional law would be very familiar that there is a big question mark over the capacity of the Commonwealth level of government to provide direct financial grants to local government.

So if you are concerned about the political independence of local governments or you are concerned about the financial viability of local governments, as I am, in their capacity to deliver services, then you should be standing in this parliament and voting and speaking in favour of this bill and then going out to your community and talking in favour of this modest constitutional amendment. It is, if anything, directed at ensuring the independence and the political security of local governmentbut, more importantly than that, the financial security of local governments.

Of the three tiers of government in Australia, local government and the services they provide are of closest proximity to us. We each rely on local government services every day as we go about in our communities. Local governments carry out a great service to our community that is simply beyond the capacity of any other tier of governmentcertainly Commonwealth and also state, in my view.

Their services are broad and expanding. They include not only planning and development services and development approval but also parking, immunisation, public amenities such as toilets and parks, waste disposal and the cleaning and maintenance of local streets, footpaths and roads. There is also an extensive range of community services including libraries, public gardens and sports grounds. I am very pleased to be speaking on this bill today because the bill is directed at ensuring that local governments continue to have financial viability and that they can continue to grow and expand in the delivering of these services.

Many Australians would be surprised to hear that local government is not already recognised in our federal Constitution. We are going to hear all sorts of things in this debate, and they need to be addressed head-on. I have already addressed the concerns raised by the member for Hughes, but I simply say this: it is important to note at the outset that this bill does not give the federal parliament any power over local governments. It does not change the status of local councils and it does not intrude in the relationship between local and state governments. What it does do is provide certainty over the federal government's ability to provide funding directly to local governments such as already occurs through the popular Roads to Recovery program, a program initiated by the previous coalition government and continued by this Labor government.

A short historical interlude: I understand that AdelaideI see the member for Boothby at the table; he can probably correct me on thisclaims the establishment of the first elected municipal council in 1840, followed by Sydney and Melbourne in around 1842. Local government in Australia preceded the establishment, obviously, of our own national government. It is true that the 1901 Constitution ignores the existence of local government and many might ask why local government was overlooked in the first place. According to a 1984 study of this matter by Chapman and Wood, it is believed that 'at none of the three constitutional conventions held in the 1890s was local government discussed; it was not important for the creation of the federation'.

Despite the early establishment of local councils in our system of government, it is interesting to note that local government did not come under much consideration during the 1890s constitutional conventions that led to Federation. This is because many present at the conventions, such as Sir Samuel Griffith, saw local government as purely a domestic responsibility of the individual states which had no relevance to federal discussions. Alfred Deakin, a future Prime Minister, apparently suggested at the Australasian Federal Convention in 1897 that some individual 'localities' might be funded directly by the Commonwealth; however, another future Prime Minister, Edmund Barton, saw this as a risky financial proposition. I interrupt myself to say his concerns were about the financial viability of the federal government, not about any political concerns about that tier of government funding the local governments. Barton's response reflected the consensus view that Australia's Federation was an agreement between the existing states to create a future nation on mutually agreed principles. It is interesting to note that some estimate that nearly 30 per cent of the first federal parliamentarians elected in 1901 had served in local government. A survey of today's federal parliament would probably yield a similar result.

The proposal for this bill today to enable a referendum on this question has a lengthy period of consultation and deliberation behind it, led by this government. In August 2011 the government approved an Expert Panel on Constitutional Recognition of Local Government. In December 2011 the expert panel presented its final report, concluding that financial recognition of local government through an amendment of section 96 of the Constitution was a viable option in 2013. In November 2012 the parliament established a Joint Select Committee on Constitutional Recognition of Local Government. The committee released its final report in March 2013. The committee recommended that a referendum on financial recognition of local government be held at the 2013 federal election after a lengthy consultation process, engaging with the communityimportantly, with all tiers of government as well as with the communityon the questions to be considered at a future referendum.

The bill before the House today is a bill to alter section 96 of the Constitution to specifically state that the Commonwealth may grant financial assistance to local government bodies formed by a law of a state. Item 1 of schedule 1 alters the heading to section 96 of the Constitution by including the words `and local government bodies'. Item 2 alters the Constitution by inserting in section 96, after 'to any State', the text set out in the schedule. As amended, section 96 would be as follows:

Financial assistance to States and local government bodies

During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State, or local government body formed by a law of a State, on such terms and conditions as the Parliament thinks fit.

The alteration of s 96 would establish specifically that the Commonwealth may grant financial assistance to local government bodies formed by a law of a State.

That is an important point. The Commonwealth would thus no longer need to rely on other, less specific sources of power to provide financial assistance to local government bodies. The wording was specifically designed to give assurance to state governments that, under the proposed change, local governments would remain the responsibility of state and territory governments. I know that is a matter of some concern to many local government bodies, particularly in New South Wales and Queensland where the authoritiessome may say the tyranny of central authoritiesin Sydney and in Brisbane, and previously in Victoria with the central authority of Melbourne, have run roughshod over the views of local councillors and local citizens in either merging or demerging, or taking over, local government bodies and putting in place administrators. Nothing in this legislation will impair the ability of a state government to do, or not do, any of those things. It goes merely to the financial arrangements between the federal government and the local government.

This bill provides long overdue Constitutional recognition for local government. I commend it to the House. I urge voters in my own electorate of Throsby and across the country to support the proposition and to vote yes at a referendum to be held at the federal election on 14 September 2013. I commend the bill to the House